On 31st December, 2020, President Muhammadu Buhari signed the Finance Bill, 2020 (now Finance Act) into law. The Finance Act, 2020 ("the Act" or "FA 2020"), was signed into law alongside the 2021 Appropriation Bill (now Appropriation Act). The Act introduces significant changes to a number of tax and regulatory laws in Nigeria including the introduction of COVID-19 incentives alongside other changes.
One critical tool for tax collection is the availability of unambiguous legislative provisions. At the end of the second millennium, the Finance (Miscellaneous Provisions) Act No.30 of 1999 was passed to revise certain provisions of the Nigerian tax laws. Since then, the use of this avenue for legislative review has not been deployed despite the prevalence of redundant and anti-business provisions that continued to exist in our tax laws However, President Muhammadu Buhari remarkably signed into law the Finance Act, 2019 two decades later to revise certain redundant and anti-business provisions that existed in our tax laws. In a similar vein, the President has recently signed the Finance Act, 2020 with a commencement date from 1st January 2021.
The Finance Act, 2020 amends some key provisions of the Capital Gains Tax Act, Companies Income Tax Act, Industrial Development (Income Tax Relief) Act, Personal Income Tax Act, Tertiary Education Trust Fund Act, Customs & Excise Tariff (Consolidation) Act, Value Added Tax Act, Federal Inland Revenue Service (Establishment) Act, Fiscal Responsibility Act, Public Procurement Act, Companies and Allied Matters Act, and the Nigerian Export Processing Zone Act and Oil and Gas Export Processing Free Zone Act. It also establishes the Crisis Intervention Fund to cater to National exigencies.
Given the volume of the Finance Act, 2020 and the associated complexity of legal provisions for business owners, we have provided highlights of key reforms and analysed the changes introduced by the Act for the relevant tax types in this document. Our analyses also include potential implications of the new provisions for the specific sectors of the Nigerian economy as well as general provisions as applicable to all companies and taxpayers.
We hope that you find the summary and commentaries useful. However, you are free to engage us to provide detailed advice on the implications of the laws and the new provisions for your business or upcoming projects as this document does not constitute professional advice.
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