By Tony Akowe and Victor Oluwasegun, Abuja
Finance bill to exempt small companies from company income tax
Gbajabiamila promises speedy passage
The Federal Government has no intention of introducing new taxes in 2021.
It will, instead, make efforts to reduce the tax burden on Nigerians in view of the current economic situation, Finance Minister Zainab Ahmed said on Friday.
Speaking at a public hearing on the 2020 Finance Bill currently before the National Assembly, the minister said the bill would bring about comprehensive reforms in the nation’s tax laws.
The Finance bill is expected to pave way for government to generate revenue to fund the 2021 budget.
She said the bill would enable Nigeria to adequately respond to economic challenges occasioned by the Covid-19 pandemic and the crash in crude oil prices.
She said: “We also need to defer tax rate increases to the domestic economic sufficiently recover and reduce compliance burden on tax payers in line with the ease of doing business reforms.
“The second principle is the need to reform fiscal incentives policies to help reduce proliferation of fiscal incentives by carefully assessing cost benefit of tax incentives and prioritise job creation, growth and incentives.”
Zainab Ahmed said government needed a closer coordination of monetary, trade and fiscal policies so that it would be able to align existing tax incentives for lending to agriculture with the recent CBN moratorium and interest rate reduction for agriculture and real sector loans, reform the stamp duty level on banking transaction and make provisions that will help harness funds in form of unclaimed dividends and unclaimed bank balance that has been sitting idle.
It is expected that the bill will promote fiscal equity by removing double taxation on companies during commencement and cessation of business, simplify the basis for calculating minimum tax and exempt profits that had been taxed from further taxation in the form of excess dividends.
The law will also increase revenue for government as it supports the increase of VAT from 5 to 7.5 per cent and will also introduce legislative backing for banks to charge stamp duties on electronic receipts.
She said: “What we don’t have in the finance bill 2020 is increase in tax. There are no new taxes that are being introduced and there is no increase in taxes.
“There are also no new incentives that have been introduced in this bill.
“The bill also makes provisions to create a legal framework for the creation of a crisis intervention fund that will address crisis that may arise in future, while introducing provisions that allow for the recovery of donations made towards the Covid-19 pandemic and other potential crises.”
In his remarks, House of Representatives Speaker Femi Gbajabiamila said even though the bill was only transmitted to the House about one week ago, it was committed to ensure speedy passage, but not at the expense of thorough examination of the various clauses.
The Speaker said that funding the budget to support economic recovery and address other challenges was the reason the House gave immediate attention to the bill.
He said: “?The Finance 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 2021 budget, meet the obligations of government and implement policies to build infrastructure, address the problem of insecurity, grow the economy, and provide jobs that pay a living wage and lift families out of poverty.
“It 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.
“We have a responsibility as legislators to meticulously review and examine every aspect of this Bill to ensure that we produce a legislative document that is clear in its objectives, thoughtful in the mandates it imposes and reflective of the best aspirations of all our citizens.”