Public officers that fail to ensure there is a proper procurement plan before award of contracts will be liable to three years of imprisonment and a fine of N100,000.
Under the Finance Bill 2022, which is currently before the National Assembly, a public officer is required to seek administrative approvals and ensure there is an approved procurement plan in addition to existing requirements for the award or signing of contracts.
Failure to comply with this requirement is liable to three years imprisonment and a fine of N100,000 on conviction.
Also, under the Bill, gains on digital assets including cryptocurrency will be taxed under the capital gains tax act at the rate of 10 percent while capital losses on chargeable assets (including shares) will become tax deductible against chargeable gains on the same class of asset.
Currently, losses incurred on the disposal of any asset are not deductible for capital gains tax purposes.
Some amendments will affect the Value Added Tax schedule for the country. The Finance Bill 2022, the federal government wants, the introduction of general anti-avoidance transfer pricing rules to counteract any artificial arrangement in respect of transactions between connected persons for VAT purposes.
Persons appointed to deduct VAT at source on invoices received from their vendors are now to remit such VAT to the FIRS on or before the 14th day of the following month (currently 21st day of the following month).
An importer of goods purchased online, from a non-resident supplier who has been appointed by the FIRS to charge and collect VAT, is required to provide proof of such appointment and VAT charged on the invoice as a condition for clearing the goods without further VAT and
The redefinition of building for VAT purposes to exclude any fixtures or structures that can be easily removed from land such as radio and television masts, transmission lines, cell towers, mobile homes etc. This implies that such assets are not eligible for the VAT exemption on building.
All services, including but not limited to telecommunication services, provided in Nigeria will be liable to excise duty at rates to be specified through a Presidential Order.
The Bill wants an amendment of the Customs and Excise Tariff Act to clarify the responsibility and powers of the finance minister to review customs and excise tariffs through the Tariff Review Board.
There is also a request before the National Assembly that “any amount paid as premium by an individual during the preceding year of assessment in respect of own life or the life of a spouse, or contract for a deferred annuity will be tax deductible provided that any portion of a deferred annuity withdrawn within five years of paying the premium will be taxed at the point of withdrawal”.
Fiscal Policy Partner and Africa Tax Leader, PwC, Mr. Taiwo Oyedele, said while some progress has been made in Nigeria’s tax system, there is still much to do in the areas of tax harmonization and effectiveness.
“Some progress has been made with respect to the tax system most fundamentally as a result of the 2017 National Tax Policy and the subsequent annual finance acts over the past 4 years. We have seen reforms targeted at the digital economy; exemptions for small businesses and minimum salary earners; and efforts to improve transparency and fiscal discipline by government owned enterprises among others.
“However, there is still a long way to go before we achieve a tax system we can be proud of. Critical among these include the need for harmonisation of taxes and revenue agencies; effective architecture to leverage data for tax intelligence; the need for political leaders to build trust by setting the right tone at the top and providing fiscal exchange to taxpayers through the efficient utilisation of revenue to serve public good; and so on,” Oyedele said.
Speaking to the plan to amend tax premium on life insurance Oyedele noted that “the amendment is actually positive for the insurance industry. If people can get tax deductions for their insurance premium then they will be more inclined to buy life policies and contract of annuities. The five years restriction proposed in the Bill is meant to prevent abuse and put such insurance contracts on the same pedestal as contributions under the Pension Reform Act”.
With regards to the gas flaring tax, Oyedele argued that “government owns controlling interests in the major oil assets. Gas flare-out requires huge investments and historically government has failed to play its part thereby making it difficult for gas flaring to end or reduce significantly.
“This is the reason why the various gas flaring penalty regimes have failed to achieve any meaningful progress. Not only is the timing questionable, it will be unfair to punish the companies without addressing the fundamental issues”.
The Nation
