HIGHLIGHTS OF FINANCE BILL (2019)
It is no longer news that the NA has passed the much awaited finance bill (2019) into law. The Finance bill is aimed at addressing grey areas and deficiencies of major primary tax legislation by amending obsolete and contentious provision.
Whether we like it or not, the president will accent to the bill and it becomes law. The effective date of the bill is 2nd, January 2020. As a citizens, employees and business owners, what should be your concerns is the impact of this bill on your bottom line.
There are many significant changes in the bill, however, I will highlight area that is relevant to individual and small business. The good news is that the bill is more favourable to startups .
COMPANY INCOME TAX
1. Small businesses with turnover less than N25m will be exempted from CIT while a lower CIT rate of 20% will apply to medium-sized companies with turnover between N25m and N100m. Small businesses may have to prove to their customers that they do not meet the threshold to avoid withholding tax.
2 Commencement and cessation rules have been modified to eliminate overlaps and gaps to avoid double taxation and complication during commencement.
3 The restriction of carry forward of tax losses has been amended such that tax losses can be carried forward indefinitely. This is useful as startups who incur significant losses in the first few years of business can now carry forward tax losses against future taxable profits.
VALUE ADDED TAX
1. The VAT rate to increase from 5% to 7.5%.
2.VAT registration threshold of N25 million turnover in a calendar year to be introduced, this implies that SMEs that do not meet the threshold would not need to register for VAT and as a result would not be able to recover input VAT on their purchases
3 Penalties for failure to register will increase to N25,000 for the first month of default and N20,000 for each subsequent month.
4 Penalty for VAT late filing of returns increased to N50, 000 for the first month and N25,000 for subsequent months of failure;
5 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
Others/ Stamp Duty
1. Banks to request for Tax Identification Number (TIN) before opening bank accounts, while existing account holders must provide their TIN to continue operating their accounts
2. Stamp duty on bank transfer to apply only on amount from N10, 000 and above.
For you to take the advantage of some the incentives and exemptions in the new bill, it is imperative to have a proper accounting records and a good partners that will guide in you. ABITEP MANAGEMENT CONSULTING is the partner that you need for your financial advice for 2020. You can contact us on 07060514534 or labiola@yahoo com.