[JUST IN] Senate Passes Finance Bill 2020

…As Bill exempts aircraft engines, spare parts, others from
Custom charges

The Senate, on Tuesday, passed the Finance Bill 2020 transmitted
to the National Assembly by President Muhammadu Buhari two weeks
ago.

The passage of the Bill followed the consideration of a report
by the Senate Joint Committee on Finance; Customs, Excise & Tariff;
Trade and Investment and Public Procurement at plenary by the upper
chamber.

Chairman of the Joint Committee, Senator Solomon Adeola (Lagos
West), in his presentation, said the Finance Bill 2020 specifically
seeks to amend 17 key aspects of extant laws.

According to the him, they are: Capital Gains Act; Companies
Income Tax Act; Industrial Development (Income Tax Relief) Act;
Personal Income Tax Act; Tertiary Trust Fund Act; Customs and
Excise Duties Tariff; Value Added Tax Act; Stamp Duties Act; and
Electronic Transaction Levy.

Other areas amended are: Federal Inland Revenue Service
(Establishment) Act; Nigeria Export Processing Zone Authority Act;
Oil and Gas Export Processing Zone Act; Crisis Intervention Fund;
Unclaimed Funds Trust Fund; Companies and Allied Matters Act, 2020;
Fiscal Responsibility Act; and Public Procurement Act.

President Muhammadu Buhari, had in a letter dated 25th November,
2020 said the passage of the Finance Bill would support the
implementation of the 2021 budget through key reforms in taxation,
customs, excise, fiscal and other laws.

The Committee among others recommended the inclusion of free
duty and levy for commercial airline operators in line with
presidential waivers and approval already granted by the President
in the Customs and Excise Tariff Act (CETA).

On the Capital Gain Tax, according to Adeola, the Joint
Committee recommended that returns should be filed per year on the
30th of June and 31st December of every Tax year.

“The Committee recommended that the deductions provided for in
the Company Income Tax should among others be based on the actual
cost of the in-kind donation instead of the value which may be
different from what the donor actually incurred.

He added: “The Committee recommends that Section 25(9) of CITA
proposed be reduced from 25% to 15% of assessable profits to reduce
the amount of deductions available for this voluntary donations
made to State or Local Government

“The Committee recommends penalty or fine to be disallowed
should be restricted to those imposed by legislation enacted by the
National Assembly or States Houses of Assembly with the aim of
removing the restriction that will be occasion by the proposal in
the Bill with the aim of ease of doing business.

“The Committee recommends that Section 7 of the proposed
amendments be deleted and Section 8 of the proposed Bill is the new
Section 7.”

On the Industrial Development Income Tax Relief (IDITRA), the
Committee recommended “deduction in the Tax Relief periods from
initial 5 years to 4 years and additional 3 years to 2 years as
this will enable the government to start taxing the relevant
organization after a total period of 6 years of tax holiday.”

On the Customs and Excise Tariff Act (CETA), the Committee
recommended as follows: The “word ‘service’ be changed to
telecommunication in order to be specific on the section been
targeted instead of leaving it open to all of the services
industries.

“The inclusion of the new duty and levy been proposed and
presented at the public hearing in view of the economic hardship by
the Minister of Finance and CG Custom Services in order to improve
the revenue generation by the Custom Services and reduce loss of
revenue to neighbouring countries.

“The inclusion of free duty and levy for commercial airline
operators in line with presidential waivers and approval already
granted by the President.”

On the Value Added Tax VAT), the Committee recommended that
“goods and services exempted should include commercial aircraft,
engine, spare part, airline transportation ticket, hire rental on
lease of tractors plough and other agricultural equipment or
implements should be included as parts of goods and services
exempted from VAT.

On Stamp Duty, the Committee recommended that “the Minister in
charge of finance subjects to the approval of the National Assembly
shall make regulation for the imposition, administration,
collection and remittance of the electronic levy.

“The sharing formula of the electronic levy between States and
Federal Government with States Government taking 85% and Federal
Government being the collecting agent on behalf of the States
collects 15%.”

On the Federal Inland Revenue Establishment Act, the Committee
recommended “that the service may deploy proprietary technology to
automate tax administration process including tax assessment and
information gathering provided it gives 30 days’ notice to the tax
payer.”

On the Unclaimed Fund Trust Fund, the Committee recommended
among others that, “The Debt Management Office shall – maintain a
reliable database of all unclaimed dividends and dormant bank
balances constituting the debt owed by the Trust Fund which shall
be verified and reconciled with the Securities and Exchange
Commission, and the Central Bank of Nigeria on a bi-annual
basis.

“Liaise with the relevant Registrars of Companies, deposit money
banks or the National Deposit Insurance Corporation, as the case
may be, to make adequate arrangement for the repayment of the
verified interest and capital obligations due to the relevant
shareholders, depositors or their legal beneficiaries, as the case
may be.

“Prepare and implement a plan for the efficient management of
the obligations of the Trust Fund, which plan shall include setting
guidelines, modalities and other arrangements, which may include an
annual sinking fund, for the servicing of the interest and capital
obligations of the Trust Fund.”

On the Fiscal Responsibility Act, the Committee recommended that
“the classification of corporation operating surplus as it relates
to the cost of revenue ratio and operating surplus of the Minister
in charge of finance must upon the approval of the National
Assembly may approve for that particular corporation.

“The balance of operating surplus paid into the Consolidated
Revenue Funds and any other deductions from the Corporation account
which may be effected by regulation issued by the Minister, such
regulation must be approved by the National Assembly.

“The quarterly reconciliation carried out by the Ministry of
Finance on the corporation, the report of this quarterly
reconciliation must be forwarded to the National Assembly.”

…As Bill exempts aircraft engines, spare parts, others from
Custom charges

The Senate, on Tuesday, passed the Finance Bill 2020 transmitted
to the National Assembly by President Muhammadu Buhari two weeks
ago.

The passage of the Bill followed the consideration of a report
by the Senate Joint Committee on Finance; Customs, Excise & Tariff;
Trade and Investment and Public Procurement at plenary by the upper
chamber.

Chairman of the Joint Committee, Senator Solomon Adeola (Lagos
West), in his presentation, said the Finance Bill 2020 specifically
seeks to amend 17 key aspects of extant laws.

According to the him, they are: Capital Gains Act; Companies
Income Tax Act; Industrial Development (Income Tax Relief) Act;
Personal Income Tax Act; Tertiary Trust Fund Act; Customs and
Excise Duties Tariff; Value Added Tax Act; Stamp Duties Act; and
Electronic Transaction Levy.

Other areas amended are: Federal Inland Revenue Service
(Establishment) Act; Nigeria Export Processing Zone Authority Act;
Oil and Gas Export Processing Zone Act; Crisis Intervention Fund;
Unclaimed Funds Trust Fund; Companies and Allied Matters Act, 2020;
Fiscal Responsibility Act; and Public Procurement Act.

President Muhammadu Buhari, had in a letter dated 25th November,
2020 said the passage of the Finance Bill would support the
implementation of the 2021 budget through key reforms in taxation,
customs, excise, fiscal and other laws.

The Committee among others recommended the inclusion of free
duty and levy for commercial airline operators in line with
presidential waivers and approval already granted by the President
in the Customs and Excise Tariff Act (CETA).

On the Capital Gain Tax, according to Adeola, the Joint
Committee recommended that returns should be filed per year on the
30th of June and 31st December of every Tax year.

“The Committee recommended that the deductions provided for in
the Company Income Tax should among others be based on the actual
cost of the in-kind donation instead of the value which may be
different from what the donor actually incurred.

He added: “The Committee recommends that Section 25(9) of CITA
proposed be reduced from 25% to 15% of assessable profits to reduce
the amount of deductions available for this voluntary donations
made to State or Local Government

“The Committee recommends penalty or fine to be disallowed
should be restricted to those imposed by legislation enacted by the
National Assembly or States Houses of Assembly with the aim of
removing the restriction that will be occasion by the proposal in
the Bill with the aim of ease of doing business.

“The Committee recommends that Section 7 of the proposed
amendments be deleted and Section 8 of the proposed Bill is the new
Section 7.”

On the Industrial Development Income Tax Relief (IDITRA), the
Committee recommended “deduction in the Tax Relief periods from
initial 5 years to 4 years and additional 3 years to 2 years as
this will enable the government to start taxing the relevant
organization after a total period of 6 years of tax holiday.”

On the Customs and Excise Tariff Act (CETA), the Committee
recommended as follows: The “word ‘service’ be changed to
telecommunication in order to be specific on the section been
targeted instead of leaving it open to all of the services
industries.

“The inclusion of the new duty and levy been proposed and
presented at the public hearing in view of the economic hardship by
the Minister of Finance and CG Custom Services in order to improve
the revenue generation by the Custom Services and reduce loss of
revenue to neighbouring countries.

“The inclusion of free duty and levy for commercial airline
operators in line with presidential waivers and approval already
granted by the President.”

On the Value Added Tax VAT), the Committee recommended that
“goods and services exempted should include commercial aircraft,
engine, spare part, airline transportation ticket, hire rental on
lease of tractors plough and other agricultural equipment or
implements should be included as parts of goods and services
exempted from VAT.

On Stamp Duty, the Committee recommended that “the Minister in
charge of finance subjects to the approval of the National Assembly
shall make regulation for the imposition, administration,
collection and remittance of the electronic levy.

“The sharing formula of the electronic levy between States and
Federal Government with States Government taking 85% and Federal
Government being the collecting agent on behalf of the States
collects 15%.”

On the Federal Inland Revenue Establishment Act, the Committee
recommended “that the service may deploy proprietary technology to
automate tax administration process including tax assessment and
information gathering provided it gives 30 days’ notice to the tax
payer.”

On the Unclaimed Fund Trust Fund, the Committee recommended
among others that, “The Debt Management Office shall – maintain a
reliable database of all unclaimed dividends and dormant bank
balances constituting the debt owed by the Trust Fund which shall
be verified and reconciled with the Securities and Exchange
Commission, and the Central Bank of Nigeria on a bi-annual
basis.

“Liaise with the relevant Registrars of Companies, deposit money
banks or the National Deposit Insurance Corporation, as the case
may be, to make adequate arrangement for the repayment of the
verified interest and capital obligations due to the relevant
shareholders, depositors or their legal beneficiaries, as the case
may be.

“Prepare and implement a plan for the efficient management of
the obligations of the Trust Fund, which plan shall include setting
guidelines, modalities and other arrangements, which may include an
annual sinking fund, for the servicing of the interest and capital
obligations of the Trust Fund.”

On the Fiscal Responsibility Act, the Committee recommended that
“the classification of corporation operating surplus as it relates
to the cost of revenue ratio and operating surplus of the Minister
in charge of finance must upon the approval of the National
Assembly may approve for that particular corporation.

“The balance of operating surplus paid into the Consolidated
Revenue Funds and any other deductions from the Corporation account
which may be effected by regulation issued by the Minister, such
regulation must be approved by the National Assembly.

“The quarterly reconciliation carried out by the Ministry of
Finance on the corporation, the report of this quarterly
reconciliation must be forwarded to the National Assembly.”