*Sugar tax takes effect
The Federal Government is set to drive internal revenues through new tax regimes as contained in the Finance Act 2021 to drive funds to implement 2022 budget priorities.
Key among the areas the government intends to raise taxes include sugar tax on carbonated and sweetened beverages, digital economy taxes, tax on traded shares above a N100 million, profit making educational institutions and more.
These and more were key issues during the Finance Act 2021 – Stakeholder engagement: Manufacturing and Capital Markets Industry held virtually on Monday.
Presenting a paper on the “Finance Act 2021: key Drivers & Thematic Areas”, Dr. Bode Oyetunde, the Executive Director STP, AfDB, member and Co-Secretary Fiscal Policy Reforms Committee, said domestic revenue acceleration, Tax administration and dealing with areas as in 2020 Finance Act forms the core of Finance Act 2021 which will be implemented until the next Finance Act is passed and signed into law.
He also said the digital economy will be taxed more equitably. Even as he said some of the multinationals have welcome the new tax applications and are complying already.
Speaking on capital gains tax as new required he said 10 percent capital gains tax will apply on “shares disposal transactions where the aggregate disposal proceeds exceed N100 million in any 12 consecutive calendar months.”
He however said there is an reinvestment relief provided to defer capital gains tax where disposal proceeds are wholly or partially reinvested.
He said taxpayers are required to report annually to FIRS for corporate shareholders and state IRS for individuals.
On Taxation for profit educational companies, he “clarified that for profit educational institutions incorporated as ordinary companies are liable to corporate tax on their profits generated from providing commercial educational services by way of a trade or business.” However, he said charitable educational bodies set as Trusts or Incorporated Trustees shall be tax exempt.
On Excise Duty on non-alcoholic, carbonated and sweetened beverages he noted that the “specific excise duty of N10/litre imposed on non-alcoholic, carbonated and sweetened beverages, to discourage excessive consumption of sugar in beverages which contributes to diabetes, obesity etc,”
He said the revenues from sugar tax to raise funding for health-related and other critical expenditures in line with the 2022 budget priorities.
He also said the Finance Act 2021 has reinforce the FIRS mandate as principal tax collector agency.
“FIRS confirmed as FGN’s principal tax revenue collection agency and may collaborate with other federal law enforcement MDAs.”
Also “the Minister of Finance, Budget and National Planning will now regulate electronic money transfer levy.
He said the National Agency for Science and Engineering Infrastructure (NASENI levy comprise of one percent of FAAC, 0.25 percent of profit before tax of major companies with turnover greater than N100 million per annum. This is to align with current realities and ensure that the NASENI Act is implementable. It empowers the FIRS to collet NASENI levy from major banking, telecoms. ICT, aviation, Maritime and oil and gas companies with turnover above N100m.