Some of the highlights of the new Financial Act 2020.

  1. If you’re a low income earner on N30k per month or less, you’re now exempted from personal income tax based on the new Finance Act. So tell your employer to stop deducting PAYE from your pay effective from this month.
  2. Effective 1st Jan 2021, commercial flight tickets have been exempted from VAT. Next time you fly, cross check that you’re not wrongly charged VAT (and hopefully air fares should come down).
  3. The new law clarifies that land & building are not taxable goods for VAT purposes. This means no VAT on transfer of land or purchase of a house. Impliedly, it also means no VAT on house rent on lease of real property whether residential.
  4. Reduction of import duty on Tractors from 35% to 5%; Mass transit vehicles for transport of more than 10 persons and Trucks from 35% to 10%, and reduction of import levy on Cars from 30% to 5%.You should pay less when importing or buying an imported car.
  5. Compensation for loss of office up to N10m is exempted from tax. Any excess above N10m is liable to 10% CGT to be deducted by the payer and remitted within the time specified under the PAYE Regulations.
  6. Minimum tax payable by companies in respect of returns for years of assessments falling due between 1st Jan 2020 and 31st Dec 2021 has been reduced from 0.5% to 0.25% of ‘gross turnover less franked investment income.
  7. Cost of donation made in cash or kind to any fund set up by government in respect of any pandemic or natural disaster to be tax deductible subject to a maximum of 10% of ‘assessable profits after other allowable donations’
  8. The scope of items liable to excise duties has been expanded to include telecommunication services provided in Nigeria as may be prescribed in the law or an Order issued by the President. You may have to pay more for airtime & data in the near future.
  9. Unclaimed dividends in a listed company and dormant account balances unutilised for 6yrs or more to be transferred to Unclaimed Funds Trust Fund to be managed by the DMO. Amounts can subsequently be claimed by the owner at any time together with the yield thereon.
  10. You will no longer pay stamp duty on bank transfers but sorry you’ll now pay a new transaction levy called “Electronic Money Transfer” EMT levy of N50 on transfer of money in a bank or any financial institution on any account on sums of N10k or more.
  11. Revenue collected from the new EMT levy will be shared based on derivation 15% to FG & FCT and 85% to States.
  12. Better Days are coming.
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