Nigeria approves draft Finance Bill 2020 – what you need to know

Nigeria's Federal Executive Council has approved the Finance Bill 2020, a move aimed at improving existing tax laws in the country. The Finance Bill, according to the Minister of Finance, Budget, and National Planning, Zainab Ahmed, seeks to address the current economic challenges facing Nigeria, including the impact of COVID-19 and the impending recession. In a recent interview with CNBC Africa, Taiwo Oyedele, Partner and West Africa Tax Leader at PwC Nigeria, shed light on the key elements of the Finance Bill and its implications for the Nigerian economy. Oyedele emphasized that the Finance Bill 2020 is part of a series of annual initiatives to align the country's finances with the budget. However, he noted that the current bill is unique due to the unprecedented challenges posed by the global pandemic. The bill not only focuses on tax matters and fiscal policy but also aims to stimulate the economy without introducing new taxes or increasing existing tax rates. One of the key aspects of the Finance Bill is the government's efforts to expand the tax net and widen the tax base. Oyedele highlighted that while the amendments introduced by the Finance Bill are incremental, they pave the way for future reforms that will be crucial in achieving a more progressive tax system in Nigeria. The process of expanding the tax bracket will require extensive consultation and engagement with stakeholders, signaling a gradual but necessary shift in the country's tax policies. The Finance Bill contains several provisions aimed at providing relief and support to various sectors of the economy. One notable change is the reduction of import duties on vehicles, mass transit buses, and cars, a move aimed at mitigating the effects of rising costs due to factors like the removal of petroleum subsidies. Additionally, the bill includes tax relief for COVID-19 donations by the private sector, a reduction in the minimum tax rate for companies facing losses, and exemptions for small businesses from education tax. Despite some concerns raised about certain elements of the bill, such as the requirement for banks to obtain customers' tax identification numbers before opening accounts, Oyedele maintains that the overall impact of the Finance Bill on the economy is positive. The bill's provisions reflect a pragmatic approach by the government to address the current economic challenges while providing support to businesses and individuals affected by the pandemic. In conclusion, the Finance Bill 2020 represents a step towards strengthening Nigeria's tax system and fostering economic growth in the face of unprecedented challenges. While further reforms may be needed to achieve a more comprehensive tax structure, the bill sets a foundation for future changes that will be vital in ensuring a sustainable and progressive fiscal environment in Nigeria.