THERE may be stringent rules in the operation of bank accounts by Nigerians effective from next year.
The Finance Bill 2021, an Executive Bill sent to the National Assembly by President Muhammadu Buhari, if passed into law will make the presentation of Tax Identification Number (TIN) compulsory before opening bank accounts.
President of the Senate, Ahmad Lawan, had during plenary on Tuesday, informed his colleagues about the receipt of a letter from President Buhari dated December 7, 2021, seeking the approval of the Senate for passage of the bill into law.
In a lead debate read on the floor of the Red Chamber on Wednesday on the Finance Bill by Senate Leader and Senator representing Kebbi North, Yahaya Abubakar Abdullahi, and sighted by Nigerian Tribune, the Bill disclosed that “Banks will be required to request for TIN before opening bank accounts for individuals while existing account holders must provide their TIN to continue operating their accounts.”
On Value Added Tax, (VAT), the Bill proposed a fine of N50,000 at first instance for late filing of returns and for default.
“Penalty for VAT late filing of returns increased to N50,000 for the first month and N25,000 for subsequent months of failure;
“The penalty for failure to register for VAT is reviewed upwards to NGN 50,000 for the first month of default and NGN 25,000 for each subsequent month of default;
“The penalty for failure to notify Federal Inland Revenue Service (FIRS) of change in company address to be reviewed upwards to N50,000 for the first month of default and N25,000 for each subsequent month of default. This penalty also covers failure to notify FIRS of permanent cessation of trade or business.”
There is also proposed penalty for operators saddled with responsibility to collect tax but defaulted in their statutory functions.
“Penalty for failure to deduct tax will also apply to agents appointed for tax deduction. This penalty is 10 per cent of the tax not deducted, plus interest at the prevailing monetary policy rate of the Central Bank of Nigeria (CBN).”
There is cheering news for pensioners as “the proposed Bill seeks to remove the tax exemption on withdrawals from pension schemes except the prescribed conditions are met; Child relief (N2,500 per child up to a maximum of four) and dependent relief (N2,000 per dependent for a maximum of two) are to be deleted.”
President Buhari is also anxious to remove all conditions attached to tax exemption on gratuities and ultimately make it tax exempt. Senator Abdullahi disclosed that the motive of the Bill was to reduce budget deficits, through clarity in policy reforms and execution.
The Senate curiously re- laxed some of its rules as the Bill sealed First and Second Readings on Wednesday.
Meanwhile, the Federal Executive Council (FEC) has ratified the Finance Bill 2021/2022 fiscal year. Minister of Finance, Budget and National Planning, Mrs. Zaynab Ahmed, while announcing the ratification to State House correspondents at a briefing after the meeting on Wednesday, explained that the bill, currently before the National Assembly, focused on tax as well as reviewing and amending some 11 fiscal laws.
She further explained that rather than proposing new taxes, or increasing tax rates, the Finance Bill for the 2022 fiscal year focuses on closing loopholes and improving tax administration.
“So, the proposed legislation falls under five broad categories. The first one of course is domestic revenue mobilisation, and various measures are proposed in the bill to enhance revenue.
“These include limited, excellent exemptions of case from shares disposals from capital gains tax to long-term equity investments, out to a close in tax loopholes for companies that are transmitted from the previous federal public tax regime to the world corporate tax and have recovered tax regime that is provided under the new petrol industry act of 2021.
“There are also provisions that have been made to prevent the abuse of Personal Income Tax released by individual taxpayers and allowances to evade taxation.
“This second broad category is Tax Administration Reforms and this include provisions to support the FIRS ongoing reforms to fully automate and deploy technology to enhance collections and encourage taxpayer compliance and there are several measures in that category.
“The third one is International Taxation Reforms. This provision empowers the FIRS to better assess non-resident companies to taxation by taxing profits derived from digital services rendered to Nigerian customers and it’s also designed to reduce the tax compliance burdens on non-resident taxpayers that are not required to register in Nigeria as companies.
“The fourth broad objective or the Finance Bill is financial reform to enhance tax equity. Most of these provisions that have been made are to enhance ongoing capital market reforms relating to securities lending transactions, real estate investment trusts, as well as the minimum taxation reductions that have been pioneered by the two previous Finance Bills.
“The fifth principle is Critical Public Financial Management and Reform. This reform was designed to strengthen the Federal Inland Revenue Service (FIRS) tax administration and coordination role in relation to the collection of taxes, vis-a-vis the responsibilities of relevant law enforcement agencies, such as the Nigerian Police or the EFCC and also to ensure and reinforce the supremacy of the fiscal rules and regulations as provided for by the Finance Controls and Management Act, as well as the 1999 Constitution, as amended.
