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Key Highlights of the Tax Law/Finance Bill 2019

A Bill to amend various tax laws in Nigeria has passed the second reading of the legislative process at the National Assembly.

The 2019 Finance Bill which was presented to the Legislature by President Muhammadu Buhari along with the 2019 Budget seeks to introduce sweeping changes.

Below are some of the important changes you should know about:

  1. Excess dividend tax to apply only to untaxed distributions other than profits specifically exempted from tax and franked investment income
  2. Small businesses with turnover less than N25m to be exempted from Companies Income Tax
  3. A lower CIT rate of 20% to apply to medium-sized companies with turnover between N25m and N100m
  4. Commencement and cessation rules modified to eliminate overlaps and gaps to avoid double taxation and complication during commencement
  5. Minimum tax provisions amended to 0.5% of turnover and exemption only applies to small companies (less than 25m turnover), so non-resident companies will now pay minimum tax
  6. Insurance companies can now carry forward tax losses indefinitely, deduct reserve for unexpired risks on time apportionment bases while special minimum tax for insurance has been abolished
  7. Bonus of 2% of tax payable (medium-sized companies) and 1% for large companies for early payment of CIT
  8. Introduction of thin capitalisation of 30% of EBITDA for interest deductibility. Any excess deduction can be carried forward for 5 years
  9. Deemed tax presence for non-residents with respect to imported technical and management services now taxable at a final WHT rate of 10%
  10. Any expense incurred to earn exempt income now specifically disallowed as a deduction against other taxable income
  11. Dividend distributed from petroleum profits now to attract 10% withholding tax
  12. Banks to request for Tax Identification Number (TIN) before opening bank accounts for individuals, while existing account holders must provide their TIN to continue operating their accounts
  13. Email correspondences to be recognised for communicating with tax authorities
  14. The meaning of supply and definition of goods and services has been expanded to cover intangible items other than land, among others
  15. Specific requirement for VAT deregistration for discontinuing operations
  16. Introduction of VAT reverse charge on imported services
  17. VAT registration threshold of N25 million turnover in a calendar year to be introduced
  18. Remittance of VAT now to be on cash basis, that is, difference between output VAT collected and input VAT paid in the preceding month
  19. Compensation for loss of employment below N10m to be exempted from CGT
  20. Stamp duty on bank transfer to apply only on amount from N10,000 and above. Transfers between the same owner’s accounts in the same bank also to be exempted
    © PWC

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