June 7, 2018
On 6 June 2018, the Federal Executive Council (FEC) approved two Executive Orders and five Amendment Bills. Amongst other provisions, the Executive Orders and Bills aim to amend certain controversial tax provisions, reduce some applicable tax rates and reduce tax burden on taxpayers by exempting certain goods and services from Value Added Tax (VAT).
The Executive Orders include the Value Added Tax Act (Modification) Order and the Review of Goods Liable to Excise Duties and Applicable Rate Order. In addition, the following Bills will be presented before the National Assembly for review and enactment:
– Companies Income Tax (CIT) Act Amendment Bill;
– Personal Income Tax Act Amendment Bill;
– Value Added Tax Act Amendment Bill;
– Customs, Excise, Tariff etc. (Consolidation) Act Amendment Bill; and
– Industrial Development (Income Tax Relief) Act Amendment Bill.
Amongst other things, the Executive Orders and Bills seek to introduce the following changes:
The approval of the Executive Orders and Bills by the FEC is a welcomed development as the changes should encourage better tax compliance and improve Nigeria’s business climate. Also, the exemption of dividends paid out of retained earnings and franked investment income from tax will address the incidence of double taxation arising from distributions made from retained earnings (in excess of taxable profits) and by holding companies.
It is expected that the Bills will be promptly submitted to the National Assembly for deliberation and enactment to enable the amended provisions to have the effect of law. We will issue detailed analyses in our subsequent publications.