Nigeria’s national tax collector, the Federal Inland Revenue Service (FIRS), is to become known as the Nigeria Revenue Service, and would have a separate Board from the Service with the latter to be headed by a Commissioner General.
This is sequel to the passage of the 2022 Finance Bill on Wednesday, 28 December 2022 by the Senate and the House of Representatives.
An “Update on Nigeria’s 2022 Finance Bill” provided by PWC Nigeria, said as a next step, both chambers are expected to harmonise the Bill and send it to the President for assent which is “likely to happen not later than 31 December 2022.”
The famous auditing firm however noted that “With the passing of the Bill, it is unclear if the public hearing would still go ahead or indeed be necessary.” It noted that the Senate had invited stakeholders to a public hearing within 24 hours on Thursday 22 December 2022, while the HoR slated its public hearing for Friday 13th January 2023.
PWC outlined the key changes in the version of the Bill as passed by the lawmakers to include:
Increase in Tertiary Education Tax (TET) rate from 2.5% to 3%. It is instructive that the rate was only recently increased from 2% to 2.5% via the 2021 Finance Act. This effectively increases Nigeria’s corporate income tax rate to about 36% which is one of the highest rates in the world (i.e. 30% CIT, and 3% TET equivalent to 6% CIT given the larger tax base for TET)
Amendments to change the name of the FIRS to Nigeria Revenue Service and separate the Board from the Service with the latter to be headed by a Commissioner General.
Deletion of the proposed taxation of Gaming and Lottery businesses under the CITA
Capital losses deductible for CGT purposes may be carried forward for a maximum of 5 years
The proposed 50% Investment Tax Credit for investment in gas utilisation has been changed to investment allowance of 10% and 5% per annum for non-associated and associated gas respectively subject to attaining a cumulative production of 300 billion cubic feet.
Exemption of companies engaged in upstream and midstream gas operations (along with Agro Allied businesses and manufacturing companies) from the annual restriction of capital allowance utilisation to 2/3rd of assessable profits.
Commencement date of the Bill changed from 1st January 2022 to 1st January 2023.
In a tweet, Taiwo Oloyede of PWC noted that “Over N2 trillion has been collected from Education Tax in the past 10 years alone. Surprisingly there is no focus on accountability but a further increase which places yet more burden on already struggling businesses.”
