According to the presidency, the 2021 finance bill has no measures requiring Nigerians to have tax identification numbers (TINs) in order to open bank accounts.
A TIN is a one-of-a-kind number assigned and issued by the Nigerian government to identify a person (individual or corporation) as a properly registered taxpayer.
According to reports, the bill has measures that require “banks to obtain TIN before creating bank accounts for individuals, while existing account holders must supply their TIN to continue running their accounts.”
According to TheCable’s research, the bill does not include a line item for TIN requirements for Nigerians. The 2021 finance bill merely changed section 10 of the Value-Added Tax (VAT) to require non-resident individuals making taxable supplies to Nigeria to have a TIN.
“A non-resident person who makes a taxable supply to Nigeria shall register for registration with the Service (FIRSandbd get a Tax Identification Number for the purposes of this Act,” the law states.
“For all taxable supplies, a non-resident person must include the tax on its invoice.”
According to the White House, the bill would offer 21 major modifications, which would be debated this week in both the Senate and the House of Representatives.
“Capital gains tax at a rate of 5% will be applicable on the disposal of shares in a Nigerian company worth N500 million or more in any 12 consecutive months,” the statement continues, “save when the proceeds are reinvested in the shares of any Nigerian firm within the same year of assessment.”
“Partial reinvestment will attract tax in proportion to the amount re-invested.
“Transfer of shares through a regulated Security Lending Transaction is excluded.”
“Lottery and gaming businesses, such as betting, games of chance, promotional competitions, gambling, wagering, video poker, roulette, craps, bingo, slot or gaming machines, and the like, will be expressly taxable under CITA.”
“Companies engaged in petroleum operations, including midstream and downstream operations, will be ineligible for earnings on items exported from Nigeria.” Under the original Upstream and Downstream classification, downstream enterprises were previously eligible.
“FIRS should be able to assess CIT based on the turnover of a foreign digital enterprise that sends, receives, or transmits signals, sounds, messages, photos, or data of any sort, including e-commerce, app stores, and online advertisements.”
“The amount of capital allowance that can be claimed on an asset is restricted to the percentage that is used to generate taxable profits.”
“Except where the proportion of non-taxable income does not exceed 20% of the total income of the company, assets partially used to generate taxable income will be eligible for pro-rata capital allowance.”
“Any capital allowance or unabsorbed allowances brought forward by a small or medium firm, other than a company with pioneer status, shall be recognised as claimed and consumed in each such assessment year.”
“The reduction in the minimum tax rate from 0.5 percent to 0.25 percent of turnover (less franked investment income) will apply to any two accounting periods chosen by the taxpayer between 1 January 2019 and 31 December 2021.”
“Disputed tax assessments will be put on hold until they are resolved, whereas uncontested tax assessments must be paid within 30 days of delivery of the notice of assessment on the company, unless the FIRS grants an extension.”
In recognition of the well-established self-assessment tax regime, the reference to provisional tax has been removed.
“Interest collected from a unit trust will be subject to a withholding tax that will be treated as a final tax.” For local enterprises, only WHT on dividends is now treated as a final tax.
“FIRS has expanded its use of third-party technologies to automate tax administration, including assessment and information gathering” (previously only proprietary technology may be deployed).
“If a corporation fails to allow access to FIRS, a penalty of N50,000 would be imposed, plus N25,000 for each day the failure continues.”
“FIRS must be the primary federal agency responsible for the administration, assessment, collection, accounting, and enforcement of taxes and levies owed to the federation, the federal government, and any of its agencies, unless the finance minister otherwise directs.”
“Any federal government person or agency must send matters requiring tax inquiry, enforcement, or compliance to the FIRS.”
“Relevant officers who break the rule face a fine of N10 million and/or five years in prison if convicted.”
“A contract for a deferred annuity is not deductible as a life insurance premium for personal income tax purposes.”
“The finance minister should create regulations for the imposition, administration, collection, remittance, and distribution of arrears of stamp duty and electronic money Transfer levies received between 2015 and 2019 fiscal years, subject to the consent of the national legislature.”
“Tertiary Education Tax must be paid within 30 days of assessment service” (currently 60 days).
“Non-residents making taxable supplies to Nigerian recipients are required to charge, collect, and submit VAT to FIRS.” Nigerian beneficiaries’ VAT withholding responsibility is now limited to situations where the non-resident or its authorised agent fails to collect the VAT.
“The exemption from VAT registration and compliance obligations applicable to small businesses with annual turnover of less than N25 million has been expanded to include enterprises involved in upstream petroleum operations, regardless of revenue.”
“Appointment of the Financial Intelligence Research Service (FIRS) to assess, collect, and enforce the payment of the Nigerian Police Trust Fund fee.”
“A tax of 0.005 percent was placed on the net profit of firms operating in Nigeria by the Act enacted in 2019.”
“Amendment to the National Agency for Science and Engineering Infrastructure Act to abolish the need that commercial enterprises pay a 0.25 percent of annual revenue to the fund.”
“Except as otherwise permitted by law, mandatory payment of gross revenue collected by federal ministries, departments, or agencies to the federation account or consolidated revenue fund.”
Any officer who violates this provision might face up to 5 years in prison or a fine of N5 million, or both, if convicted.
“Amendment to the Fiscal Responsibility Act to allow the government to borrow money for “important reforms with large national implications.”
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