As it did last year by offering a variety of tax incentives to Nigerians through the Finance Bill that later became law, the Buhari administration is offering more this year through the 2020 Finance Bill to attract more incentives and make business in Nigeria more competitive. .
Vice President Yemi Osinbajo, SAN, stated this on Friday at the third edition of the Nigerian Diaspora Investment Summit, which was held virtually and was attended by several Nigerians and potential Diaspora investors.
Speaking specifically about how the Federal Government has been able to use the 2019 Finance Law to improve the business environment in the country, Professor Osinbajo said that “what we have done to advance our own economic policy is to try to make the fiscal environment as attractive as possible. What we have done is use the instrumentality of the Finance Laws to make or propose significant reforms ”.
The highlights of the tax incentives in the 2020 finance bill include:
- Reduction of tractor duties from 35 to 10 percent
- Reduction of duties on motor vehicles for the transport of goods from 35 to 10 per cent.
- Reduction of the levy on motor vehicles for the transport of persons (automobiles) from 35 percent to 5 percent.
- Exemption of small companies from paying education tax under the tertiary education trust fund (TETFUND): companies with a turnover of less than N25m are eligible
- Reduction of 50 percent of the minimum tax; 0.5 percent to 0.25 percent for gross billing for financial years ending between January 1, 2020 and December 31, 2021.
- Concession of tax relief to companies that donated to the COVID-19 relief fund of the private sector coalition (CACOVID).
- Introduction of the acquisition of software as an eligible capital reserve.
Prof. Osinbajo emphasized that “the Finance Bill analyzes various fiscal issues that we want to legislate or amendments that we want to make in the law, which would facilitate the implementation of the budget and would also facilitate the fiscal environment or the most favorable fiscal environment. So, we started passing the Finance Law last year and now we are proposing a second Finance Law this year.
“Last year, we passed legislation that grants small companies with a turnover of less than 25 million per year, tax exemption from corporate income tax, while medium-sized companies with a turnover between N25 million and N100 million now pay corporate income Tax at the lowest rate of 20%. And then, the services provided by Microfinance Banks are completely exempt from VAT. So no microfinance bank pays VAT now for its services. Tax withholding rates, also on roads, bridges, buildings, power plant construction contracts have been reduced from 5% to 2.5% ”.
Further explaining, Prof. Osinbajo said that “those who are making construction contracts and proposing construction contracts, pay a reduced rate, they no longer pay 5%, now they pay 2.5%.
“Now, in the proposed finance bill for 2020, we have gone a little further, we are reducing the minimum tax rate by 50%. So the minimum tax rate used to be 0.5%, now it is reduced to 0.25% for gross turnover for financial years ending between January 1, 2020 and December 31, 2021. Therefore, we have reduced the rate minimum tax by 50%, in half. . “
Highlighting the education tax exemptions, the vice president added that “we have an exemption for small businesses, with less than 25 million losses from the payment of 2% of the education tax from the Trust Fund for Tertiary Education. What we are saying now is that for companies that have a turnover of less than N25 million, they are no longer required to pay that 2% tax for the education tax fund, so their tax burden is reduced. “
Regarding the provision for software acquisitions, the vice president said that “when companies purchase software for their business operations, in the past, that was treated as an overhead. We will now treat it as an expense that qualifies for a tax deduction to improve the ease of doing business. “
On the government’s efforts to generate jobs and create opportunities for income generation through the Economic Sustainability Plan (ESP), Prof. Osinbajo said that “in response, we designed an ambitious Economic Sustainability Plan of 2.3 billion dollars and the focus of that plan is job creation, first through the Mass Farming program, where we have already listed 5 million farmers and geo-tagged them on their farmland.
“In addition, a Mass Housing program in which we are building 300,000 homes in all states of the Federation using local materials and using small and medium-sized construction companies and using direct labor.
“All of these locally produced. The idea is to generate jobs, generate opportunities and income in each locality in which we are operating ”.
In addition, the vice president pointed out that “we also have a solar program to make 5 million connections throughout the country. In other words, we are going to install 5 million solar home systems in Nigeria that will serve a total of around 25 million people. “
Praising the contributions of the Nigerian diaspora community to the country’s development, the Vice President noted that “our diaspora is one of our most vital resources, a literally infinite reservoir of talent, commerce, investment, tourism, education, culture and sports opportunities. . “
“But perhaps most importantly, is the wide variety of well-trained, honed and experienced talents our diaspora represents. It is that potential, not remittances, that makes our diaspora network an inexhaustible source of economic hope and social aspiration ”, added Prof. Osinbajo.
Recognizing the efforts of the CEO of the Nigerians in the Diaspora Commission (NIDCOM) Hon. Abike Dabiri-Erewa, particularly in leveraging the resources and talents of Nigerians abroad, the Vice President said that “diaspora initiatives that we have and all your efforts are certainly appreciated and will result in a stronger economy for Nigeria and a better country. “
The investment summit is an annual feature of the Nigerians in the Diaspora Commission (NIDCOM).