FEATURES INSIGHTS ON THE 2020 FINANCE BILL AND HOW IT AFFECTS ENTREPRENEURS By Admin Posted on January 16, 2020 8 min read 0 0 Share on Facebook Share on Twitter Share on Google+ Share on Pinterest Share on Linkedin On the 13th of January 2020, President Muhammadu Buhari signed the finance bill into law. The finance bill is the new tax law and is expected to make sweeping changes to the nation’s tax laws, also gives the federal government additional powers as it seeks to shore up its tax base. The bill supports micro, small and medium-sized businesses, also includes increasing government revenues and stakeholder investment in the investment/capital market. No doubt, this bill is a welcome development in the tax landscape of Nigeria. It makes provisions that have the capacity to boost the economy by stimulating the growth of small and medium scale enterprises and enticing foreign direct investment into Nigeria How the finance bill affects a Nigerian entrepreneur; The company income tax act and the customs excise tax act concerns entrepreneurs. The customs excise duties remove any unfair advantage on imported products over local products. It ensures a balance between local producers and imported products and gives the local producers an edge advantage. Firms whose return is less than N25m turnover will be exempted from company income tax, firms whose return is between N25m-N100m turnover would pay 20% company tax and firms whose return is above N100m would pay 30% company tax. All these gives room for further investment. The following tax act was amended in the finance bill; Petroleum profit tax actThe Custom excise tariff actCompany income tax actPersonal income tax actValue-added taxStamp duties actCapital tax Petroleum profit tax act applies to the taxation of the assessed income profits of companies engaged in petroleum operations, be it crude oil or natural gas. Thereby amending the petroleum profit tax act can either lead to positive or negative results. Following the outcome of this study, it is therefore concluded that a higher tax rate causes a reduction in the profitability of oil and gas firms in Nigeria. It is recommended that the government should reduce the tax rate to enable oil and gas firms to thrive especially during the economic recession and creating a positive impact in the oil and gas sector. Customs and excise tariff act is an act to provide for the imposition of ad valorem custom and excise payable to goods imported in Nigeria based on a harmonized system of customs tariff. The tariff increase the prices of imported goods because of this, domestic producers are not forced to reduce their prices from increased competition and domestic consumers are left paying higher prices. The company income tax act is a tax on the profits of incorporated entities in Nigeria. It is therefore commonly referred to as a corporate tax. It is one of the taxes administered and collected by the Federal Inland Revenue (FIRS). Company income tax is a tool to achieve economic growth in any country. Raising the corporate income tax rate will result in economic consequences. Raising the corporate income tax rate would reduce economic growth and lead to the smaller capital stock, lower wage growth and reduced employment. Personal income tax act payable is dependent on the amount of taxable income that the person is liable for. Taxable income refers to the base upon which the income tax system imposes and decides on how much tax a person is to pay in a given year calendar year. An increase in personal income tax will result in a reduction in saving, investment and consumption. Value-added tax is a tax on the amount by which the value of an article has been increased at each stage of its production or distribution. Income-based inequality has increased due to the adoption of value-added tax. Stamp duties act: stamp duties are basically taxes paid to the federal government on documents (also known as an instrument of the purpose of the stamp duties act) such as conveyance on sale, bills exchange. Stamp duties discourage house moving locally, slowing down the housing market. Capital gain tax is a tax on the profit realized on the sale of non-inventory assets. The most common capital gains are realized from the sales of stocks bonds, precious metals, real estate, and property. Capital gains tax reductions are often proposed as a policy that will increase saving and investment, provide a short-term economic stimulus and boost long-term economic growth. Capital gains tax rate reduction, therefore, appears to decrease public savings and may have little or no effect on private savings. . . . . . . . . . . . . As written by Ajibade Bambi.