The President of the Federal Republic of Nigeria, on Monday January 13, 2020, signed into law the much-talked about Finance Bill, 2019 which was submitted to the National Assembly alongside the year 2020 budget proposals. It is the first time since Nigeria’s return to democratic rule, in the year 1999, that a fiscal Bill will accompany the Appropriation Bill for enactment by the National Assembly.
The Finance Act is a representation of an attempt by the federal government to utilise a budgetary tool to moderate the fiscal environment and stimulate the business economy through tax reforms. With over 90 (ninety) changes to the extant tax laws, the Finance Act introduces sweeping changes, perhaps the most impactful revision of our tax laws in one fell swoop since independence of Nigeria. Some of the significant amendments effected by the Finance Act include: the exemption of companies with an annual turnover of N25 million and below from companies income tax compliance;
extension of foreign companies taxable in Nigeria to include digital companies with “significant economic presence” in Nigeria; imposition of excise on certain imported goods; introduction of bonuses for early tax remittances of companies income tax; introduction of withholding tax application to dividends distributed from petroleum profits; stamp duty on bank transfers are only applicable to transfers of N10,000 and above amongst others. In this article, we undertake a review of the changes made to the VAT (“Value Added Tax”) regime highlighting its underlying issues and legal implication of these changes on the rights ofthe taxpayer in Nigeria’s VAT system.