Benefits of Finance Act 2019, by finance, tax consultants

 Finance analysts and tax experts in Nigeria have been dissecting the recently promulgated Finance Act 2019 with the belief that it will go a long way in engendering business growth in the country.

I t would be recalled that the Finance Bill 2019 was presented to the National Assembly along with the 2020 Budget in October, 2019 by President Muhammadu Buhari.

The National Assembly passed the Bill in November, 2019 and the President signed the bill into law on the 13th of January, 2020.

Speaking at a seminar on organized by Okwudili &Co. (a firm of Chartered Accountants) on Finance Act 2019: Challenges and Opportunities” at the Sheraton Hotel &Suites Ikeja Lagos at the weekend,  a tax consultant, Musa  M. Kolo, described the Act  as a welcome development as  it will assist in the 2020 budget implementation.

Kolo, who is also the Chief Executive Officer of Armlink Ventures,  in his paper on “Finance Act 2019 – Tax Incentives Embedded In Different Sectors”, said the Act would also afford government the opportunity to review and align tax laws with the nation’s current realities.

According to Kolo, the Act is aimed at curing the deficiencies of the major primary tax legislations by amending obsolete and contentious provisions.

“Provisions of the Act have the capacity to boost the economy by stimulating the growth of micro, small and medium scale enterprises and encourage foreign direct investments.

“The bill is the first of its kind since Nigeria’s return to democracy in 1999. It is expected that the Executive will continue the practice of submitting a Finance Bill along with the Budget to the National Assembly in subsequent years in accordance with global best practice”, Kolo further said.

Speaking in the same vein, the Chairman of Colindale Consulting, Preye Ogriki, said t the Federal Government  has taken  has taken  the rigjt step in the same direction with the enactment of the Act to go with the 2020 budget, which is the country’s first since 1999. According to Ogriki, the  Act wil make taxation the major source of public revenue in Nigeria and the diversification the country’s economy from oil.

Stating that the Finance Act came with both threats and benefits to the Medium and Small-scale Enterprises (MSMEs), Dr. Tunji Adeniyi of Tunji Adeniyi and Associates Limited, said the threats would include lowered derive demand for their products, wage rate pressure, high cost of business financing and high cost of doing business, which might push many of them out of business.

Adeniyi identified the benefits in the Act to include the promotion of fiscal equity by enabling firms and individuals to pay tax proportionately and promotion of ease of doing business, and stimulate production and encourage reinvestment of profits.

In his submission, the Managing Partner of Modilim and Co., Dr. Patrick Modilim, said the Finance Act amended some sections of existing tax laws in the country without abrogating the entirety of these laws. These, according to him, include:  Companies Income Tax (CIT), Petroleum Profit Tax (PPT), Personal Income Tax (PIT), Value Added Tax (VAT), Customs and Excise Tariffs law, Capital Gain Tax (CGT) and Stamp Duty Tax (SDT).

Modilim stated that the amendment of Section 19 of CIT by Section 5 of the Finance Act solved the problem of double taxation and removed excess dividend tax rules that discouraged corporate savings and retention of profits.

Dr. Udochukwu G. Ogbonna, a senior lecturer in the College of Management Sciences, Rhema University, Aba, Abia State,  on his paper, said the major aim of the Finance Act was to bring changes in the Nigerian tax laws and make them responsive to tax reform policies of the federal government.

Ogbonna pointed out that the failure of the Finance  Act to define what it meant by a foreign company’s ‘significant economic presence’ in Nigeria and allowed it to be determined by the Minister of Finance through executive orders would  hinder its implementation. The university don then recommended more consultations to enhance the effective implementation of the Finance Act.

The Founding Managing Partner of Okwudili Ijezie and Co., Blakey Ijezie, said the Federal Government’s resolve to increase the Value Added Tax (VAT) by 50 per cent would trigger inflationary pressure, adding that Nigeria may record between 15 and 20 per cents inflation rate by July this year.

Earlier in her keynote address, President of Chartered Institute of Taxation of Nigeria (CITN), Gladys Olajumoke Simplice, who was a keynote speaker, said the Act would usher in a new beginning for a country that has stayed long on the fence on matters of taxation.

According to her, Lauding the Federal Government’s decision to raise VAT) by 50 per cent from five per cent to 7.5 per cent, Simplice said the greatest achievement of the Act was the reawakening of the consciousness of taxation among Nigerians.

Simplice further said: “I believe that VAT increase is good. Let us tax luxury consumptions. The increase has been compensated with the give and take the government has done, especially for the Micro, Small and Medium Enterprises (MSMEs) and exemption of goods consumed by the poor from VAT payment,”