By Tony Obiechina, Abuja
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed said the Finance Act 2020 was enacted by the government to support the 2021 Budget with a view to boosting business growth and improving government’s fiscal position.
The Minister stated this at an Executive Roundtable organised by PwC Nigeria on Monday, to discuss and enlighten business leaders and other critical stakeholders on the Finance Act and the economy generally.
The Act took effect from 1st January 2021 alongside the 2021Federal Budget of “Economic Recovery and Resilience” after being been assented to, by the President.
In her keynote address at the Roundtable, the minister explained that the Finance Act was essentially structured across five broad areas namely, enacting counter cyclical measures and crisis intervention initiatives; introducing broad-based tax and fiscal responsibility reforms implementing key public procurement reforms.
Others include, providing fiscal relief targeted at key sectors such as mass transit for mass transit, transportation and minimum wage earners; and reforms around fiscal incentives for job creation as well as ensuring closer coordination of monetary, fiscal and trade policies across ongoing Ease of Doing Business and other key reforms.
Ahmed said, “it is important to note that the Finance Act, 2020 consolidates on the fiscal reforms introduced in the Finance Act, 2019 but is focused specifically on fiscal incentives and does not propose any new taxes or increases in existing tax rates.
“The Act has introduced 80 changes to about 14 different tax laws including the Company Income Tax Act, the Capital Gains Tax Act, Stamp Duties Act, Oil & Gas Export Free Zone Act, Customs & Excise Tariff Etc. (Consolidated) Act, Value Added Tax Act, amongst others. etc.
“Some of the provisions of the Finance Act 2020 are to consolidate on directed at using tax incentives in the Finance Act, 2019 which were targeted at to stimulatinge micro, small and medium enterprises (MSMEs), given the role they play in employment generation and output growth”.
She said further, “for instance, the Finance Act, 2020 extends the Corporate Income Tax exemption in the Finance Act, 2019 for Mmicro and Ssmall enterprises with an annual turnover of N25 million or less to include exemption from are exempted from paying Tertiary Education Tax.
“Also, Small or Mmedium Eenterprises who are engaged in primary agricultural production may, on application, be granted pioneer status (tax relief) for an initial period of 4 years and an additional 2 years (making a total of 6 years), she added.
According to her, other key reforms in the Tthe Finance Act, 2020 are targeted at supporting the implementation of the 2021 Budget, including restrictions on the Cost-to-Revenue Ratios of Government and State-Owned Enterprises; reforms extending the Public Procurement Act, for the first time, to cover the Judiciary and the National Assembly, as well as shortening procurement periods, increasing procurement mobilization fee thresholds from 15% to up to 30%, and providing for e-procurementprovides a critical support base for the 2021 budget.
“We intend to judiciously utilize our available resources to implement the 2021 Budget to boost infrastructural development, restore growth, and improve the general economic wellbeing of Nigerians”, stated.
The minister assured that the Federal Government “will continue to focus on economic policies aimed at improving revenue generation, enhancing economic competitiveness, attracting foreign direct investments, encouraging domestic investors, and ensuring enhancing the overall sustenance of the macroeconomic environment, stability, despite the significant challenges posed by the COVID-19 pandemic”.
