OrderPaperToday – The Senate has approved President Muhammadu Buhari’s request for increment to Value Added Tax (VAT) from five percent to 7.5 percent.
This bill, which passed third reading on Thursday, was submitted alongside the 2020 Appropriation Bill to the Federal Lawmakers.
The report on the VAT legislation was presented for consideration by the chairman of the Senate Finance Committee, Solomon Olamilekan bill.
It was, thereafter, subjected to a clause by clause consideration.
It is not clear if the senators have now acquainted themselves with the contents of the document as the Senate President, Ahmad Lawan, hurriedly read out all the provisions at once and banged the gavel in support without any contribution from the lawmakers.
But the Senate minority leader, Enyinnaya Abaribe, immediately questioned the approval of the increment, saying Nigerians are under too much financial burden for more to be added.
He appealed that five percent be maintained, saying, “Nigerians have suffered enough.”
Responding to his appeal, Senate President Lawan said his (Abaribe) contribution has been noted but nothing could be done as the provisions have already been approved.
The report read by Senator Olamilekan revealed that the bill, which contains 56 clauses, amended six tax provisions to make them more responsive to tax reform policies and one Customs and Excise Tariff Act to encourage local manufacturers.
“This will subject certain imported goods to excise duties in a similar manner as their locally manufactured counterpart”, he said.
They consolidated Bill amended: Companies Income Tax Act, Value Added Tax Act, Customs and Excise Tariff etc (Consolidation) Act, Personal Income Tax, Capital Gains Tax Act, Stamp Duties Act and Petroleum Profit Tax Act.
Under the Companies Income Tax Act, the following were amended: “Charge of tax, Identification of a company, Nigerian Companies, Insurance Companies, Payment of dividend by Nigerian companies, Nigerian dividends received by companies other than Nigerian companies, profits exempted, deductions allowed.
“Deductions not allowed, Basis for computing assessable profits, Total profits from all sources, Payment of minimum tax, Gas utilisation (downstream operations), Rates of tax, Replacement of obsolete plant and machinery, Dividend and tax interim dividends paid by Nigerian companies.
“Self-assessment of tax payable, Returns and provision account, Time within which tax (including provisional tax ) is to paid, Deduction of tax from interest etc, Deduction of tax from dividend, Deduction of tax at source, Interpretation (CIT), Third Schedule, Seventh Schedule-Deductible Interest.”
Under the VAT, the following were looked into: “Taxable goods and services, Rates of tax, Registration and deregistration requirements, Registration by non-resident companies, Taxable person to render returns, Remission of tax, Effect of non-remittance, Value Added Tax Technical Committee.
“Failure to notify change of address, Failure to register, Failure to submit returns, Business sold or transferred, Interpretation, First Schedule (VAT).”
In the Customs and Excise Tariff tax, Goods liable to Excise Duty was reviewed.
Also examined in the Personal Income Tax are: “Persons on whom tax is to be imposed, Deductions allowed, Personal relief and relief for children and dependents, Information to be provided by bankers, Revision in case of objection, Penalty for failure to deduct tax, Third Schedule, Interpretation (PIT)”.
Under Capital Gains Tax Act, the following were amended: “Exemption of tax on gains arising from take-overs, Personal injury and Interpretation (CGT)”.
On Stamp Duties Act, “Interpretation, Provisions as to duty upon receipts, Certain forms of receipts not dutiable, Schedule (Stamp Duties)” were reviewed.
Under the Petroleum Profit Tax Act (PPTA) 2004, “Restriction of effect of the Personal Income Tax Act and other Acts” was amended.
According to the report, the objectives of the bill seek to promote fiscal equity by mitigating instances of regressive taxation, reform domestic tax laws to align with global best practices, introduce tax incentives for investment in infrastructure and capital markets, support small businesses in line with the on-going “Ease of Doing Business Reforms” and raise revenues for the government.
It also allows for responsiveness to the tax policies of the Federal Government and enhances its implementation and effectiveness.
“The initiative to reform the tax system and the proposed modifications to the fiscal rules around taxation are clearly aimed at creating an enabling business environment and minimizing the tax burden for Micro, Small and Medium Enterprises (MSMEs)”, Adeola added.
In his remarks, the Senate President, Ahmad Lawan said the passage of the bill is not to burden Nigerians but to create more revenue for the benefit of everyone.
“We amended 7 Acts largely to ensure that we streamline the tax system in Nigeria and ensure that we get revenues for government to provide services and infrastructure to the citizens of this country.
“What we have done is very significant because this is to ensure that we not only have sources of funding but credible and reliable sources of funding for 2020 Appropriation but also for subsequent activities of government.
“I believe what we have done is not to put taxes or burden on the ordinary people. What we have done is to create more revenue”, Lawan said.
The Bill entitled Nigeria Tax and Fiscal Law (Amendment) Bill, 2019 (Finance Bill 2019) was brought to the federal chambers on October 14 and slated for second reading on November 6.