The variation of the Finance Act by President Bola Ahmed Tinubu has some significant meaning for individuals and businesses already in operation or those planning to set up shop.
Some amendments were carried out to the Finance Act 2022 in the twilight of the Buhari administration in May 2023. The commencement date for these amendments was put at July 2023 instead of September 2023.
Before the executive order, the new three per cent Tertiary Education Tax (TET) rate was supposed to take effect from when a company’s next TET is due (for companies with July 1 accounting period).
Because the Finance Act was amended in May, implementing the three per cent TET tax rate in July 2023 will not give businesses the required 90 days to internalise and adjust to the new tax rate.
The executive orders affect commencement dates for all VAT withheld or collected in June 2023, to be remitted to FIRS on or before the 14th.
Companies must charge VAT at the prevailing rate with effect from July 1, 2023. This has been reversed by the new EOs.
The adjustment of the commencement dates of the changes contained in the Finance Act 2022 from May 23, 2023, to September 1, 2023, is to ensure adherence to the 90 days minimum advance notice for tax changes as contained in the 2017 National Tax Policy.
In other words, it is designed to allow taxpayers to adjust themselves to the impending taxes.
The suspension of the five per cent excise tax on telecommunications services and the escalation of Excise Duty on locally manufactured products have been a source of controversy because they will lead to an increase in the call and data rates charged by the telecommunications companies (TelCos) and also discourage the manufacture of some goods locally.
Tinubu’s suspension of the import tax adjustment levy on certain vehicles will allow for the importation of mass transit buses and vehicles that appeal to the middle class.
The decision made by President Tinubu to suspend the Green tax or Excise Tax on Single Use Plastics is a welcome development. This is due to the fact that the sector lacks adequate data and transparency, making taxation an unfavourable approach.
There is no guarantee that the ultimate cost won’t be shifted to consumers, hence making taxation unreliable in this case.
