The Senate on Thursday passed the Finance Bill 2019, which increased the Value Added Tax (VAT) from five per cent to 7.5 per cent and streamlined the nation’s tax regime.
The passage of the Bill followed the presentation and consideration of the report of the Senator Solomon Adeola-led Committee on Finance on the Finance Bill 2019.
Following the passage of the Bill, Senate President Ahmad Lawan said the amendment was meant to generate revenue to fund the 2020 budget.
He said: “We amended seven Acts largely to ensure that we streamline the tax system in Nigeria and ensure that we get revenues for government to provide services and infrastructure to the citizens of this country.
“What we have done is very significant because this is to ensure that we not only have sources of funding but credible and reliable sources of funding for the 2020 Appropriation but also for subsequent activities of government.
The revenue-generating agencies will have to sit up. The National Assembly, particularly the Senate, will be doing a lot of oversight functions. If they have targets, we must ensure they meet the targets.
“I believe what we have done is not to put taxes or burden on the ordinary people. What we have done is to create more revenue.”
The seven Bills that were amended included: Petroleum Profit Tax Act (PPT), Customs and Excise Tax Act, Company Income Tax Act (CITA), Personal Income Tax Act, Value Added Tax Act, Stamp Duties Tax Act, and the Capital Gains Act.
The Finance Bill was presented alongside the 2020 Appropriation Bill to the National Assembly by President Muhammadu Buhari on October 8, 2019.
Adeola said following the presentations at the public hearing and submissions by relevant stakeholders, the committee observed that:
“The Bill sought to amend the provision of the Companies Income Tax Act by curbing Base Erosion and Profit Shifting (BEPS), as proposed by the Organisation for Economic Cooperation and Development (OECD) and broaden the triggers for domestic taxation of income earned by non-resident companies in Nigeria through dependent agents and via online market platforms.”
He added: “The Bill also seeks to address the taxation of industries, such as insurance, start-ups and the capital markets, deemed by the Federal Government of Nigeria as critical to the growth and development of the Nigerian economy.
“The Bill proposes to improve the efficiency of the Nigerian VAT system, taking into consideration recommendations from various stakeholder groups. Attached herewith is a list of selected countries with their respective VAT rates.
“The Bill also seeks to expand VAT coverage by addressing some critical issues, such as taxation of digital economy, VAT registration thresholds and intangibles.
“The Bill wishes to subject certain imported goods to excise duties in similar manner as their local manufactured counterparts.
“The Bill also seeks to provide clarity and efficiency in the administration of individual income taxes in Nigeria.
“The Bill also covers the taxation of business combination and seeks to prevent abuse of provisions of the Act on group restructuring.
“The Bill also seeks to increase revenue generation from duties on Electronic Stamps Duties.
“The Bill seeks to improve revenue by removing the tax exemption granted for dividends or incomes received from companies charged under Petroleum Profits Tax Act.
“The Bill was a welcome development and the consensus view was that its proposals and principles should be sustained, subject to the specific recommendations of the Committee.”
Adeola said after considering the specific issues raised by the various Stakeholders on the relevant sections of the Bill, the Committee noted that: “The initiative of the Executive in the Finance Bill, alongside the Executive Budget proposals and the Appropriation Bill was welcomed and long overdue.”
He added: “Going forward, the Executive should be encouraged to propose to the National Assembly, Finance Bills to support the fiscal policies of the annual Budget and should also sustain the initiative as an annual tradition.”
The committee also recommended that the proposed amendments to the Finance Bill be approved by the Senate.
Responding to questions from reporters, Adeola denied that there is any disagreement between the Senate and the House of Representatives on the Finance Bill.
“There is no issue between the Senate and the House Committee on Finance. Because of the independence of each chamber, they decided to hold their public hearing on Tuesday,” he said.
