The Finance Act: What you need to know

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Earlier, President Muhammadu Buhari signed into law the Finance Bill, 2019 which accompanied the 2020 fiscal budget with an objective to reform domestic tax laws, promote fiscal equity, incentivize investments in infrastructure & capital markets, support small businesses and raise revenues for the Government.

The Finance Act: What you need to know
Source: FMF, Budget Speech, United Capital Research

To achieve these objectives, sweeping changes were made to seven different tax laws – the Companies Income Tax (CIT), Value Added Tax (VAT), Petroleum Profits Tax (PPT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Customs and Excise Tariff Etc. (Consolidation) and the Stamp Duties Acts. Also, notable highlights of the changes include an increase in the rate of VAT from 5.0% to 7.5%; 0.0% CIT rate for small businesses and a lower rate of 20.0% for medium-sized companies; requirement for TIN to open and operate a business bank account; increase in the threshold of online transfers liable to stamp duty of N50 from N1,000 to N10,000; and taxation of foreign entities involved in digital transactions with significant economic presence in Nigeria.

Read:  FG moves to raise VAT rate to 7.2%

Yet, uncertainty remains as to the effective date of the law. Technically the law takes effect from the date the bill is signed into law. However, since the new law have not been gazetted we expect that the effective date will be soon (say the beginning of Feb 20) availing tax authorities and taxpayers some time to digest the changes.

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United Capital Research

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