The Federal Executive council on the of 6th June 2018 approved 2 executive orders and 5 tax policy amendment bills in a bid to ameliorate tax burden, simplify tax payment, and increase the ease of doing business. It is noteworthy that Nigeria climbed 24 places on the recent World Bank ease of doing business index as a result of the current government’s policies.
The move was announced by the Minister of Finance in a press conference following the FEC meeting. The announcement followed the recommendation of the National Tax Policy Implementation Committee. The Federal Executive Council had in February 2017, approved the revised National Tax Policy in a bid to improve the nation’s tax policy, improve revenue, and investment for sustainable national development.
Earlier in May, the Vice-President had announced that the Federal Government will be introducing tax reforms to ease doing business for small and medium scale enterprises and vulnerable Nigerians. According to the VP the government is“…also aware that our tax systems require review to make it easier for citizens to fulfil their own end of the social contract. That is why in February 2016, Federal Executive Council, FEC adopted the National Tax Policy and the establishment of an Implementation Committee of the policy with the mandate of reviewing obsolete and ambiguous provisions in our tax laws, the simplification of the tax payment process and reduction of the tax burden on SMEs.”
The executive orders are the Value Added Tax (Modification) Order and the Review of Goods Liable to Excise Duties and Applicable Rate Order. According to the Finance Minister, the Value Added Tax Act (Modification) Order, will exempt “majority of the provisions approved today are actually removing the tax burden and clarifying obsolete and ambiguous areas of tax. So for example for VAT there is to be exemption for residential property, leases on rental, transport for the general public and life insurance.” from Value Added Tax (VAT). Review of Goods Liable to Excise Duties and Applicable Rates Order approved changes to the rates and bases for levying excise duties on alcoholic beverages and tobacco.
The Minister explained that the reforms will be beneficial to Nigerians in the long run.
The proposed bills are the Companies Income Tax Act (Amendment) Bill, the Value Added Tax Act (Amendment) Bill, Excise, Tariff ETC (Consolidation) Act (Amendment) Bill; Personal Income Tax Act (Amendment) Bill and Industrial Development (Income Tax Relief) Act (Amendment) Bill. While the executive orders take effect immediately, the bills will have to scale through the legislative hurdle before it can effectively become law.
We believe the reforms are in order and much-needed measure to ameliorate tax burden on Nigerian. It will encourage the massive inflow of investment and an engender an ambient ecosystem for businesses.