Senate on Wednesday passed into second reading a bill seeking to compel every account holder in the Nigeria to have Tax Identification Number (TIN).
Also, the bill when passed into would also prohibit anyone without Tax Identification Number from opening bank account in account.
These are contained in a Finance bill that was submitted by President Muhammadu Buhari to National Assembly for consideration.
The Financial Bill as proposed by Buhari seeks amendment to clarify that pension contributions no longer require the approval of the Joint Tax Board (JTB) to be tax-deductible.
The proposed law also seeks to remove the tax exemption on withdrawals from pension schemes except where the following prescribed conditions are met: first is a Child relief package of up to N2,500 per child up to a maximum of 4) and a dependent relief (N2,000 per dependent for a maximum of 2) are to be deleted.
On Value Added Tax (VAT), Buhari introduces VAT exemption on group reorganizations on the conditions that the sale is to a Nigerian company and it is for the better organization of the trade or business.
Another condition given by the President is that the entities involved are part of a recognized group of companies 365 days before the transaction, and the relevant assets are not disposed earlier than 365 days after the transaction.
The current practice is that companies send an approval request letter under CITA Section 29(9) to the FIRS, and include a VAT exemption request, even though there is technically no basis for this in the VAT Act.
In his lead debate, Senate Leader, Yahaya Abdullahi said the Finance Bill seeks to introduce sweeping changes to the tax laws covering seven different tax laws with significant positive impact on investment and ease of paying taxes especially for MSMEs.
The proposed tax law however made provisions for various penalties for defaulters.
Buhari increased the penalty for VAT late filing of returns to N50, 000 for the first month and N25, 000 for subsequent months of failure.
The President also increased the penalty for failure to register for VAT to NGN 50,000 for the first month of default and NGN 25,000 for each subsequent month of default
The penalty for failure to notify FIRS of change in company address to be reviewed upwards to N50,000 for the first month of default and N25,000 for each subsequent month of default.
This penalty also covers failure to notify FIRS of permanent cessation of trade or business.
The proposed Finance Bill by Buhari also recommends penalty for operators whose responsibility it is to deduct the taxes.
Failure to make deduct will attract penalty of 10% of the tax not deducted, plus interest at the prevailing monetary policy rate of the Central Bank of Nigeria.
Buhari however removed all the conditions attached to tax exemption on gratuities making it unconditionally tax exempt.
Under the proposed Finance Bill, the duties currently performed by the Joint Tax Board (JTB) as relates to administering the Personal Income Tax Act, will now be performed by the FIRS.
Join our WhatsApp Group to receive news and other valuable information alerts on WhatsApp.