It’s no longer news that Nigeria is entering the New Year 2023 with a host of problems. From tackling insurgency and other forms of insecurity to voting for the next president in the upcoming elections, a lot of decisions need to be made.
For now, let’s focus on the Finance Bill of 2022. This is a legislation document created in order to support the implementation of the national budget.
What is the purpose of the Finance Bill?
The Finance Bill was created to help increase revenue for the country. This is done in order to shoulder the costs of expenses in the National budget. In simple terms, the bill was made to make more money for Nigeria as expenses accumulate in the budget.
What’s wrong with the Finance Bill?
The bill, which was recently passed by the National Assembly (NASS) on December 28, 2022, has caused a lot of anger amongst Nigerians. This is because of two reasons – the time the bill was passed and the content of the bill.
The bill was approved for the president’s assent by both the Senate and the House of Representatives in the National Assembly (NASS) three weeks before the public hearing of the bill by stakeholders in January 2023. This simply means that none of the parties involved were able to see the contents of the bill before it was passed.
A statement was made by the Director of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, which expressed his displeasure with the hasty passage. So far, there has been no response from NASS on the statement.
However, the major bone of contention is the content of the bill. The amendments seem to be heavily focused on billing Nigerians (especially business owners and investors in the private sector) in the form of taxes. Let’s take a look at some of them:
A 0.5% import tax levy on all goods from outside Africa
At first, an import tax levy sounds great to help boost revenue for local producers. However, this isn’t the case at all. Manufacturers are complaining about the high import duty costs for raw materials needed.
These import duty costs could be as high as 35%. The tax so far has affected their income and even made some producers close down their businesses.
Every service provided in Nigeria will be charged with an excise duty tax
Excise duty tax is now to be charged on every service in Nigeria. Currently, it is only taxed on certain manufactured goods such as alcohol and narcotics. The rate is to be announced by the President himself.
This simply means that tariffs on data subscriptions and calls, medical bills, electricity bills, and even TV subscriptions are about to get even more expensive than usual for the average Nigerian.
An income tax raise for all gas companies from 30% to 50%
Ballers in the oil and gas business may be on their way to becoming mechanics. The Finance Bill has declared a raise in Company Income Tax (CIT) from 30% to 50%. This is for all companies that deal with natural gas.
Considering that the Nigeria Liquified Natural Gas Company (NLNG) had to declare a force majeure (a law that absolves companies from the obligation of supplying their clients during emergencies) during the flood crisis in 2022, it seems unfair to call an income tax raise just at the beginning of the year.
Digital assets including cryptocurrency are now to be taxed
Owners of all digital assets may now have to pay a price for their ownership. The Federal Government is now taxing 10% of all digital assets. These include Non-Fungible Tokens (NFTs) and cryptocurrencies.
Chargeable assets such as land are to be taxed based on capital loss
A capital loss is the amount derived when a chargeable asset has decreased from its original value. Examples of these chargeable assets could be cars, jewelry, land, etc.
With this explained, capital losses from chargeable assets are now to be taxed from the gain one makes when the item is sold. For instance, if one sells a piece of land and it has decreased in value, then the owner is going to pay tax on the capital loss to the government if it is eventually sold.
Can anything be done to change this?
For now, the bill has not yet been passed into law, as the nation still awaits President Muhammadu Buhari’s assent. We can only hope that he gives a listening ear to all stakeholders and grants a public hearing on the bill.
