As the amended Finance Act 2020 takes effect from 1st January 2021, it is important for businesses in Nigeria, especially MSME’s to understand how some of the features of the amended laws could affect the way of doing business.
The Finance Act 2020 introduced over 80 amendments to 14 different laws, this article, however, examines some of the important parts of the acts that could impact the ways of doing business in Nigeria, check the list below;
1. A small or medium company engaged in primary agricultural production may be granted pioneer status for an initial period of 4 years and an additional 2 years (making a total of 6 years)
2. Exemption of low-income earners (earning minimum wage or less) from personal income tax. i.e., workers earning N30,000 and below
3. The acts introduced the reduction of import duty on Tractors from 35% to 5%; Mass transit vehicles for transport of more than 10 persons and Trucks from 35% to 10%, and import levy on Cars from 30% to 5%.
4. Unclaimed dividends in a listed company and unutilized amounts in a dormant bank account outstanding for 6 years or more to be transferred to the Unclaimed Funds Trust Fund as a special debt to the Federal Government to be managed by the Debt Management Office and shall be available to the shareholder or account holder at any time together with the yield.
READ: How to Check Your Unclaimed Shares Dividends (For Unregistered Investors for e-Dividend)
5. Introduction of electronic money transfer levy of N50 on electronic transfer of money deposited in any bank or financial institution on any account on sums of N10,000 and above. The act scraps the existing stamp duty charges on the transaction.
6. The 2020 finance act now exempt commercial airline ticket from VAT, likewise, hire or lease of agricultural equipment for agricultural purposes.
7. Minimum tax for companies in respect of returns for years of assessments due between 1st Jan 2020 and 31st Dec 2021 has been reduced from 0.5% to 0.25% of gross turnover less franked investment income.
8. FIRS may prescribe the form of accounts other than audited financial statements for small and medium companies as defined under CITA.
9. A non-resident person that makes a taxable supply to Nigeria is required to register for tax and obtain TIN, include VAT on its invoice, and may appoint a representative in Nigeria for the purpose of its tax obligations.
10. Establishment of a Crisis Intervention Fund of N500b or other sums as may be approved by the National Assembly; and by way of trust, as a sub-fund of the Crisis Intervention Fund, an Unclaimed Funds Trust Fund.
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