The Nigeria government wants to enact the 2020 Finance Act to improve the implementation of its annual budgets, the Minister of Finance, Budget and National Planning, Zainab Ahmed, has said.
President Muhammadu Buhari is expected to send the 2020 Finance Bill to the National Assembly for enactment to the 2020 Finance Act soon. Mrs Ahmed said the proposed law seeks to amend various laws upon which the government’s fiscal policies are based.
The minister spoke on the Bill while addressing State House correspondents at the end of the weekly meeting of the Executive Council of the Federation in Abuja on Wednesday.
Mrs Ahmed said the Finance Bill was produced by several ministries, departments and agencies, tax practitioners and scholars working under the Fiscal Policy Reform Committee set up by the government.
Apart from proposing changes to tax laws relating to the Nigeria Customs and Excise and other fiscal laws, the minister said the Bill introduces new fiscal measures to enhance the management of the economy.
She said the Bill also seeks to reform the fiscal incentive policies to ensure coordination between the monetary and fiscal authorities of the government.
“The broad principle in the Finance Act was to consider how we will have adequate macroeconomic strategies to attract investments, to be able to grow the economy on a sustainable basis, and to create jobs as the immediate fiscal strategies to put in place accelerate domestic revenue mobilisation in response to the COVID-19 pandemic and the recent decline in the economy,” she said.
Mrs Ahmed said the Finance Bill seeks to amend 13 different tax laws.
These include the Capital Gains Tax Act, Companies Income Tax Act (CITA), Industrial Development (Income Tax Relief) Act (IIDITRA), Personal Income Tax Act (PITA), Tertiary Education Trust Fund Act, Customs & Excise Tariff (Consolidation) Act, Value Added Tax Act (VATA), Federal Inland Revenue Service (Establishment) Act, the Fiscal Responsibility Act and the Public Procurement Act.
Highlights of the Bill aside from the amendments to tax laws include providing fiscal reliefs for corporate taxpayers, for instance by reducing their minimum tax for two consecutive years.
The minister explained that the Bill reduced taxes from 30 per cent to 20 per cent for medium-term enterprises, and entirely cancels taxes for small or macro enterprises with a turnover of N25 million and below.
She said the 2020 Finance Bill also removes the two per cent education tax of the smallest businesses, who would also no longer pay company income tax.
Under the Bill, the government wants to create a legal instrument to support a crisis intervention fund for COVID-19 and other such crises in the future.
The Bill also seeks to amend the Fiscal Responsibility Act (FRA) to enhance fiscal efficiencies as well as control the cost-revenue ratios of government-owned enterprises, to increase their operating surpluses.
On the role of the Bill in budget implementation, the minister said President Muhammadu Buhari, during the presentation of the 2021 Budget to the National Assembly, said the bill would support the budget process.
She said her ministry was working on implementing current fiscal reforms in line with the multi-year medium-term framework.
The minister said the reforms would be followed by the cessation rules for small businesses as well as the provision of incentive for mass transits, by reducing import duties and the levies for large tractors, buses and other motor vehicles.
She noted that transportation cost is a major driver of inflation, especially of food prices, in the economy.
She said the summary of the 2020 Finance Bill would be published on different websites after the president has submitted the document to the National Assembly, to enable citizens to make inputs to the review process by parliament.
Asked whether the 2020 Finance Bill would not increase taxes and VAT, the minister said the Bill proposed to reduce taxes from 30 per cent to 20 per cent for enterprises with a turnover of between N25 million to N100 million.
“What we are doing in the Finance Bill 2020 is to further renew the Education tax of two per cent for that lower category of enterprises that have turnover of N25 million and below.
“The incremental changes means gradually making changes, up or down. But for now, with the economic slowdown, the assessment is to cut down on taxes and not increase levies and VAT as well as reduction in the duties for vehicles related to the mass transit,” she said.