Federal Government is to use additional revenues gained from the implementation of the Finance Bill 2020 to fund health, education, and infrastructure programmes.
The Senate Leader, Yahaya Abdullahi, stated this on Wednesday in his lead debate during the second reading of the bill.
The Bill was read for the first time on Wednesday.
The Bill seeks to amend the Capital Gains Tax Act; Companies Income Tax Act; Personal Income Tax Act; Tertiary Education Trust Fund (Establishment) Act; Customs and Excise Tariff, etc (Consolidated) Act; Value Added Tax; Federal Inland Revenue Service (Establishment) Act and Nigeria Export Processing Zone Act.
It also seeks to amend the Oil and Gas Export Free Zone Act, Fiscal Responsibility Act; Companies and Allied Matters Act 2020; and Public Procurement Act; in order to make further provisions in connection with Federal Government Financial Management; Public Revenue, and other relevant matters.
The Finance Bill, 2020 seeks to support the implementation of the 2021 Budget by proposing key reforms to specific taxation, customs, excise, fiscal and other laws.
Essentially, the Bill has six strategic objectives:
*Adopt appropriate counter-cyclical fiscal policies to respond to the economic and revenue challenges precipitated by the decline in international oil prices, as well as the impact of the COVID-19 Pandemic on the Nigerian economy,
*Reform extant Fiscal Policies to prioritise job creation, economic growth socio-economic development, domestic revenue mobilisation, as well as to foster closer coordination with Monetary and Trade Policies;
*Provide fiscal relief for taxpayers by reducing the applicable minimum tax rate for two (2) consecutive years of assessment, as well as reforming the commencement and cessation rules for small businesses
*Propose measures to fund the Federal Government’s COVID-19 Pandemic response and introduce provisions to enhance the recovery of corporate donations towards responses to the COVID 19 Pandemic, as well as any similar crises in the future:
*Amend certain aspects of the Fiscal Responsibility Act, to align this Act with the 1999 Constitution (as amended), as well as to enhance fiscal efficiencies by controlling the cost-to-revenue ratios of key State and Government-Owned Enterprises, and
*Amend the Public Procurement Act to implement key procurement reforms previously proposed by the National Assembly, in 2019. to extend the scope of the Act to the Federal Judiciary and Legislature accelerate procurement processes, increase mobilisation fee thresholds, and provide for essential e e- procurement reforms.
This bill seeks to, among other things, amend the tax provisions and make them more responsive to the tax reform policies of the Federal Government and enhance its implementation and effectiveness.
The bill increases the VAT payable by consumers from 5℅ to 7.5% and increased the penalty payable by a taxable person for non-remittance within the specified period from 5% to 10%.
The Bill proposes under new section 15 of VAT that companies with turnover of N25 million or more shall render their tax on or before 21st of every month.
The Senate Leader said the Bill would transform the economic fortunes of the country, calling on ministries, departments, and agencies to utilise public funds derived from the amendments by providing infrastructural facilities needed to improve the economic activities of Nigeria and thus improve the GDP.
He said, “It is absolutely essential to intensify the revenue generation efforts of, this Administration and its commitment to ensuring that the inconvenience associated With any fiscal policy adjustments, is moderated, such that the poor and the vulnerable, who are most at risk, do not bear the brunt of these reforms.
“It is imperative that the Nigerian tax legislation is updated frequently to respond to the challenges of today’s business environment which therefore underscores the importance of the Finance Bill 2020.
“The Finance Bill is intended to support the funding of the 2021 budget. The Finance Bill contains several long-awaited changes to the tax framework which seek to address issues of low tax revenue growth, such as an increase in the VAT rate and the introduction of tighter deductibility rules.
“Overall, the provisions contained in the Finance Bill are intended to incentivize economic activities to stimulate GDP growth and facilitate an increase in the revenue generated.”
