* Says it’ll determine FG’s ability to fund 2020 Budget
The House of Representatives has revealed that the Finance Bill
will be laid on the floor of the House on Wednesday for
consideration.
It also said that the bill would determine the federal
government’s ability to fund the 2020 budget.
Speaking on Monday at the public hearing of the Nigeria Tax and
Fiscal Law amendment Bill (the Finance Bill), 2019, the Speaker,
Femi Gbajabiamila, said that the bill is an important piece of
legislation, deserving of thorough consideration and reasoned
debate by the parliament of the people, acting in the best
interests of the people.
Gbajabiamila, who was represented by the Deputy Majority Leader,
Peter Akpatason, said they have a responsibility as legislators to
meticulously review and examine every aspect of the Bill to ensure
that they produce a legislative document that is clear in its
objectives, thoughtful in the mandates it imposes and reflective of
the best aspirations of all the citizens.
He added that the public hearing moves the House closer to the
laudable objective by providing an opportunity for citizens and
legislators to jointly consider the contents of the Bill.
According to the Speaker, “The Tax and Fiscal Law (Amendment)
Bill which we have gathered here to consider and to contribute to,
will determine amongst other things, our ability as a nation to
fund the 2020 budget, meet the obligations of government and
implement policies to build infrastructure, tackle insecurity, grow
the economy, and provide jobs that pay a living wage and lift
families out of poverty.”
Gbajabiamila said it was expected that over the course of the
public hearing, citizens would advance ideas and make
recommendations that would improve the quality of the legislation
and ensure the varied interests and considerations of all Nigerians
are taken into consideration before final enactment into law of
this essential legislation.
Earlier, the Chairman, House Committee on Finance, Hon. James
Faleke, said the highlights of the Bill among others included
excess dividend tax to apply only to untaxed distributions other
than the profits specially exempted from tax and franked investment
income; small businesses with turnover less than N25 million to be
exempted from Companies Income Tax (CIT).
He added that lower CIT rate of 20% to apply to medium-sized
companies with turnover between N25 million and N100 million.
“We work over it today and tomorrow and it would be laid on the
floor of the House on Wednesday for consideration. Without this
bill, 2020 budget is going nowhere,” Faleke said.
The Minister of Finance, Zainab Ahmed, commended the House for the
expeditious process and the professional manner in which the bill
has been handled.
The Bill seeks to amend the provision of the Companies Income
Tax Act to, amongst other things, curb Base Erosion Profit Shifting
(BEPS) as proposed by the Organization for Economic Corporation and
Development (OECD) and thereby broadening the triggers for domestic
taxation of income and by non-resident companies in Nigeria through
dependent agents and via online market platforms.
Ahmed explained that in line with global best practice, the bill
proposes to improve the efficiency of the Nigerian VAT system
taking into consideration recommendations from various stakeholder
groups.
She stressed that in addition to simplifying the VAT landscape,
the Bill also seeks to expand VAT coverage by addressing some
critical issues, such as taxation of the digital economy VAT
registration thresholds and intangibles.
In his submission, the Chairman, Oil Producers Trade Section
(OPTS) of the Lagos Chamber of Commerce and Industry, Mr. Paul
McGrath, identified some key areas of concern which he said has the
potential to further erode Nigeria’s competitiveness.
He said Sections 5 and 26 introduce a 7.5-10 per cent
withholding tax on dividends paid out of petroleum profits,
stressing that international oil companies operating in Nigeria are
subsidiaries of foreign companies, to which they pay dividends out
of the profits made from operations in Nigeria.
McGrath noted that while OPTS recognised the government’s need
to fund the budget, however, the short-term increase in revenue
from all these provisions puts at risk Nigeria’s ability to sustain
its current production through new investments, adding that without
new projects, Nigeria’s production would be subject to a 15% annual
natural decline.
He said that additional taxes, such as those proposed in the
Bill, would further increase OPTS costs, tax burden and would also
erode Nigeria’s competitiveness in the global oil and gas
industry.
Also, Mr. Taiwo Oyelade of PricewaterhouseCoopers (PwC) observed
that Section 1 of the bill which talks about security lending was
not covered, adding that there was a loophole which may be
exploited to avoid payment of income or capital gains tax on the
margin or profit made by a borrower and lender in a security
lending transaction.
On her part, President, Chartered Institute of Taxation of
Nigeria, Dame Simplice, described the proposed Bill as a move in
the right direction since it would give legal backing to reforms
aimed at improving the ease of doing business in the country.
She warned that increasing the VAT rate might not address budget
deficit if government expenditure are not under control, adding
that an increase in VAT rate should have corresponding increase in
government accountability and service to the citizens in order to
achieve the desired goal.
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