From Juliana Taiwo-Obalonye, Abuja
The Federal Executive Council (FEC) meeting, presided over by President Muhammadu Buhari has ratified the Finance Bill 2021/2022 fiscal year.
Minister of Finance, Budget and National Planning, Zainab Ahmed, while announcing the ratification to State House Correspondents at the end of the meeting, explained that the bill, which is currently before the National Assembly, focused on tax as well as reviewing and amending some 11 fiscal laws.
She further explained that rather than proposing new taxes, or increasing tax rates, the Finance Bill for the 2022 fiscal year focuses on closing loopholes and improving tax administration.
“This draft bill was prepared by the Fiscal Policy Committee and it focused on tax and reviewing some fiscal laws and also amending some and these laws, about 11 in number, that have been affected. The purpose for us is to be able to refine our fiscal laws to improve tax compliance and also to enhance revenue generation.
“So, the proposed legislation falls under five broad categories. The first one of course, is domestic revenue mobilisation and various measures are proposed in the bill to enhance revenue and these include; one limited, excellent exemptions of case from shares disposals from capital gains tax to long term equity investments, out to a close in tax loopholes for companies that are transmitted from the previous federal public tax regime to the world corporate tax and have recovered tax regime that is provided under the new petrol industry act of 2021. Three, there’s also provisions that have been made to prevent the abuse of Personal Income Tax released by individual taxpayers and allowances to evade taxation.
“This second broad category is Tax Administration Reforms and this include provisions to support the FIRS ongoing reforms to fully automate and deploy technology to enhance collections and encourage taxpayer compliance and there are several measures in that category. But the third one is International Taxation Reforms.
“This provision empowers the FIRS to better assess non-resident companies to taxation by taxing profits derived from digital services rendered to Nigerian customers and it’s also designed to reduce the tax compliance burdens on non-resident taxpayers that are not required to register in Nigeria as companies.
“The third broad objective or the Finance Bill is financial reform to enhance tax equity. Most of these provisions that have been made are to enhance ongoing capital market reforms relating to securities lending transactions, real estate investment trusts, as well as the minimum taxation reductions that have been pioneered by the two previous Finance Bills.
“The fifth principle is Critical Public Financial Management and Reform. This reform was designed to strengthen the FIRS tax administration and coordination role in relation to the collection of taxes, vis-a-vis the responsibilities of relevant law enforcement agencies, such as the Nigerian Police or the EFCC and also to ensure and reinforce the supremacy of the fiscal rules and regulations as provided for by the Finance Controls and Management Act, as well as the 1999 Constitution, as amended.
“Again, to emphasise also that we shied away from addressing any changes to the VAT regime or the current Stamp Duty regime because of the current ongoing litigations by some states in those two areas. So, nothing was proposed on this. When it becomes clearer, when the courts take decision on this matter or resolutions to the current challenge is attained”, she explained.