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We say a piece of legislation is a bill when it is yet to be passed as a law by the Houses of Assembly, it is termed a Bill. Finance Bill is a Bill contains legislations about a country’s finance just as the name suggest. It could be about taxes, government expenditures, government borrowings, revenues, etc.

The proposals of the government for levy of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by Parliament are submitted to Parliament (Assembly) through this finance bill.

The Finance Bill is accompanied by a Memorandum containing explanations of the provisions included in it. Finance bill is passed and review in different countries to re-dress or address their finance issues. The Finance Bill 2019 (the “Bill”) was passed On Thursday, November 21, 2019, by the Senate after the bill scaled through third reading on the floor of the Senate. The Bill which was sent early October 14, 2019, to a joint session of the National Assembly (that is, the Senate and House of Representatives of the Federal Republic of Nigeria) alongside the 2020 Appropriation Bill (the “2020 Budget”) by His Excellency, President Muhammadu Buhari.

Nigerian President Muhammadu Buhari submitted the Finance Bill to the National Assembly for review and passage into law. The bill was meant to increase government revenue with a proposal to raise the country’s Value   Added Tax (VAT) from 5% to 7.5%. The 2020 budget is also based on the VAT increase.  Despite the fact that the VAT was the only area that gained more attention and comment from people, there are other part that mean relieve to the micro, small and medium enter price which we shall look deeply into in the course of this article. The Finance Bill currently passed by NASS amends sections 33, 49 & 58 of the Personal Income Tax Act. Specifically, these amendments cover the deletion of provisions that grants certain personal reliefs and also the deductibility of Pension contributions.

The Bill proposes fiscal measures in support of the 2020 Budget of the Federal Government of Nigeria (the “FGN”), with extensive tax implications for the country. With a total proposed expenditure of N10.33 trillion against total expected revenue of N8.15 trillion, resulting in a deficit of N2.18 trillion; the 2020 Budget is projected to be financed partly by tax revenues expected to be generated through the key fiscal changes introduced by the Bill.

Addressing the lawmakers during Budget presentation on, President Buhari said the bill has five strategic objectives, in terms of achieving incremental, but necessary, changes to Nigeria’s fiscal laws. The Bill is an compilation drafted legislation, intended at finding lasting solution to the insufficiencies of major prime tax legislation by amending outdated and combative provisions. This is a major aspect of the initiatives suggested by the President Enabling Business Environment Council (PEBEC) and the National Tax Policy Implementation Committee.



The bill intends to do the followings according to the bill presented:

The Finance Bill, 2019 proposes incremental, but necessary, changes to Nigeria’s tax and fiscal laws, to ensure the optimal funding of the 2020 Budget. Specifically, the Bill has five (5) strategic objectives, viz:


  1. Promoting fiscal equity by mitigating instances of regressive taxation;


  1. Reforming domestic tax laws to align with global best practices;


  1. introducing tax incentives for investments in infrastructure and capital markets;


  1. Supporting small businesses in line with the ongoing Ease of Doing Business Reforms; and


  1. Raising revenues for Government, by various fiscal measures, including a proposed increase in the rate of Value Added Tax from 50/o to 7.5%


The bill is to among other things amend the following tax provisions and make them more responsive to the tax reform policies of the Federal Government and enhance its implementation and effectiveness.

The bill amended both the direct tax and indirect tax as it touched taxes like:

  • Company Income Tax Act C21 LFN 2004
  • Value Added Tax Act Cap V1 LFN 2007
  • Customs and Excise Tariff (Consolidation) Act Cap C49 LFN 2004
  • Personal Income Tax Cap P8 LFN 2007
  • Capital Gain Tax Act Cap C1 LFN 2007
  • Stamp Duties Tax Act Cap S8 LFN 2007
  • Petroleum Profit Tax LFN 2007

Here are the basic changes to tax regime in Nigeria as proposed on the just approved finance bill:

Companies Income Tax (CIT):

Broader base for taxing non-resident companies (NRCs) The Bill announces provisions that create a taxable presence for NRCs carrying on digital activities, consultancy, technical, management or professional services in Nigeria, on condition that they have “significant economic presence” (SEP) in Nigeria; and profit can be attributable to such activity.

The Bill looks into and amends these sections  of Company Income Tax Act; 9, 10, 13, 16, 19, 20, 23, 24, 27, 29, 31, 33, 39, 40, 41, 43, 53, 55, 77, 78, 80, 81, 105, and the Third and Seventh Schedules of the Companies Income Tax Act (“CITA”) to –

  1. Charge of Tax: Section 9 experienced changing of “in respect” to “immediately”. The definition of interest and dividend was looked into in subsection 1(c) to give proper definition of interest and dividend.

The whole idea was to eliminate double taxation on the same income stream. This also aim at promoting investment in securities in Nigeria.

  1. Identification of a company: Section 10 was more equipped with a subsection 2. This further extends the section 10 to give room to other tax payers who has not been complying for one reason or the other.

It is this subsection 2 of the section 10 that further disclose that “every person engaged in banking in Nigeria shall require all companies to provide their tax identification numbers as a precondition for opening a bank account or, in the case of an account already opened prior to the 30th September, 2019, the bank shall require such tax identification numbers to be provided by all companies as a precondition for continued operation of their bank accounts”.

This was done in order to synchronize taxpayers banking and tax database.

  • Nigeria Companies: Section 13 of CITA was amended there and the most captivating part was the portion included which is titled (f) which says “if the trade or business comprises the furnishing of Technical, Management, consultancy or professional services outside of Nigeria to a person resident in Nigeria, to the extent that the company has significant economic presence in Nigeria and profit can be attributable to such activity”

It was further said in the bill that the minister of finance by order will give proper definition of Significant Economic Presence. This is to see that Nigeria have a share of the tax paid on services rendered abroad.

  1. Insurance Company: Section 16 of CITA was amended and given a fair adjustment to see and ensure that all insurance companies are taxed in a fair and equitable manner relative to other companies operating in other sectors of the economy. The amend further take away double taxation and give proper recognition to regulatory cost.
  2. Payment of dividend by a Nigeria Company: This amend the excess dividend tax rules that currently results in double taxation and discourages corporation savings/retention of profit.
  3. Nigeria Dividends received by companies other than Nigerian companies: the elimination of the provisions of section 19 of CITA which was repeated got reformed by section 5 of the bill.
  • Profit exempted: Section 7 of the finance bill also provided a general exemption for businesses he classified to be small being having turnover less than 25million Naira in any tax year. The tax relief of 20% goes to the business classified as medium being that their turnover is over 25 million but not up to 100 million Naira in a tax year.
  • The Finance Bill, taxpayers who pay their tax liability at least 90 days before due date would be entitled to a bonus of 2% and 1% of the tax paid for medium and large companies respectively. Section 33 of CITA said “For the purposes of subsection (1) of this section, the minimum tax to be levied and paid shall be 0.5% of turnover of the company”.

Personal Income Tax (PIT)

In the bill, Sections 2 (2), 49(1),86 (2)(a) & (8), 102(1), 104 (3) (c) (ii) and 108 (f)” of the Personal Income Tax Act, Cap. P8, Laws of the Federation of Nigeria 2004 as amended (in this Act referred to as “the PIT Act”) are amended by substituting the words “the Federal Board of Inland Revenue” with “the Federal Inland Revenue Service” where they appear. The Bill amends sections 33, 49, and 58 of the Personal Income Tax Act.

Section 49 was amended as a new subsection (1) was added and it says “Every person engaged in banking shall require that a person intending to open a bank account for the purposes of its business operations must provide a tax identification number as a precondition for opening such bank account or continued operation of a bank account”.

Deletion of provisions that grant certain personal reliefs It is unclear if the amendment seeks to eliminate claim of child benefit or other surrounding provisions. In essence, the Bill maintains the child benefit deduction (still capped at N2,500 per child with a maximum of 4 children). One would have thought the amendment would be to eliminate the child relief in lieu of the combined relief allowance. If the desire is to retain the relief, its insignificance leaves little to be desired.


Value Added Tax (VAT)

The Bill amends sections 2, 4, 10, 15, 46, 21 and the First Schedule of the VAT Act, and recommends the following:

A proper definition was given to goods and services as a way to eliminate the ambiguity with respect to the application of VAT on certain transactions which are said to be VATable. Quoting the bill, the following was found right as the new definition of goods and services.

Inclusion of the definition of “goods” and “services” The Bill’s proposed inclusion of the definition of “goods” and “services” in VATA is expected to eliminate ambiguity with respect to the application of VAT to certain transactions. be transferred from one person to another excluding interest in land”.

“Services” means “anything other than goods, money or securities which is supplied excluding services provided under a contract of employment”

An amend was made to cater for the registration, invoicing and filing of VAT to be a person who has a revenue up to ₦25million. So, if your revenue falls below this amount, you are exempted from VAT.

There was VAT rate increase to aid government generate extra revenues to liquefied the budget Rise. Value Added Tax rate was raised to 7.5% from 5% as one of the major changes in the Nigeria Tax regime.

Section 4 of the VATA is the section which was amended to accommodate the change from “5 per cent” with 7.5 per cent”.


Capital Gains Tax (CGT)


The finance bill amends sections 32 and 36 of the Capital Gains Tax Act Capital Gains Tax Act, Cap. C1. The bill amendment helps to close out loopholes that allows abuse of related party reorganization.

Exemption on tax arising from re-organization Transfer of assets during reorganization within a group of companies would be exempt from CGT. However, an anti-avoidance provision was included to ensure companies do not create fictitious group structures to take advantage of the exemption.

Other changes spotted in Section 46(1) of the CGT Act is hereby amended as

deleting the definition of “Board” and defining
the term “Service” as follows: “Service” means the “Federal Inland Revenue Service
as defined in the Federal Inland Revenue Service
(Establishment) Act, 2007”
Replacing all references to “the Board” in the CGT
Act with “the Service”. Introducing a definition for “Recognised group
of companies” as follows: “Recognised group of companies” means a group
of companies as prescribed under the relevant
accounting standard”


Petroleum Profits Tax (PPT)


The Bill repeals section 60 of the Petroleum Profits Tax Act and efficiently presents Withholding Tax (“WHT”) of 10% on dividends rewarded out of the profits of companies betrothed in petroleum operations in Nigeria. This was done to ensure dividends paid out of petroleum profits are subject to withholding tax.

The Bill measured out penalties as follows:

  1. A taxable person who fails to notify the Service of any change of address within 30 days of such change, or who fails to comply with the requirement for notification of permanent cessation of trade of business under Section 8 of this Act, is liable to pay

                                    (a) N50,000 for the first month in which the failure occurs; and

  1. b) N25.000 for each subsequent month in which the failure continues
  2. Under the CITA, it is a penalty that any company which fails to comply with the provisions of subsection (2) shall be liable to pay a penalty for late filing.

N50,000 for the first month in which the failure occurs; and

                                                N25,000 for each subsequent month in which the failure continues

Other punishment under the company income tax says “any person who violates the provisions of this Section shall be liable to a penalty at 10% and interest at the central bank of Nigeria monetary policy rate plus a spread to be determined by the Minister on any adjustments made by the Service relating to excess interest charged in any year”.


  1. The VAT Act says; “A taxable person who fails or refuses to register with the Service within the time specified in subsection (1) of this section shall be liable to pay as penalty an amount of-

N50,000 for the first month in which the failure occurs; and

N25,000 for each subsequent month in which the failure continues.



Razaq Adedamola AYENI is a creative, talented and innovative Accountant with consolidated expertise in Accounting, Strategy, digital marketing and business development. He has worked in different industries and this has added to his wealth of knowledge.

He is a highly motivated and positive minded person, a business development expert. He has demonstrated his competence in leadership and mentoring in Matog Consulting & Matthew Ogagavworia & Co. in Ikeja Lagos where he is a Consulting associate and an Audit junior

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