Thread by @Victornkemjika

Brief Review of the Finance Bill of 2019 for SME`s and Start UP

Thread

The Finance Bill of 2019 in a nut shell seeks to :
1. Promote Fiscal equity
2. Reform domestic tax Laws
3. Introduce tax incentives for investments in infrastructure and capital markets
4. Support Small business (SME's and start ups)
5. Raise revenue for the government...

Major Changes from the previous "finance Act's" occurs in companies income tax Act, Value Added tax Act, Capital Gains Tax Act, and the Stamp Duties Act, inter alia..

The Bill seeks to alleviate the tax burden for small and medium enterprises , in other to encourage growth and investment.
Major changes the Bill introduces are specialized tax frame work for securities Lending transactions (see section 9)

The bill also expands the tax regime to capture non-resident companies (like Netflix), with significant economic presence in Nigeria by including digital/ electronic services and service rendered outside Nigeria to a beneficiary (see section 33)...

Section 16 of the Bill talks about insurance taxation, Amending section 16 of the CITA to place insurance companies on the same level with companies in other sectors, the bill also eliminates double Taxation risk by exempting dividends paid out of certain capital market...

instruments (see section 19) In section 29 : The Bill tacitly deleted the old basis for computing new business periods and when a business would be said to have ceased from operations. It introduced a simplified "actual year" basis for computing commencement of...

business for tax purposes.

Section 33, seems to be the most important aspect of the act and it is also the most amplified since it concerns SME's and start ups. Here the Bill creates a minimum tax computation to turn over, by the exemption companies with a gross annual...

turn over of less than 25 million Naira, the bill exempts them from capital gains Tax, Company income Tax et al, thereby repealing the minimum tax exemption granted to companies with 25% imported equity which hetero was Norm. The companies with a less than 25 million Naira...

turn over yearly are even exempted from VAT registration.
Registration and ownership of TIN number is how ever made compulsory as a prerequisite to operate an account for both individuals and corporations...

Under section 77 of the Bill : A new bonus was included at 2% and 1% bonus for medium-sized and a large company, respectively, where companies income tax liability is paid before 90 days of the due date .

Also note that the Finance Bill increased VAT across board from 5% to 7%, so every body has to pay higher Tax for goods purchased (I fear this may cause the price of goods and service to sky rocket, since manufacturers always find a way to push the cost of production,

to the final consumer) also the Bill expands the definition of goods and services to include intangible services and products (in tune with the times and laudable) Furthermore,the Bill exempts locally manufactured sanitary pads and tampons and towel from VAT, also tuition fees.

In my opinion, the Bill is a "bitter sweet" legal document, the extent of enforcement will how ever determine how much the citizen accept or reject the Finance Bill.

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