The Nigerian Senate yesterday passed the Finance Bill 2021, which was transmitted to the National Assembly by President Muhammadu Buhari, on December 7, 2021. According to The Nation, the passage by the Red Chamber of the National Assembly, followed the consideration of a report by the Senate Joint Committee on Finance; Customs, Excise and Tariff; Trade and Investment.
One of the major highlights of the Bill is the aspect equipping the Federal Inland Revenues Service (FIRS) with the power to evaluate non-resident firms like Twitter, Facebook, Google, and Netflix, among others. They are to be taxed on fair and reasonable turnover earned from digital services to Nigerian customers.
The Finance Bill further directs FIRS to appoint persons for the purpose of collection and remittance of non-resident taxes. In his presentation, 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, such as Customs Duties, fiscal charges and other relevant laws.
Adeola, representing Lagos West, said a total of 12 Acts were amended under the Finance Bill which contained 39 clauses.
He said the Bill sought to promote fiscal equity, align domestic tax laws with global best practices, introduce tax incentives for infrastructure and the capital market and support small businesses with a view to increasing government’s revenue.
“The Finance Act 2020 was predicated essentially on having no new taxes and no new incentives due to the COVID -19 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,” Adeola said.
According to the committee, it was recommended that five per cent Capital Gains Tax be imposed on shares’ disposal transactions where gains exceed N250million in 12 months.
It also recommended that Gaming and Lottery companies be taxable, as it applied to oil and gas companies. The Bill underscored the need for midstream and downstream oil and gas companies to be liable to corporate tax, without the benefit of tax exemptions for firms exporting goods to earn foreign exchange.
The Bill equally sought more powers for the Federal Inland Revenue Service (FIRS) to collect the Nigeria Police Trust Fund (NPTF) levies on Nigerian companies and to streamline tax, levy collection from Nigerian companies in line with the administration’s ease of doing business reforms. The committee noted the need for the Nigerian Government to ascertain 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 tax defaulters.
The Bill further empowers FIRS to assess and tax non-resident firms on fair and reasonable turnover basis on revenue earned from digital services to Nigerian customers, with a further mandate to appoint persons for the purpose of collection and remittance of non- resident taxes.