Dissecting Nigeria’s Finance Bill

In Morning Crossfire 2019-12-04 10:53:25
Dissecting Nigeria’s Finance Bill
Dissecting Nigeria’s Finance Bill

By Jude Chukwuemeka

 

Guest

Taiwo Oyedele – Partner, PwC Nigeria

Morning Crossfire highlights issues regarding finance Bill in Nigeria and how it will affect all Nigerians in 2020. It is explained that in 2020, BVN will not be enough for one to use in maintain a bank account. Those Nigerians who live outside the Nigerian border can also benefit by paying attention to the show.

 

Now that the finance Bill has been passed by the Senate, Nigerians are wondering how the Bill will impact their lives. Some of the key changes will be effective next year and as Wemimo Adewuni says, the finance Bill proposes fiscal measures in support of 2020 budget with extensive tax implications for Nigerians. At the present time, it is seen that Nigeria has a deficit of about 2.18 trillion naira, this against the fact that part of the budget must be financed through tax payments.

 

The following are listed as the five (5) key strategic objectives of the Bill:

(i) Promoting fiscal equity by mitigating instances of regressive taxation; (ii) Reforming domestic tax laws to align with global best practices; (iii) Introducing tax incentives for investments in infrastructure and capital markets; (iv) Supporting small businesses in line with the FGN’s ongoing Ease of Doing Business Reforms; and (v) Raising required revenue for government, by various fiscal measures, including a proposed increase in the rate of Value Added Tax (“VAT”) from 5% to 7.5%.

 

Taiwo Oyedele is also a member of the National Tax Policy, Implementation Committee that drafted the Bill. For this reason, he is able to give Nigerians some insight on the feeling of Nigerian government on this touchy issue. He speaks first about the 7.5% VAT.

 

“The idea is that the VAT rate in Nigeria is one of the lowest in the world. Government also admits that majority of Nigerians are poor. So, the final decision is to exclude the poor from paying VAT. Therefore, the exemption list includes basic food items such as fish, cereal, meat, roots, oil, milk, and others. This list is expanded to include tuition and medical bills.

 

“It is the middle and upper class in the society who are able to pay more that will be allowed to pay the 7.5 percent VAT. However, if a person runs a small business and the turnover amounts to below 25 million naira, such a person may not need to register for VAT. You don’t need to charge VAT on your goods and services.”

 

A commentator on Facebook, Raphael Adegoke wrote the following:

It amazes me the way this government is running Nigeria. They just come up with draconian policies that are inconvenient to the public. We all know that even people without job have active bank accounts and they receive money from people. What tax identification are they going to provide. So, because vat is low they want to increase it? Is that a tangible reason enough? What are we benefiting from the government after paying all these multiple taxes?

 

Explaining the reasons for reforms, Taiwo says that in the military era all through 1999, Nigeria had what was called the finance miscellaneous decree.

 

“Of course, the military guys just call a few people who they thought knew about it. They just sign and Nigerians have to deal with it. But since 1999, Nigeria has not been able to make changes to its tax laws. The business environment changes every day. Now, we are struggling to fit our square pegs into a round hole. Now, we want our tax laws to be dynamic, fit for purpose, and not to come in the way of business."

 

As for the other statements and reactions from within and outside the studio, check out the full scope of the show below.