Discover the significant amendments to existing tax laws and related legislations in the Finance Act of 2023.
The Finance Act 2023 (FA23) was signed into law by the former President Muhammadu Buhari on 28 May 2023, a day before the end of his administration. The Act is to take retroactive effect from 1 May 2023. FA23 amends relevant tax, excise duties legislations in line with the macroeconomic policy reforms of the Federal Government and makes further provisions in specific laws in connection with the public financial management of the Federation. The various legislations amended by FA23 include the Capital Gains Tax Act, the Companies Income Tax Act, the Customs, Excise, Tariffs, Etc. (Consolidated) Act, the Personal Income Tax Act, the Petroleum Profit Tax Act, the Stamp Duties Act, Value Added Tax Act, Corrupt Practices and other related Offences Act, Tertiary Education Trust Fund (Establishment) Act, Public Procurement Act, and the Ministry of Finance (Incorporated) Act.
Capital Gains Tax Act
Companies Income Tax Act
Customs and Excise Tariffs Etc. (Consolidated) Act
Personal Income Tax Act
Petroleum Profit Tax Act
Stamp Duties Act
Value Added Tax Act
Tertiary Education Trust Fund (Establishment etc.) Act
Corrupt Practices & Other Related Offences Act
Public Procurement Act (PPA)
Ministry of Finance (Incorporated) Act (MOFA)
The purpose of the Finance Act is to amend existing tax and other related laws in Nigeria, to align these laws with the nation's current economic realities and fiscal expectations. Though the Federal Government has done well in the periodic passage of the Finance Act from 2019, particularly in amending some obsolete provisions in our tax laws, reforming the tax system, and keeping abreast of the impact of digitalization, it is important to note that more is expected in our drive as a nation to conform with global best practices in all ramifications.
The Finance Act 2023 which was signed into law on 28 May 2023 with a retroactive implementation date of 1 May 2023 is a subject of discussion among relevant stakeholders. Some of the concerns that readily come to mind are:
It is important to note that the Finance Act 2023 equally provided that a date other than 1 May 2023 may be indicated by the National Assembly or the President of the Federal Republic of Nigeria by assent or order. Based on this, one would expect that the date of implementation may be revisited.
As a way of providing clarifications to some of the concerns that may be raised by stakeholders, the Federal Inland Revenue Service (the Service) in a public notice recently issued on the enactment of the Finance Act 2023 states that the new tertiary education tax (TET) rate of 3% shall take effect in respect of accounting period ending on or after 1 July 2023. Inasmuch as the Service has given a clear definition for the implementation date in relation to VAT compliance, the interpretation given as to the date of commencement for corporate tax purposes remains a subject of discourse for all.
On digital assets, clarity is needed as regulated financial institutions are still prohibited from facilitating the trade or exchange of cryptocurrencies in Nigeria. However, we hope the FIRS will clarify further on some of the concerns bordering on the amendments in the Act in relation to tax matters to prevent avoidable controversies that may arise due to different interpretations from taxpayers and the FIRS.
In the end, we understand the need to increase the nation’s non-oil revenue by increasing taxes and removing incentives that do not reflect the current economic reality of the nation. However, we should also bear in mind the competing needs to promote ease of doing business in Nigeria, provide a favorable climate for both local and international investors in Nigeria, and promote small and medium enterprises operating in Nigeria.