NBCC Forum Examines Impact of Finance Act 2020 on Nigerian Businesses

Saturday, March 06, 2021 / 07.00PM / Bukola Akinyele-Yisau forWebTV / Header Image Credit: NBCC

As part of its advocacy role ofgovernment policies and the impact on businesses and the Nigerian economy, theNigeria-British Chamber of Commerce (NBCC) recently hosted a forum to examinethe finance Act 2020.

Mr. Kayode Falowo President of NBCC inhis opening remarks, said the finance Act which was passed to provide economicrecovery and resilience through the nation's fiscal space, is a topical issueat the moment in Nigeria.

He said, the Finance Act aimed toaddress ambiguity and provide clarity to certain provisions, and supportcompanies with incentives to mitigate the impact of COVID 19.

According to the NBCC President, hesaid there had been several reactions from different stakeholders, analysts,and commentators concerning the finance Act.

He said it was important to understandthe key changes and their effect on the general economic outlook and how thechanges will affect individuals, business owners, and top managers in anyorganization of the Nigerian economy.

The Moderator of the NBCC Finance Act2020 event Mr. Olasunkanmi Adenuga said the Finance Bill amended about 14principles on tax-related legislation, which include boosting governmentrevenue and also streamlining areas of regulatory conflict as well asaddressing certain ambiguities. It is also to provide relief toSmall and Medium Enterprises, expand the crisis intervention fund, and adoptingan unclaimed trust funds strategy.

Mr. Theophilus Emuwa, ManagingPartner, AELEX shared his views on the Finance Act 2020. According to Emuwa,the 2020 Act was a continuation of the 2019 Finance Act.

Enuwa said the finance Act needs toamend some of the challenges facing businesses in the country. The mainlegislation was still the same and needs to change.

He added that the annual review of thefinance Act was a positive step for the government. "From 1999 to 2020amendment in the finance act was slow to happen. In terms of direction, thegovernment has been struggling with revenues and resources to do its job. In2020, the VAT was increased from 5% to 7.5% which was the first time VAT hadbeen increased since 1993" Emuwa said

Mr. Taiwo Oyedele. the Fiscal PolicyPartner and West Africa Tax Leader at PwC, said the Finance Act was not aperfect piece of legislation, but came at a time the government faced thechallenges of low revenues for the economy.

Apart from low revenues, the taxexpert noted that there was a need for the government to increase expenditurein such areas as providing palliative to vulnerable sectors of the economy andexploring fiscal measures to stimulate business.

He also believed in the need for thegovernment to increase its capacity in handling fiscal responsibilities andimproving the procurement process.

Oyedele lauded the initiative of thegovernment in signing the Finance Act. He emphasised the need to getstate-owned enterprises (SoEs) to work effectively.

According to him "The impact on Smallbusinesses is that they were exempted from the Company Income Tax (CIT) in thefinance Act 2020 and they were equally exempted from Value Added Tax (VAT) ontheir goods and services. Also, there was an exemption of minimum wage earnersfrom Personal Income Tax (PIT). The exemption on minimum wage from PIT was themost impactful policy in the finance Act, alongside the deduction of importduties and levies on vehicles and also an exemption of VAT on airline ticketsand unclaimed trust funds; all these were significant aspects of the FinanceAct".

Oyedele said that the tax authoritiesin Nigeria could leverage technology to improve the ease of doing business. Hesaid what individuals need to do was to understand the laws around taxation,and the need for taxpayer groups to come together and engage policymakers andlawmakers in tinkering with the Act.

The PwC West African leader said thefinance Act should be seen as a work in progress, with better proactive ratherthan reactive steps.