NIGERIA NEW TAX BILLS PROVISIONS

INCOME TAX
It will be imposed on Profit or Gains of any company including chargeable gains, income due to a trustee/estate. Company can be charged on its name, principal officer, representative, receiver, liquidator or administrator
COMPANY INCOME TAX RATE %
Companies with Gross Turnover of N100m or less per annum with total fixed assets not exceeding N250m will be subjected to Company Income tax at the rate of 0%. CIT rate of 30% expected to drop by 5% year on year for large companies
TAX RATE FOR INDIVIDUALS
Paye Rates is now from 0% to 25% and Tax Band from N800, 000.00 to N50, 000,000.00 per annum. The higher you earn the more tax you pay. First N800,000.00 – 0% tax; Next N2,200,000.00 – 15% tax; Next N9,000,000.00 – 18% tax; Next N13,000,00000 – 21% tax; Next N25,000,000.00 – 23% tax; Next N50,000,000.00 – 25% tax.
TAX INCENTIVES
Tax exempt from income tax for 1st 5 years of commencement of business is granted to agricultural businesses, including crop production, livestock, aquaculture, forestry, diary, cocoa processing and manufacturing of animal feeds.
DEVELOPMENT LEVY REPLACES OTHER TAXES PAID BY COMPANIES
A flat rate of 4% on companies assessable profit replaces other taxes and levies (aside CIT) such as Tertiary Education Tax, Nigeria Police Trust Fund, National Information Technology Development Agency levy, National Agency for Science and Engineering Infrastructure,
EFFECTVE TAX RATE (ETR)
ETR is now 15% of Net Income of a company
NET INCOME
Net income is defined as Audited Financial Statement Profit before Tax excluding franked investment income and unrealized gains and losses
RENT RELIEF
Individuals that live in their own accommodation cannot claim such relief. Consolidation Relief Allowance is eliminated and Rent Relief is introduced which is 20% of rent paid subject to maximum of N500, 000.00 whichever is lower.
TAX ON DIGITAL /VIRTUAL ASSETS
Prices, winnings, honoraria, grants, awards, profits/gains from transactions in digital or virtual assets are chargeable to tax.
INTEREST
Interest now include penal interest, foreign exchange difference arising in relation to securities, payments in relation to derivatives or similar payment.
DIVIDEND
Dividend has been expanded for liquidating to include capital nature distribution.
ROYALTY
Royalty now encompasses any payment of any kind on the right to use or exploit any property. Note that tis include received /receivable or paid/payable
NON RESIDENT PERSONS
Applicable profit shall be margin of total income generated from Nigeria where the profit cannot be ascertained. Where Financial Statements are not available, NRS shall determine the profit margin based on that of comparable company
ALLOWABLE EXPENSES
Expenses must be ‘Wholly and exclusively incurred in the production of income’ to qualify for deduction, Note that principles of ‘Reasonably and Necessarily’ in the old tax law is no more applicable.
EXPENSES ON OTHER CURRENCY THAN NAIRA
Expense incurred in a currency other than Naira may only be deducted to the extents of its naira equivalent at the official exchange rate published by CBN.
CAPITAL ALLOWANCE
Only straight line allowances are applicable. Initial allowance have been eliminated.
CHARGEABLE GAINS AND ASSETS
Chargeable assets include all types of property, including shares, option, rights, debts, digital assets, intangible property and foreign currencies.
INPUT VAT CLAIM
Input VAT claim has been extended to include VAT incurred on services and fixed assets. Provided that such supplies are consumed, utilized while making taxable supplies.
DIGITALIZATION OR FISCALISATION OFSUPPLIES FOR VAT
The process of implementing systems and practices to ensure accurate recording and reporting of financial transactions, primarily for tax purposes must be deployed. NRS has introduced E- INVOICING SYSTEM and VAT AUTOMATION.