Wednesday

Millions of Nigerians Will Not Have Access To Their Account By January.


Provision of an evidence of tax payment will be a condition for operating a bank account as from January, this is according to the Financial Bill that has been passed by the National Assembly.
The Bill which was submitted by President Muhammadu Buhari to the lawmakers is designed to catch more people in the tax net and streamline the tax regime.
The bill will be signed alongside the budget before this month runs out, so that there will be a return to the January to December budget cycle.
A section of the bill will make it mandatory for anyone wanting to open an account to provide his Tax Identification Number(TIN), while those who already have accounts with banks will also be required to provide their TIN.
There are over 30 million Bank Verification Numbers (BVN) linked accounts.
The Tax Identification Number (TIN) is a unique identifier for an individual or a company for tax remittance according to the Joint Tax Board.
It is prepared by the tax office and issued for proper identification and verification.
Getting a TIN is free, the generation is real-time and doesn't normally exceed 48 hours after a request is submitted.
Another major interesting feature of the Financial Bill is the hike in the Value Added Tax(VAT) from the extant 5% to 7.5%.
Emails will be accepted by the tax authorities as a formal channel of correspondence with taxpayers henceforth.
The bill will also strategically "promote fiscal equity by mitigating instances of regressive taxation; reform domestic tax laws to align with global best practices; introduce tax incentives for investments in infrastructure and capital markets; support small businesses in line with the ongoing Ease of Doing Business Reforms; and raise revenues for the Government by various fiscal measures."
Under the proposed Personal Income Tax Act(PITA): the bill will state that pension contributions no longer require the approval of the Joint Tax Board(JTB) to be tax-deductible.
The bill when signed into law will remove the tax exemption on withdrawals from pension schemes except prescribed conditions are met.
A penalty of 10% of the tax not deducted, plus interest at the prevailing monetary policy rate of the Central Bank of Nigeria (CBN) will be on failure of tax agents appointed for tax deduction to deduct tax.
Conditions attached to tax exemption on gratuities will be removed by the bill, that is gratuities are unconditionally tax exempted. The administration of Personal Income Tax Act(PITA) as being performed before by the Joint Tax Board (JTB) will now be taken over by the FIRS.
Late filling of Value Added Tax(VAT) is another penalty that will come into effect when the bill becomes law.
There is an upwards review of the penalty for failure to register for VAT to N50,000 for the first month of default and N25,000 for each subsequent month of default. This also applies to failure to notify the FIRS of change in company address and failure to notify FIRS of permanent cessation of trade or business.
Just like the VAT amendment, the bill is also introducing Capital Gains Tax(CGT) exemption on Group reorganisations, subject to the following conditions being met:
Assets are sold to a Nigerian company and is for the better organisation of the trade or business; the entities involved are within a recognised group 365 days before the transaction, and the relevant assets are not disposed earlier than 365 days after the transaction.
The current practice is that companies send an approval request letter under CITA S29(9) to the FIRS, and include a CGT exemption request. Currently, the CGT Act imposes CGT on compensation for loss of employment above N10,000.
There will be an expansion of coverage of this provision by renaming it "compensation for loss" and increase the minimum threshold from the present N10,000 to N10m.


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