The Finance Act amends various provisions of Nigerian tax legislations such as the Companies Income Tax Act (“CITA”), Value Added Tax Act (“VAT Act”), Capital Gains Tax Act (“CGTA”), Petroleum Profits Tax Act (“PPTA”), Personal Income Tax Act (“PITA”) and Stamp Duties Act (“SDA”). The Finance Act also introduces amendments to the provisions of the Customs, Excise Tariff, Etc. (Consolidation) Act.
According to President Buhari through a tweet on his Twitter account, “We introduced the bill alongside the 2020 budget, to reform Nigeria’s tax laws to align with global best practices, support MSMEs in line with our Ease of Doing Business Reforms, incentivize investments in infrastructure and capital markets and raise government revenues.”
The Finance Act which was submitted to the National Assembly alongside the Appropriation Act 2020 (the “2020 Budget”) on 8 October 2019, is significant to the implementation of the 2020 Budget as the Executive hopes to increase tax revenue through various sources including: the increase in the VAT rate from 5% to 7.5%; taxation of dividends paid to shareholders of petroleum companies; widening of the tax net and strengthening of tax compliance.