The Finance Bill, 2020 which was an Executive Bill prepared by the Honourable Minister for Finance, Budget and National Planning, was approved by His Excellency, President Muhammadu Buhari and presented together with the 2021 Budget proposals to the National Assembly of Nigeria. The Bill was subsequently reviewed and passed by the Senate on Tuesday, 15 December 2020 and the House of Representatives on Thursday 17 December 2020, respectively, prior to assent by the President to culminate into Finance Act, 2020 (hereinafter referred to as “Finance Act”, “FA 2020” or “the Act”).
Finance Act, 2020 introduces changes to the Capital Gains Tax Act, Companies Income Tax Act, Industrial Development (Income Tax Relief) Act, Personal Income Tax Act, Tertiary Education Trust Fund (Establishment, etc.) Act, Customs, Excise Tariff, etc.
(Consolidation) Act, Value Added Tax Act, Stamp Duties Act, Federal Inland Revenue Service (Establishment) Act, Nigeria Export Processing Zones Authority Act, Oil and Gas Export Free Zone Act, Companies and Allied Matter Act, Fiscal Responsibility Act and the Public Procurement Act. These changes became effective on 1 January 2021. It is important to note that Finance Act, 2020 did not repeal Finance Act, 2019, although it modified some of the amendments introduced by the latter to provide clarity and make it consistent with the government’s fiscal plans and current economic realities.
The passage of the Act reinforces the Federal Government’s commitment to making incremental changes to Nigeria’s fiscal framework, such that Nigeria has a fiscal framework that enables the achievement of the country’s economic growth and development imperatives.
The amendments made by the Act are intended to provide counter-cyclical fiscal policy measures that will aid economic recovery and growth given the devasting effect the COVID-19 pandemic has had on the Nigerian economy. The amendments are staged across five broad thematic areas with a view to:
- enacting counter-cyclical measures and crisis intervention initiatives
- providing fiscal relief for mass transit
- implementing key procurement reforms
- institutionalizing ease of doing business (EODB) reforms
- ensuring fiscal responsibility
This publication contains the analysis of the amendments introduced by the Act and the expected impact of the changes on tax administration, government bodies and taxpayers operating in various sectors of the economy.