As is traditional dating back to 2019, the Finance Act is passed every year and its main purpose is to fix the rates to be charged under the Income Tax Act for that year. The 2022 Finance Bill is currently undergoing legislative consideration cum Presidential Assent.
What are we to expect? Here is a cursory look on some notable areas the Proposed Finance Act 2022 will seek to Amend.
The Bill seeks to amend the following laws amongst others:
• Capital Gains Tax Act (CGTA)
•Companies Income Tax Act (CITA)
•Customs, Excise Tariff, Etc (Consolidation) Act
•Personal Income Tax Act (PITA)
•Petroleum Profits Tax Act (PPTA)
•Stamp Duties Act (SDA)
Value Added Tax Act (VATA)
•Corrupt Practices and Other Related Offences Act
•Public Procurement Act
FINANCE BILL 2022: What major changes are we likely to see?
Income derived by a company from gaming, gambling, betting, or lottery business to be taxable under the Companies Income Tax Act. Gains on digital assets including cryptocurrency to be specifically chargeable to tax under the capital gains tax act at the rate of 10%.
Capital losses on chargeable assets (including shares) to be tax deductible against chargeable gains on the same class of asset. Currently, losses incurred on the disposal of any asset are not deductible for capital gains tax purposes.
A company engaged in the commercial winning, capture, production and utilisation of gas will be entitled to a single 50% investment tax credit on its qualifying expenditure for that purpose.
All services, including but not limited to telecommunication services, provided in Nigeria to be liable to excise duty at rates to be specified via a Presidential Order.
The CIT rate for a gas-flaring company (defined as a company that vents or flares associated or non-associated natural gas unless in the case of an emergency) is to be increased from the standard 30% to 50%.
Persons appointed to deduct VAT at source on invoices received from their vendors are now to remit such VAT to the FIRS on or before the 14th day of the following month (currently 21st day of the following month).
A public officer is required to seek administrative approvals and ensure there is an approve procurement plan in addition to existing requirements for the award or signing of contracts. Failure to comply is liable to 3 years imprisonment and a fine of N100,000 on conviction.
Proposed amendment to the sharing formula for revenue from Electronic Money Transfer from the current 15% for FG and 85% for States to 15% for FG, 50% for States and 35% for LGs.
Various amendments to the PPTA to align with the Petroleum Industry Act including penalties for making incorrect or late returns, recognition of the Nigerian Upstream Petroleum Regulatory Commission, tax deductibility of contributions to approved decommissioning and abandonment fund, etc.
Amendment of the Customs & Excise Tariff Act to clarify the responsibility and powers of the finance minister to review customs and excise tariffs through the Tariff Review Board.
The rural investment allowance ranging from 15% to 100% of cost incurred by a company to provide facilities such as electricity, water and tarred road where such facilities have not been provided by the government within 20kms of the location is to be repealed.
Wherefore some of these proposed amendments may be recommended, we will not feign ignorance of some of the seemingly harsh ones amongst them and a practical exemplification of that is that on telecommunication which will tend to stampede the ease of communication of the common man.
We await to see the success and failure of the proposed bill and we’ll keep you posted.
About the Author
Chidiebere Mbah Esq. is Corporate and Commercial Practice Consultant. A Legal Practitioner with a flare for Corporate Practice, Taxation, ADR and Human Rights Advocacy. He is a prolific Writer and Poet who believes in salvaging the hope of the common man. He has written various legal and artistic works to his credit.