You must have seen a lot about this new thing called the Finance Act. Everywhere you turn, all you see is – The Finance Bill has been passed into law! The Finance Bill, is a Bill no more, it has evolved into an Act. You don’t have to pretend to get a hang however. This is the safe space where we learn together, in our bleached content and easy language. This is the parte after parte. We read the Finance Bill (now Act) and we reduced its impact to 10 headlines for your reading pleasure.

The Bill was presented by the Presidency and is to amend “tax provisions, make them more responsive to the tax reform policies of the Federal Government and enhance its implementation and effectiveness”. Moral lesson – the Government will be upgrading a whole lot of tax laws.

The tax laws to be amended include the Companies Income Tax Act, Value Added Tax Act, Customs and Excise Tarrif Act, Personal Income Tax Act, Capital Gains Tax Act, Stamp Duties Act and the Petroleum Profit Tax Act.

The Finance Bill is unprecedented in Nigeria. Not in Africa however as countries like Tanzania and Kenya did the same in 2017 and 2019 respectively.

Okay let’s get to it. Here are the top 10 tracks from the Finance Bill album! Groove with us.


Under the Finance Bill, Companies(1) and persons(2) are to provide their Tax Identification Number (TIN) as a precondition for opening a bank account. In the case of an account already opened before 30th September 2019, the banks will require persons and companies to provide their TIN as a precondition for the “continued operation” of their bank accounts. Haha won ti get wa!


We are now Present!

In one of our previous articles, we identified that the challenge of determining a fixed base makes it difficult for non-resident companies to be effectively taxed in Nigeria.

We all know that digital companies can make profits in countries where they have no physical presence but the CITA in section 13 only taxes digital companies when they have a fixed base in Nigeria. Aka tax revenue loss.

A new paragraph has now been added to Section 13(2) of the CIT Act(3). The effect is that a non-resident company is now taxable in Nigeria to the extent that it has a “significant economic presence” and its profit can be attributable to such activity (a bunch of digital activities are listed out).

What constitutes “significant economic presence”? The Finance Bill provides that the Minister may by Order determine this. Lol. somebody is avoiding work.


Image result for bye forever gif

EDT almost always leads to Double Taxation because the exact same profits have already been taxed in a previous year. (You may view our previous article on Excess Dividend Tax).

Taxpayers and tax authorities have engaged in mortal combat over the years because of EDT.Now, the long night has ended. Section 19 of the CIT Act has been amended and the part that allows for double taxation of the masses through EDT has been dealt with.

Now, franked investment income(4), dividends paid out of exempt profits(5), distributions made by a Real Estate Investment Company(6) and retained earnings that have already been subjected to tax (Companies Income Tax, Petroleum Profits Tax, Capital Gains Tax) are exempt from CIT.

We won’t miss you, EDT!


One of the canons of taxation is efficiency. It practically means that the cost of collection should not exceed the revenue collected. The peculiar position that the Nigerian tax authorities are in requires them to choose their targets carefully. They must now go after taxpayers who can remit the most tax revenue. Ai’nt nobody got time to be spending resources chasing small businesses and their tiny turnover. Therefore, thresholds!

Companies are now divided into small companies, medium-sized companies and large companies. A small company means a company that earns a gross turnover of N25,000,000 or less.

A medium-sized company means a company with a gross turnover greater than N25,000,000 but less than N100,000,000.

A large company means any company which is not a small or a medium-sized company.(7)

The Finance Bill exempts small companies from Companies Income Tax!(8)

Medium-sized companies are to be taxed at the rate of 20% instead of the usual 30%.(9)

Mama Cherish, it is testimony time!


A company pays minimum tax when it makes a loss and does not have profit to pay tax from, or when its total profits result in no tax payable or in tax payable which is less than minimum tax.

 The rate of minimum tax has been a little more complicated than necessary.(10) For better understanding, you may see our article on minimum tax.

Section 33 of the CIT Act that provides for Minimum Tax is to be amended by the Finance Bill.(11)

Minimum tax is now to be only 0.5% of turnover of the company, pere. Also, small companies are exempted from minimum tax. Issa parry somtin!


In an article, I have previously written – VAT and its 99 Problems, I mentioned that a problem with the Nigerian Value Added Tax (VAT) Act is missing definitions. I meant that some key terminology used in the Act were not defined, leaving space for imprecise ascertainment. There have been conflicting court decisions and confused stakeholders due to lack of details.

Section 2 of the VAT Act has been re-enacted to explain when goods(12) and services(13) would be deemed to be supplied in Nigeria.(14) It’s a spree of definitions really. The Finance Bill amends the interpretative section of the VAT Act and thereby proposes definitions for ‘goods’, ‘services’, ‘exported service’, ‘commencement of business’, ‘basic food items’, ‘recognized group of companies’ and ‘taxable supplies’.(15)(16)

Basic food items are exempt from VAT under the VAT Act. The million-dollar question has been – what is a basic food item? Well, the Finance Bill impressively includes an exhaustive definition for “basic food items”.(17)

Totally unrelated – a new item has been added to the VAT exempt list. “Locally manufactured sanitary towels, pads or tampons.” Hallelujah. Somebody has been paying attention to social media.


Remember that time the Federal Executive Council said VAT was 7.2 percent and we were like Federal Governenment ma pa wa naw.

Then the Minister of Finance clarified that it was 7.5%.(18)  LMAO. What happened there anyway?

Oh well, the Finance Bill proposes to change the rate of VAT from 5 per cent to 7.5 per cent.(19) There you go!


The VAT threshold is necessary “to align local laws with global best practice by introducing a threshold that protects the most vulnerable from exposure to VAT”.(20)

Where a taxable person has made taxable supplies or expects to make taxable supplies which in value is N25,000,000 (twenty-five million naira) or more, they are to file VAT returns. We know that this can be confusing so pay attention:

Let’s say the name of my business is Alubarika & Sons and we sell a range of household items. I would calculate the value of taxable supplies I have made (or I am likely to make). This means that I would separate the goods that are VATable and sum up their value. I would try to see if the value of these VATable goods equal or exceed N25,000,000. It could be from a single transaction or the cumulative value of supplies within a calendar year.

If the value of these VATable supplies reaches the threshold, I would begin to file my VAT returns with the FIRS on the 21st of that month or successive months. If it doesn’t reach that threshold, then I do not need to file returns.

This does not mean that I will not pay VAT because VAT is indirect, deducted at source – when people supply me, they would still add VAT. This just means that I do not need to file returns. Got it?



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You see that N50 your bank keeps charging you on your online transfers? Yeah that’s Stamp Duty.

The Finance Bill redefines “stamp”, “stamped” and “instrument” to accommodate electronic means.

The definition of stamp is now extended to include an “electronic stamp or an electronic acknowledgement for denoting any duty or fee”. An instrument is also stamped when it is “digitally tagged with electronic stamp or notional stamp on an electronic receipt”. Instrument is said to include “every written document including electronic receipt”.(21)

Importantly, if you transfer N10,000 or more from one account to another, your bank will immediately charge you N50. There is an exemption however – stamp duty will not apply for transfers made by a person into his own account within the same bank.


Interestingly, the Finance Bill recognizes electronic mail as a means of correspondence with tax authorities. This seems to be in line with our article on the TAT allowing online objection to tax assessments.

Section 31 of the Finance Bill amends the Personal Income Tax Act to include courier service and electronic email as means of communicating a notice of objection.

That is to say, if the tax authorities assess a person wrongly, they can object to this assessment by simply sending an email to the State Inland Revenue Service. That is, as opposed to journeying to the tax office. How cool is that?


The Finance Bill is simply a Bill to amend various tax laws in Nigeria. Several of our tax legislations require urgent alteration. Instead of amending them individually, the Finance Bill na de ogbonge wey go do the job fiam! one time! That is, if it scales the legislative process. This Bill passed its second reading on November 6, 2019. Now the Bill has been passed into Law!!!

We must tell you that during plenary sessions, senators were not given copies of the bill. LMAO. Senators protested this anomaly and the senate president “insisted that the general principles of the bill should be discussed without the details of the document”. Yeah, so they passed a bill they did not read. Mo ya look away.

We hope that this article was useful!

David Akindolire is a premium graduate of Obafemi Awolowo University. There, he was the President of The Tax Club and a Founder at the Career Advancement Program.

He jointly organized a number of academic events that focused on encouraging specialization and affording undergraduates a clearer view of graduate life. 

David is a dazzling writer and speaker. He represented the university at a number of debates and moot competitions. He remains keen on futuristic areas of law including taxation and media. He is a current graduate intern with PwC.



  1. Section 2, Finance Bill
  2. Section 30, Finance Bill
  3. Section 3, Finance Bill
  4. Income in the form of dividends paid to a company from earnings on which corporation tax has already been paid by the originating company.
  5. Under the Industrial Development (Income Tax Relief) Act, the Petroleum Profits Tax Act, or the Capital Gains Tax Act or any other legislation.
  6. A company that invests in real estate on behalf of its shareholders/investors. These investors receive income yearly as dividends or rent on those investments.
  7. Section 23, Finance Bill
  8. Section 7, Finance Bill
  9. Section 14, Finance Bill
  10. 0.5 percent of gross profits; or 0.5 per cent of net assets; or 0.25 per cent of paid up capital or 0.25 per cent of turnover of the company for the year whichever is higher.
  11. Section 12, Finance Bill
  12. In respect of goods: the goods are physically present in Nigeria at the time of supply, imported into Nigeria for use by a person, assembled in Nigeria, or installed in Nigeria; or the beneficial owner of the rights in or over the goods is a taxable person in Nigeria and the goods or right thereof is situated, registered or exercisable in Nigeria.
  13. In respect of services: the services are rendered in Nigeria by a person physically present in Nigeria at the time of service provision; or the services are provided to a person in Nigeria, regardless of whether the services are rendered within or outside Nigeria.
  14. Section 35, Finance Bill
  15. Section 46, Finance Bill
  16. For instance, ‘goods’ means “(a) all forms of tangible properties that are movable at the point of supply, but does not include money or securities; and any (b) intangible product, asset or property over which a person has ownership or rights, or from which he derives benefits, and which can be transferred from one person to another excluding interest in land”. ‘Services’ means “anything other than goods, money or securities which is supplied excluding services provided under a contract of employment”
  17. To mean agro and aqua based staple food described as additives, bread, cereals, cooking oils, culinary herbs, fish, flour and starch, fruits, live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables and water.
  18. https://www.premiumtimesng.com/news/top-news/352233-vat-increased-to-7-5-not-7-2-minister.html
  19. Section 36, Finance Bill.
  20. Section 39, Finance Bill.
  21. Section 53, Finance Bill


    • nuecrest Reply

      Please I still need clarifications on numbers 7 and 8.
      Using a hotel than earns less than 25 million as a case study.
      Is the hotel still required to pay tax or file tax return.
      Thank you


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