24th LUCRID WEBINAR ADDRESSES FINANCE ACT 2021 AND TAX COMPLIANCE

Post by: lmu
August 2, 2022
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INTRODUCTION

The LUCRID webinar series is a platform for scholars and experts to share thoughts on the trajectory of global issues that are generating concern in the Nigerian economy. On this note, the College of Business and Social Sciences, in collaboration with the Department of Accounting and Finance as well as SDG 17 (Industry partnership), organized the 24^th webinar series with the theme “FINANCE ACT 2021 and Tax Compliance.” The facilitator of the 24-webinar series is Ademola Olarewaju, a partner in Ascension Consulting Services presented a paper on FINANCE ACT 2021 and Personal Income Tax Act 2011 (as amended) effect on both Private and Public Sector Employees in Nigeria. The lecture was presented in simple and clear language and was well understood by the participants. Quality questions were asked by the participants and answers were provided by the guest speaker and the Director of Financial Services (DFS). We encountered some technical issues due to the weather.

COMMENCEMENT AND ATTENDANCE

The webinar commenced at exactly 10:10 am with an opening prayer said by Dr Falaye. It was well attended, both physically and online. The webinar recorded a total attendance of eighty-three (83) participants (online presence recorded twenty-seven (27) and fifty-eight (58) were physically present at the venue). The category of groups present includes Landmark University Management, Immediate Former Vice Chancellor (Prof. Adeyanju A.), Faculty and Students from Accounting and Finance Department, Financial Services Staff, and a few Faculty and staff from different Departments.

PURPOSES

To bridge the gap between academics and experts in the field in relation to the Finance Act.
Have a good knowledge of the changes to the Finance Act and their effect on the filing and preparation of tax returns.
To create Town and Gown relationship among Academics and Expert in the field which will enable students to understand both theory and practical from their discipline.
To expose staff and students of Landmark University to practical knowledge in the area of Personal Income Tax Deductions (PAYE) and how to reduce their tax liabilities in the area of allowable deductions from professionals

THE HIGHLIGHTS OF THE VICE CHANCELLOR’S REMARKS

The Landmark University webinar series came into the limelight to educate everyone on the standing of the university in the areas of teaching, learning and research, which are tripartite of the university.
Taxation is a fundamental right of every citizen, and compliance is necessary.

Every Nigerian must have a good knowledge of the changes in Financial Acts/PAYE tax and the effect they have on their personal income.
The stated reasons for tax payment include to:
1. provide revenue for long-term financing
2. finance government projects.
3. keep the system working,
4. promote economic development,
5. support the government activities and program.
Citizens must also feel the impact of paying taxes through the provision of basic facilities.

THE HIGHLIGHT OF THE FACILITATOR’S PRESENTATION

The Nigerian government’s objective towards the amendment of tax laws was to update the nation’s fiscal policies to support government revenue drive and embrace global best tax administration practices.
The Act amended 39 sections in 13 extant laws with different major amendments across the existing tax laws, and the law took effect from January 1, 2022.
The Finance Acts 2019 and 2020 have addressed ambiguities in certain provisions of the existing laws and provided clarity on some of the contentious issues between the taxpayers and the tax authorities.
The Federal Government has chosen to continue along the path of annual revision and update of the Finance Act in line with the annual budget.
The Finance Act, 2021 addresses the complexity of legal provisions for taxpayers. The Act provided highlights of key provisions and analysed the changes introduced by the Act for the relevant tax types in the document.

The key amendments under Company Tax include:

Capital gains on the disposal of shares by any person (this presupposes the inclusion of companies) in an aggregate of 100 million and above will now be liable to CGT at the rate of 10%. The only exception is where the proviso in S.30 (2) is met.
Profits of all companies engaged in educational activities will now be liable to income tax in Nigeria regardless of whether their activities are of a public character or not.
Profits of companies from the exports of goods produced in upstream, midstream, and downstream petroleum operations are no longer exempt from tax.
Profits of all companies engaged in educational activities will now be liable to income tax in Nigeria regardless of whether their activities are of a public character or not.

Premiums received from non-resident insurance companies in Nigeria are now taxable.
Companies that provide digital services in Nigeria are now liable to income tax on a fair and reasonable percentage of their turnover to the extent that they have a significant economic presence.
Restriction of Capital Allowance Claims
Companies engaged in gas utilization downstream operations are to be allowed a tax holiday in line with the provisions of this section.
Any company which fails to comply with the provisions of subsection (2) of this section and claims the minimum tax relief under section 33(2) of this Act shall be liable to pay a penalty for late filing equivalent to the amount sought.
Undisputed tax assessments that have not been subject to appeal are to be paid within 30 days after service of such notice to the company.
Withholding tax on interest for a unit trust

The key amendments under Pay as You Earn (PAYE) include:

Every taxable person is chargeable with income from a source inside or outside Nigeria, including salary, wages, fees, allowances, and bonuses. Other gains or profits from employment, such as compensation, premiums, benefits in kind (BIK),
The practical calculation of expected Pay-As-You-Earn Taxes (PAYE) includes

First N 300,000 at 7%
Next N 300,000 at 11%.
Next N 500,000 at 15%,
Next N 500,000 at 19%.
Then next N1,600,000 at 21%.
more than N 3,200,000 at 24%.

Tax-exemption items include National Housing Fund contributions, National Health Insurance Scheme premiums, Life Assurance Premiums, and National Pension Scheme contributions.
A deduction of the annual amount of any premium paid by the individual during the year preceding the year of assessment to an insurance company in respect of insurance on his life or the life of his spouse will be allowed.
Default penalties have been increased from 5,000 to 20,000 for general offences, while penalties have been increased from 100 every day for non-compliance to 2,000 for continued default for failure to furnish returns/statements/keep records.
Personal income tax is administered by State Board of Internal Revenue.
Nigeria’s Tax Administration is being handled by State Board of Internal Revenue Service, Federal Inland Revenue Service, and Federal Capital Territory-Internal Revenue Service.

GENERAL REMARKS

The review of the Finance Act will be on an annual basis.
The PAYE tax in Nigeria is calculated as a progressive tax.
Staff who need more clarity on tax exemption matters are to approach the Directorate of Financial Services (DFS) for appropriate advice.

ACTION POINTS:

Due to constant changes in the tax laws, we are all advised (business owners) to read the tax laws together with the Finance Acts or seek the help of an expert before making any financial or tax decision.

We appreciate Landmark University Management led by the Vice Chancellor, Prof. Charity Aremu, the Registrar, Miss Fola Oyinloye, the Director of Financial Services and Director, LUCRID for all that was put in place for the success of this webinar.

SOME OF THE 24 LUCRID WEBINAR PICTURES

Thank you.

Oladipo Adenike O.

Categories: SDG 17, SDG 4