HOW FINANCE BILL 2022 WILL AFFECT YOU
The presidency on Sunday debunked claims that Taxpayers Identification Number (TIN) has been made mandatory for bank account holders in Nigeria under the 2022 Finance Bill, before the National Assembly. A top Presidency source on Sunday revealed that no such provisions are in the Finance Bill 2022 now before the National Assembly forcing Nigerians to have a Tax ID number in order to operate a bank account.
The top Presidency source who was involved in the drafting of the bill said the news reports are “totally inaccurate, adding that “the bill has no such provisions for individuals.” The new Bill places a fine of N10m or 5 years imprisonment or both on relevant officers who violate the rule to be liable to a penalty of N10m and/or 5 years imprisonment on conviction for failing to expose a person or agency of the Federal Government requiring tax investigation, enforcement and compliance to the FIRS.
News reports erroneously citing the bill had claimed that there is a provision in the bill that “banks will be required to request for TIN before opening bank accounts for individuals while existing account holders must provide their TIN to continue operating their accounts.” The source however revealed that several other changes proposed under the bill which would be further defended this week at both the Senate and the House of Representatives, show that capital gains tax at the rate of 5 percent is to apply on disposal of shares in a Nigerian company worth N500m or more in any 12 consecutive months except where the proceed is reinvested in the shares of any Nigerian company within the same year of assessment.
Partial re-investment will attract tax proportionately. Transfer of shares under the regulated Security Lending Transaction is exempted. The new Bill has also made provisions that the Lottery and Gaming business will be specifically taxable under the company income tax act (CITA) including betting, a game of chance, promotional competition, gambling, wagering, video poker, roulette, craps, bingo, slot or gaming machines and the likes.
Businessday gathered that Companies engaged in petroleum operations including Midstream and Downstream operations will not be eligible for exemption on profits in respect of goods exported from Nigeria. Downstream companies were previously eligible under the old Upstream and Downstream classification. The Bill also indicates that the Federal Inland Revenue Service (FIRS) will be empowered to assess CIT on the turnover of a foreign digital company involved in transmitting, emitting, or receiving signals, sounds, messages, images or data of any kind including e-commerce, app stores, and online adverts.
Under the proposed Bill, the capital allowance claimable on an asset is limited to the portion used for generating taxable profits. Assets partially used to generate taxable income will be eligible for pro-rata capital allowance except where the proportion of non-taxable income does not exceed 20% of the total income of the company. BusinessDay’s source revealed that under the new Bill, the capital allowance or unabsorbed allowances brought forward by a small or medium company, other than a company under pioneer status, will be treated as having been claimed and consumed in each such year of assessment.
Others include the reduction of the minimum tax rate from 0.5 percent to 0.25 percent of turnover (the less franked investment income) is to be applicable to any two accounting periods between 1 Jan 2019 and 31 Dec 2021 as may be chosen by the taxpayer.