Senate passes Finance Bill, extends implementation of 2021 budget

By Benjamin Arida://

Senate on Tuesday passed the Finance Bill 2021, transmitted to the National Assembly by President Muhammadu Buhari, on December 7, 2021.

The upper legislative chamber also passed a bill to amend the 2021 Appropriations (Amendment) Act.

The bill, sponsored by the Senate Leader, Yahaya Abdullahi, seeks to extend the implementation of the Capital aspect of the Appropriation Act 2021 from December 31, 2021, to March 31, 2022.

The passage of the Finance Bill, followed the consideration of a report by the Joint Committee on Finance; Customs, Excise and Tariff; Trade and Investment. 

In his presentation, the chairman of the joint committee, Senator Solomon Adeola, said the bill seeks to support the implementation of the 2022 Federal Budget of Economic Growth and Sustainability by proposing key specific taxation, customs, excise, fiscal and other relevant laws. 

According to the lawmaker, a total of 12 Acts were amended under the Finance Bill which contains 39 clauses. 

Senator Adeola added that the bill seeks to promote fiscal equity, align domestic tax laws with global best practice, introduce tax incentives for infrastructure and capital markets, support small businesses and promote increase government revenue. 

“The Finance Act 2020 was predicated essentially on having no new taxes and no new incentives due to the COVID -19’s impact on the economy as such it was structured across four broad thematic areas; enacting counter cyclical measures and crisis intervention initiatives; tax, fiscal responsibility, and public procurement reforms; reforming fiscal incentives policies for job creation; ensuring closer coordination of monetary, trade and fiscal policies; and Enhancing tax administration,” he said.

The joint committee, based on its observations, accordingly, recommended five percent capital gains tax to be imposed on shares’ disposal transactions where gains exceed N250million in 12 calendar months.

It recommended that Gaming and Lottery Companies be taxable, as well as oil and gas companies. 

It underscored the need for midstream and downstream oil and gas companies to be made liable to corporate tax without the benefit of tax exemptions for firms exporting goods to earn foreign exchange.

The committee observed that doing so would prevent Double-Dipping by Gas Utilization Companies such that they cannot claim both (1) 3-year Tax Holidays; as well as (2) Petroleum Profit Tax Act Incentives or (3) Pioneer tax Holidays under IDITRA.

It advocated for qualifying capital expenditure rules for small and pioneer companies, to prevent double dipping by mandating that companies cannot deduct qualifying capital expenditure to reduce their taxable profits where the relevant qualifying capital expenditure is used to generate tax – exempt income.

It sought more powers for the Federal Inland Revenue Service, FIRS to collect NPTF levies on Nigerian companies on behalf of the fund and to streamline tax levy collection from Nigerian Companies in line with President Buhari administration’s ease of doing business reforms.

The joint committee also harped on the need for the federal government to ensure that FIRS deploys both proprietary and third-party tech applications to collect information from taxpayers, enhance confidentiality and non-disclosure and to enable them investigate tax evasion and other crimes and sanction non-compliant tax payers.

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