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FINANCE ACT 2020: Key changes and implications
On
President Muhammed Buhari, on 31 December 2020, signed the Finance Act 2020 (FA20) alongside the 2021 Appropriation Act into law. This reaffirms the Federal Government of Nigeria’s (FGN) commitment to enact fiscal policy annually, alongside the passage of the annual budget into law and aligns with global best practice.
The Act, which took effect on January 01, 2021, amended the provisions of 14 tax and fiscal related legislation, namely:
Capital Gains Tax Act (CGTA) Companies Income Tax Act (CITA) Industrial Development (Income Tax Relief) Act (IDITRA) Personal Income Tax Act (PITA) Tertiary Education Trust Fund (Establishment etc.) Act Customs and Excise Tariff, etc. [Consolidation] Act (CETA) Value Added Tax Act (VATA) Stamp Duties Act (SDA) Federal Inland Revenue Service (Establishment) Act (FIRSEA) Nigeria Export Processing Zones Act (NEPZA) Oil and Gas Export Free Zone Act (OGEFZA)
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This was at the first day of the public hearing, a necessary stage of the consideration and passage of the bill.
The legislation, which was transmitted to the National Assembly last year after it had suffered setbacks for about 20 years, proposes the scrapping of the
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On 31 December 2020, the President signed the Finance Bill, 2020
(now Finance Act, 2020) into law, alongside the 2021 Appropriation
Act. Indeed, the introduction of the Finance Act, 2020 (FA 2020) at
the beginning of fiscal year 2021 is a step in the right direction.
One can come to a conclusion that the Nigerian government is making
conscious efforts to align its local laws with global best
practices, promote fiscal equity, improve the ease of doing
business, provide support for small businesses and cultivate a
suitable environment for investment in infrastructure. The effort
The early passage of 2021 Budget, which for the second consecutive year, effectively returns the country to the January-December budget cycle is a means to an end and not an end itself. The main challenge is how to catalyse economic recovery efforts, and budget execution to significantly contribute towards achieving fiscal sustainability as well as macro-fiscal and sectoral objectives. Ndubuisi Francis writes
It is an unassailable fact that Nigeria is buffeted by a deepening macroeconomic challenges, a worsening social and fiscal order. While the economic challenges grow in leaps and bounds, the resources to tackle them appear to be wearing thin. Nigeria’s second quarter 2020 gross domestic product (GDP) contracted by 6.1 per cent although it performed considerably betterthan expected in the third quarter, contracting only by 3.62 per cent, representing an improvement of 2.48 per cent points over the second quarter level.
Introduction
In a bid to ensure that economic and financial challenges faced
by the country are promptly managed and addressed through revised
and definite economic policies, President Muhammadu Buhari signed
the Finance Bill 2020 into law which is now known as the Finance
Act 2020 ( The Act ) on December 31, 2020 alongside the
2021 Appropriation Bill. This aligns with best practices in
different jurisdictions across the world where existing tax
legislations and framework are annually reviewed in order to
support each year s budget and a major aspect of the
initiatives suggested by the President Enabling Business
Environment Council (PEBEC) and the National Tax Policy
Implementation Committee.