President Buhari signed 2019 Finance Bill into law , How It Will Affect You and I
President Mohammed had earlier submitted the Finance Bill 2019 to the joint session of the National Assembly along with the 2020 budget. The bill was equally jointly passed with the budget, by both chambers of the National Assembly in December last year.
The new Financial law will bring several changes into the money and capital market sector which will subsequently have its own effect on everyone of us.
Purpose of the Bill :
With the nations reliance on crude oil and the continuing drop in the price since 2014 . Nigeria has been been facing sharp drop in revenue and funding of budget has been very difficult.
The nation’s budget this year is ₦10.59 trillion, but it is only expecting to realise an income of ₦8.16 trillion, leaving the country with a budget deficit of ₦2.43 trillion. The budget is huge because of high cost of servicing Nigeria’s increasing debt.
However, more than half of the expected income of ₦8.16 trillion will be spent on debt servicing. In order to fund the deficit of ₦2.43 trillion in the budget, Nigeria has no choice than to borrow or raise its income.
However, since Nigeria cannot Increase the global price of crude oil, in order to its raise revenue, its only choice is to increase tax. Nigeria’s revenue problem was compounded this fiscal year, because of the new minimum wage which the Federal and States Governments have to start paying from this month.
How It Will Affect You and I
1. VAT Increase
Value Added Tax is now 7.5%, up from 5%. This will automatically lead to increase in commodity prices (higher inflation), high interest rate, Increase unemployment and generally, Nigerians will become poorer because their purchasing power will be reduced.
2. Compulsory Tax Identification Number (TIN)
From today, you will now be requested to provide your TIN, before you can open bank accounts. You must equally provide their TIN to continue operating your existing bank accounts.
3. Company Income Tax
• If your business has a turnover of less than ₦25m, your business will no longer be paying CIT again, as it will now be exempted from Companies Income Tax.
• Also, if your company is a medium-sized companies with turnover between N25m and N100m, you will now pay a reduced CIT rate of 20% from today.
4. Email Correspondence
Henceforth, you can now communicate with tax authorities via email, as the medium is now a recognised means of tax communication.
5. Stamp Duty
Stampduty on your bank transfers will now apply only on any amount from ₦10,000 and above. However, if you make transfer between your two accounts in the same bank, you will equally be exempted from stamp duty.