As the whole nation continues to observe the outcome of the Finance Act 2022 which was recently passed into law by the National Assembly and suspended by President Mohammadu Buhari, some of the members of the Organized Private Sector (OPS) have shortlisted necessary measures that would ensure that the document is workable and acceptable. President Buhari recently signed the appropriation bill into law, but deferred the signing of the Financial Bill, as a result of its conflict with the fiscal terms of the Petroleum Industry Act. This budget, which possesses the huge provision allocated for funding the impending general election was passed on December 28th, 2021 by the National Assembly.
However, this bill accrued huge controversies and a range of legislative amendments, including the Company Income Tax Act, Customs, Excise Tariff Act, Personal Income Tax Act, Petroleum Profit Tax Act, Stamp Duty Act, Value Added Tax Act, Capital Gains Tax Act, Corrupt Practices and Other Related Offenses Act and the Public Procurement Act. One major amendment evident in this bill is the provision that allows gains on digital assets to be taxed under the Capital Tax Act, with a 10 percent rate. This bill also allows income derived from gambling, gaming and lottery enterprises to be taxed under the Company Income Tax Act.
Federal government urged to be more careful in its tax waiver removal.
Also, the remittance of Value Added Taxes by specific companies. Entities like Oil and Gas companies and MTN which were appointed to deduct VAT on the basis of invoices received from their vendors, have now been directed to remit this VAT to the Federal Inland Revenue Services (FIRS) on or before February 21, 2023. Additionally, a 0.5 percent levy is set to be imposed on all imported goods. This will be used in the payment for subscriptions and other financial obligations to multilateral institutions. According to the bill, all the telecommunication services in the country will as well be subjected to Excise duties, with the Minister of Finance, Budget and Economic Planning, responsible for supervising the Tariff Review Board.
Lagos Chamber of Commerce and Industry has in response, urged the federal government to be more careful in its approach to saving over N6 trillion by the removal of tax waivers and exemptions that had been granted to some big companies in the oil and gas sector. In its statement titled “LCCI Comment on the 2022 Finance Bill”, the Chamber asserted that the presidential assent on the legislation was to subject it to further review. In the statement, the LCCI urged the government to be immensely conservative in raising the rates of taxes, as there were new paradigms for to rescue the tax expenditures and increase the government’s revenue for 2023. The chamber commented that leaving the rates at their levels will not cause a revenue loss.
Recommendation of the retention of the Tertiary Education Tax at 2.5%.
The government further asserted that the divestiture by some international companies in the oil and gas sector have caused the need for the country to reposition the industry via a steeply implemented Petroleum Industry Act (PIA), to enhance new investments and encourage local companies to reflate the sector with necessary investments. LCCI further recommended the retention of the Tertiary Education Tax at 2.5 percent, as it had just been recently increased. The Chamber again suggested the retention of the 30 percent Company Income Tax across all oil and gas companies, as well as the amendment of the Petroleum Profit Tax Act with similar provisions in the PIA Section 1042.
Again, the LCCI suggested an extensive stakeholders’ consultations for the Finance Bill before it is passed by the National Assembly, whilst promising to mobilize the private sector into supporting the implementation of the 2023 Federal Budget. The MDAs and Government Owned Enterprises (GOE) were also urged to increase their revenue mobilization efforts in an efficient system where private enterprises can also grow. The Centre for Promotion of Private Enterprises (CPPE) however described the process of passing the bill as a hasty one, with no room for public opinion or stakeholders’ engagement. The Chief Executive of CPPE, Dr. Muda Yusuf criticized the Senate for giving only a 24- hours notice for Stakeholders to attend the hearing and lauded the House of Assembly for giving a more generous notice.
Bill impositions predicted to have inflationary implications.
Yusuf noted that the bill possessed impositions of excise duties on every service, with its rates determined by the presidential order. He pointed out that these had immense inflationary implications on both the investors and citizens, as the production and operation costs would be affected and further denigrating the confidence of investors. However, it is hoped that when the new Finance Bill is passed, it will possess the inputs of the private sector operators and stakeholders, thus, reflecting the realities of Nigeria’s economy.