Ifeoluwa Adegoke (CFEI) speaks on The New Policy Under the Financial Act and How It might Affect the Public.
Ifeoluwa Adegoke (CFEI) is the Founder of MTWI Financial Services, she has a group of financial experts here to help clients become financially literate, attain their financial goals and live an overall happy life. She does these with the utmost dedication to help her clients make the kind of life they dream of a reality. She achieves this through financial trainings and advisory. She aim to equip her clients and community with the financial knowledge needed to live a healthy financial life they desire.
Ifeoluwa Adegoke (CFEI): If you remember correctly, the finance bill is not exactly new. It was first submitted in 2021. It included some major changes like the increase in VAT which largely caused discontent and grumbling from citizens that were trying to navigate the new national economy dynamics after the Covid-19 pandemic lockdown. At the top of the list was high inflation and increased level of job loss. Many people felt it was inconsiderate of the Federal government to increase VAT in such financially trying times for the country.
Also the practice direction by the federal high court which was then followed up by the tax appeal tribunal rules requiring that tax defaulters should pay a deposit of 50% of the amount defaulted before they can be heard also felt very inappropriate to a lot of Nigerians as it can deny a lot of people justice and fair hearing on legal tax matters.
The finance act was finally signed by the president a few days ago with some new adjustments to the bill. Some of the notable changes include;
- Education tax was increased from 2% to 2.5%
- Excise duty on carbonated, sugary, non-alcoholic drink of N10 per liter
- Capital gain tax of 10% on sales of shares of 100 million naira and above of either publicly traded or private equity companies
The education tax is a corporate tax to be paid by companies at the rate of 2.5% of their assessable profit. This is to serve as their contribution to the education tax fund.
The excise duty will roughly translate to a 5% increase in the retail price of your favorite soft drink.
For the capital gain tax for shares, the threshold in the original bill was 500 million naira with 5% tax but in the new bill signed by the president, the threshold is now 100 million with a capital gain tax of 10% within 12months except capital is reinvested by the investor.
There are other interesting part of the bill that affects the corporate environment in Nigeria that might have some negative ripple effects on the economy as corporate bodies will always look for ways to maintain profit no matter what.
The act took effect from the 1st of January, 2022.