The Federal Government has stated that it is making efforts to reduce the tax burden on the Nigerians in the wake of the current economic situation occasioned by the COVID-19 pandemic and the fall in the prices of crude oil in the international market.
The Minister of Finance, Zainab Ahmed said this at a public hearing on the 2020 finance bill currently before the National Assembly organised by the House of Representatives Committee on Finance saying the bill will make comprehensive reforms in the nation’s tax laws which are aimed at exempting small companies from paying company income tax.
According to her, the Finance Bill is expected to pave way for the government to generate revenue to fund the 2021 budget.
She stated further that the major reason behind the bill was to address issues that were lacking in the 2019 Finance Bill as well as deepen the innovations, adding that the 2020 proposal dealt largely with taxation and tax administration, adding that about 1740 persons representing various professional bodies, academics, International Development partners, civil society organisations, the private sector as well as key Federal Ministries, Departments and Agencies took part in the process of drafting the bill.
Ahmed also said that the draft bill was subjected to serious debate before the Federal Executive Council and to the National Economic Council before it was transmitted to the National Assembly.
According to her, the principle that guided the finance bill is need to adopt critical counter-cyclical fiscal policy because we need to be able to adequately respond to economic challenges that is occasioned by the Covid-19 pandemic and the crash in crude oil prices.
She stressed that there was “need to defer tax rate increases to the domestic economic sufficiently recover and reduce compliance burden on taxpayers in line with the ease of doing business reforms
“The second principle is the need to reform fiscal incentives policies to help reduce the proliferation of fiscal incentives by carefully assessing cost vs benefit of tax incentives and prioritize job creation, growth and incentives”.
Ahmed stressed that when passed into law, the bill is expected to promote fiscal equity by removing double taxation on companies during commencement and cessation of business, simplify the basis for calculating minimum tax, and exempt profits that had been taxed from further taxation in the form of excess dividends.
She maintained that “What we don’t have in the finance bill 2020 is an increase in tax. There are no new taxes that are being introduced and there is no increase in taxes. There are also no new incentives that have been introduced in this bill and will introduce tax reform that has been introduced is geared towards supporting financial stimulus while there are also tax measures that are short, focused, and uncontroversial.
“The bill also makes provisions to create a legal framework for the creation of a crisis intervention fund that will address the crisis that may arise in future, while introducing provisions that allow for the recovery of donations made towards the Covid-19 pandemic and other potential crises.”