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- WHAT IS THE PURPOSE OF THE FINANCE ACT?
The Finance Act, 2019 has been signed into law and commenced in January 2019. The Act seeks to achieve the following:
To reform the country’s tax laws and align them with global best practices
To support MSMEs
To encourage investments in infrastructure and capital markets
To increase revenue for the government.
- HOW DOES THIS AFFECT MY START UP &GROWING BUSINESS?
We have succinctly addressed four key areas that affect small businesses .
NEW COMPANY INCOME TAX (CIT) RATES:
YOU DON’T HAVE TO PAY! (emoticon)
Medium and Small Scale Enterprises in Nigeria would now be able to focus on growing their businesses with minimal issues around taxes. Consequently, early-stage startups with an annual turnover of less than ₦25 million would no longer have to pay the required company income tax (CIT).
For medium scale businesses with revenues between ₦25 million and ₦100 million, a 20% CIT will be required, instead of the standard 30% which will now only be for large scale companies with revenues above ₦100 million.
VAT COMPLIANCE THRESHOLD:
Introduction of ₦25million revenue threshold for taxable persons required to register for VAT and file returns
Anyone who does not fall within the threshold above would be exempted from registering, remitting, issuing tax invoice and collecting VAT. The threshold of ₦25million within the calendar year will therefore reduce the tax compliance burden for small companies
INTRODUCTION OF EARLY TAX PAYMENT BONUS:
EARLY BIRD BENEFITS (bird)
Under the Bill, taxpayers who pay their tax liability at least 90 days before due date would be entitled to a bonus of 2% and 1% of the tax paid for medium and large companies respectively.
REQUIREMENT OF TAX IDENTIFICATION NUMBER:
Introduction of a requirement for banks to obtain tax identification number (TIN) from corporate customers as a pre-condition for opening or maintaining bank accounts.
Thank you for reading!!