On January 13, President Muhammadu Buhari announced via his twitter handle the signage of the 2019 Finance Bill into law.
The bill which was passed following the approval of the federal budget is expected to, among other things; support MSMEs in line with the Federal Government’s Ease of Doing Business Reforms.
We had reported last week that as part of provisions of the bill, Micro and Small enterprises with annual turn-over of less than N25million will now be exempted from paying Company Income Tax (CIT) while medium enterprises with annual turn-over of between 25million and N100million will pay 20% CIT as opposed to the previous 30%.
With this new development, Start-ups or SMEs can now focus majorly on investing properly in their businesses and enable stable growth.
While this poses as positive development, a major clause in the law has raised concerns among the Nigerian public in the last 48 hours. The Finance Bill provides that value-added tax (VAT) be increased from 5% to 7.5%. A number of finance experts of have argued that this development may lead to an increment in prices of items and ultimately affect the purchasing power of Nigerians. Contrary to this, the Finance minister, Zainab Ahmed described the increased VAT as an initiative for the good of Nigerians and would help fund the 2020 budget revenue projection of N8.155trillion. She said the capital raised from the tax reforms will benefit Nigerians as 35% of the capital will go to Local Governments and 60% to state with only 15% to be directed to Federal Government. While it is clear some provisions of the bill introduced increments, several others are aimed at reducing taxes, notably for SMEs in a bid to stimulate economic activities.