Are you a resident of Nigeria, a business owner, or an employee? Are you thinking of emigrating to Nigeria to start a business or to pick up a job in Nigeria?
Then this article is for you! Do you know what the finance act of Nigeria entails, what are the dos and don’t of financial transactions in Nigeria? This article aims to educate on what recently amended Nigeria’s Financial Act.
Nigeria is a country located in western Africa. It has a population of over 200 million residents making it the most populous black nation on earth. Nigeria has the monicker “Giant of Africa”.
Finance Act 2022
On the 21st of December 2021, the Finance Bill 2021 was passed by the House of Representatives, on the 22nd of December 2021, the bill was passed by the Senate and on the 31st of December 2021, the Finance Bill 2021 was signed into law by the President, President Muhammadu Buhari thereby making it a law in Nigeria. This Act came into effect on January 1, 2022. The Finance Act 2021 brought about significant changes to 13 statutes and they are:
- Capital Gains Tax Act
- Companies Income Tax Act
- Federal Inland Revenue (Establishment) Act
- Personal Income Tax Act
- Stamp Duties Act
- Tertiary Education Trust Fund (Establishment) Act
- Customs, Excise, Tariffs etc. (Consolidation) Act
- Value Added Tax Act
- Insurance Act
- Nigerian Police Trust Fund (Establishment) Act
- National Agency for Science and Engineering Infrastructure Act
- Finance Control and Management Act
- Fiscal Responsibility Act.
The Finance Act 2021 as gazetted by the federal government on 18th January 2022 contains 42 Sections and 13 parts representing the 13 statues listed above.
Some of the major changes that the Finance Act No. 3, 2021 has brought about include:
Education Trust Fund (Establishment) Act No.16, 2021 has been amended leading to an increase on the Tertiary Education Tax levied on profitable businesses in Nigeria from 2% to 2.5%.
This tax is levied on the assessable profit of companies but it excludes small business from paying this tax.
Fiscal Responsibility Act No. 31, 2007 has been amended to bring about an increase the government borrowing powers.
Capital Gains Tax Act Cap. C1 has been amended to bring a 10% capital gain tax on disposal of shares worth 100 million naira and above within a period of 12 consecutive months.
This tax exempts proceeds that are reinvested to buy shares of any Nigerian company within same period.
Customs, Excise, Tariffs etc. (Consolidation) Act Cap. C49 has been amended to include a sugar tax. This tax entails an excise duty of 10 naira per litre on all non-alcoholic, carbonated, sweetened beverages.
Federal Inland Revenue (Establishment) Act No. 13, 2007 has been amended to increase the responsibility of FIRS personnel to ensure they protect the data of taxpayers they have in their custody.
Companies Income Tax Act Cap. C21 has been amended leading to a reduction in the minimum tax rate from 0.5% to 0.25% of gross sales for a period from January 1, 2020, to December 31, 2021.
Another amendment to this act has also brought about the taxing of non-resident digital companies in Nigeria i.e companies that provide digital services and have a significant economic presence in Nigeria can be included among non-resident companies that can be taxed.
Do you have any comments or further inquiries about the Finance Act 2022, you can leave your questions or comments in the box below and we will be sure to respond to them.