Nigeria: Tax measures in Finance Bill, 2021

Finance Bill, 2021 proposes various tax law changes

Finance Bill, 2021 proposes various tax law changes

The president on 7 December 2021 submitted Finance Bill, 2021 to the National Assembly for its consideration.

The Finance Bill, 2021 proposes various tax law changes, such as:

  • Introduction of a 5% capital gains tax rate on the gains from disposal of shares in any Nigerian company when the gross proceeds from such sales in any 12 consecutive months exceed ₦500million (except if the proceeds are reinvested in shares of the same or other Nigerian company within the same year of assessment).  Gains accruing to persons on the disposal of Nigerian governmental shares and stocks, and gains from transfer of shares in a regulated securities-lending transaction would be exempt from the capital gains tax. 
  • Modification of value added tax (VAT) provisions to allow for easier collection and remittance of VAT on “business-to-customer” (B2C) e-commerce transactions.
  • Introduction of provisions for taxation of the income/ profits of lottery and gaming businesses. 
  • Expansion of the authority of the Federal Inland Revenue Service to assess income tax on a deemed profit basis for companies with a significant economic presence in Nigeria.
  • Restriction of capital allowance claimable by a company engaged in both taxable and tax-exempt activities.
  • Introduction of an election by taxpayers in respect of the reduced minimum tax rate of 0.25% available to mitigate the impact of the coronavirus (COVID-19) pandemic.  Eligible companies would claim the incentive for any two accounting periods ending on any date between 1 January 2019 and 31 December 2021.
  • Rules for claiming an incentive with regard to downstream gas utilization projects.
  • Authority for the Minister of Finance to issue regulations regarding stamp duties and electronic money transfer (EMT) levies collected between 2015 and 2019. These measures are intended to address a dispute among the financial institutions and tax authorities on the remittance of stamp duties and EMT levies collected on transactions with individuals in the various Nigerian states.
  • Clarification of the definition of “capital requirement” in the insurance law as to what constitutes capital for insurance businesses.

Read a December 2021 report [PDF 171 KB] prepared by the KPMG member firm in Nigeria

 

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