FG Considers Another Tax Exemption For SMEs
The exemption of small businesses from the payment of tertiary education tax has been proposed in the draft Finance Bill 2020.
Currently, all companies registered in Nigeria are required to pay TET at two percent of assessable profits for each year of assessment.
Punch reports, this was disclosed by the Fiscal Policy Reforms Committee, established by the Ministry of Finance, Budget and National Planning and chaired by the Special Adviser to the President on Economic Matters, Dr Adeyemi Dipeolu.
The Chairman, Drafting Sub-committee and member of Fiscal Policy Reforms Committee, Mr Ajibola Olomola, said the proposal for Finance Bill 2020 “is to introduce an amendment to the Tertiary Education Tax Act to exempt small businesses from Tertiary Education Tax”.
According to the committee, currently, all companies registered in Nigeria are required to pay TET at two per cent of assessable profits for each year of assessment.
It noted that the Finance Act 2019 introduced companies income tax exemption for small businesses.
“However, in line with the Federal Government objective of incentivising small businesses, there is a need to introduce similar exemption for TET,” Olomola said at a virtual consultation and stakeholder engagement on Friday to discuss the economic and fiscal policy drivers underpinning the bill.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said the President had indicated in his 2021 executive budget presentation speech that the Finance Bill “is to support the realisation of our 2021 revenue projections and that we will be adopting appropriate counter-cyclical fiscal policies that will enhance the efficiency of fiscal incentives.”
According to the committee, there is a proposal to introduce legislation to empower the Federal Inland Revenue Service to deploy technology for general tax administration.
It was also proposed that penalties should be introduced for breach by tax officials of taxpayer confidentiality.
Olomola said, “The Finance Bill 2020 will include certain provisions that allow the tax authorities deploy information technology for the collection of taxpayer information of tax and reduce cost of collection.
“In light of this proposal, stringent rules are also proposed to secure taxpayer confidentiality from unauthorised access by third parties. The Finance Bill 2020 will look to introduce significant penalties for breach of data confidentiality by tax officials.”
According to the committee, there is a proposal for the creation of an unclaimed dividend and unutilised bank balance trust fund wherein dividends declared and unclaimed would be warehoused and owed as a perpetual debt to shareholders.
“This change corrects an anomaly under the CAMA which extinguishes shareholder’s right to dividend after 12 years and returns the money to the company for redistribution to other shareholders,” Olomola said.