Finance (Miscellaneous Taxation Provisions) A BILL FOR

Transcription

1 SB. A BILL [Executive] C000 FOR An Act to Amend Various Tax Provisions as Contained in Certain Tax Laws in Order to Give Effect to the Fiscal Measures Contained in the 00 Budget and for Matters Connected Therewith [ ] Be it Enacted by the National Assembly of the Federal Republic of Nigeria Commencement. 0 0 Part I General. The following tax laws (a) the Companies Income Tax Act; (b) the Personal Income Tax Act, (c) the Petroleum Prot its Tax Act; (d) the Value Added Tax Act, are amended as set out in this Act. Part II Companies Income Tax Act. The Companies Income Tax Act, (in this Part of this Act referred to as the principal Act ) as amended, is further amended as set out in this Part of this Act.. Section of the principal Act is amended (a) in Subsection () by substituting the sum x,000,000 for the sum x0.000 ; (b) in Subsection () by substituting for ; (c) in Subsection () by (i) deleting the sentence after the word company where it first occurs in line ; and (ii) inserting a new Subsection (0) as follows (0) A company shall be deemed to be engaged in manufacturing for export it (a) at least 0% of the manufactured goods are exported; and of tax laws. Cap. 0 LFN No. 0 Cap. LFN No. 0. of Cap. 0 LFN. of Section. Bill, 00.p

2 C No. of Section (b) the undertaking repatriates at least % of the export earnings through government approved channels.. Section of the principal Act is amended by substituting for the existing Section, the following new Section Insurance companies.. () Notwithstanding anything to the contrary contained in this Act, insurance business shall be classified into (a) life insurance business which covers personal life and group life insurance business and other insurance businesses that are contingent on the life of an individual or a group of individuals, (b) non life insurance business which covers motor vehicle accident, fire, workmen s compensation, goods in transit, theft, marine and aviation, oil and gas, credit, railway, rolling stock, miscellaneous businesses and all other risks that are not contingent on the life of the insured. () In an insurance company, whether proprietary or mutual, other than a life insurance company or a Nigerian company which carries on business through a permanent establishment in Nigeria and whose profits accrue in part outside Nigeria, the profits on which tax may be imposed, shall be ascertained by taking the gross premiums and interest and other incomes receivable in Nigeria less reinsurance, and deducting from the balance so arrived at, a reserve for unexpired risks at the percentage consistently adopted by the company in relation to its operations as a whole for such risks at the end of the period for which the profits are being ascertained, subject to the limitation imposed in Subsection () (a) of this section. () The profits on which tax may be imposed in an insurance company which is a life insurance company, whether proprietary or mutual, other than a Nigerian company which Bill, 00.p

3 0 0 0 carries on business through a permanent establishment in Nigeria, shall (a) be the investment income less the management expenses, including commission. subject to the limitation imposed in Subsection () (b) of this section; (b) where the profits of the company accrue in part outside Nigeria, be that proportion of the total investment income of the company as the premiums received and receivable, less the agency expenses in Nigeria and fair proportion of Elie expenses of the head office of the company, but where the insurance company has its head office outside Nigeria, the Board may substitute some basis other than that prescribed in this paragraph for ascertaining the required proportion of die total investment income. () Any amount distributed in any form as dividend from an actuarial revaluation of unexpired risks or from any other revaluation shall be deemed to be part of the total profits of the company for tax purposes. () Not more than three months after an actuarial revaluation of the unexpired risks or any other revaluation has taken place, the Company shall Provide the Board with full particulars of the revaluation carried out, including a copy of the actuary s revaluation certificate, () The profits on which tax may be imposed (a) in a non life Nigerian insurance company shall be ascertained in accordance with the provisions of Subsection () of this section as though the whole premium and investment incomes of the company were incurred in Nigeria, (b) in a Nigerian life insurance company, shall be ascertained in accordance with the provisions of Subsections (), () and () of this section as though the whole premium, Bill, 00.p

4 0 0 0 investment arid other incomes were received in Nigeria and all tile expenses and other outgoings of tile company were incurred in Nigeria. () Where an insurance company takes on a life class and a non life class insurance business. the funds and books of accounts of one class shall be kept separate from tile other is though one class does not relate to the other class, and the annual tax returns of the two classes of insurance businesses shall be made separately. () Each class of insurance shall be assessed separately as to Life Insurance Assessment and Non Life (other) Insurance Assessment and in respect of each class of insurance, where there are more than one type of insurance business in the same class, the loss from one type of business shall iiot be allowed against the income from another type of insurance business. but the loss shall be available to be carried forward against profits from the same class of insurance business and in all cases, the period of carrying forward of a loss shall be limited to four years of assessment. () An insurance company, other than a life insurance company, shall be allowed as deductions from its premium the following reserves for tax purposes (a) for unexpired risks, % of the total premium in case of general (non life) insurance business other than marine insurance business and % of the total premium in the case of marine cargo insurance; (b) for other reserves, claims and outgoings of the company, an amount equal to % of the total premium, so however that, after allowance under the Second Schedule to this Act, as may be restricted, has been allowed for in any year of assessment, not less than an amount equal to % of the Bill, 00.p

5 0 0 0 total premium and other incomes shall be available as the total profit of the company for tax purposes. (0) An insurance company, in respect of its life insurance business shall be allowed the following deductions from its investment incomes and other incomes (a) an amount which makes a general reserve fund equal to the net liabilities on policies in force at the time of an actuarial valuation; (b) an amount which is equal to % of gross premium or 0% of profits (whichever is greater) to a special Reserve Fund and accumulate until it becomes the amount of the statutory minimum paid-up capital; (c) all normal allowable business outgoings, provided that after allowing for all the outgoings and allowance under the Second Schedule to this Act as may be restricted under the provisions of this Act for any year of assessment, not less than all amount equal to 0% of tile gross incomes shall be available as total profit of tile company for tax purposes. () A reinsurance company shall be allowed the following deductions from its gross profit to be credited to a general reserve fund (a) an amount not more than 0% of the reinsurer s gross profits for the year where the general reserve fund is less than the initial statutory minimum authorised share capital; or (b) an amount not more than % of the reinsurer s gross profit for the year, where the fund is equal to or exceeds the initial statutory minimum authorised share capital. () An insurance company that engages the services of an insurance agent, a loss adjuster and an insurance broker shall include in its annual tax returns, a schedule showing the name and address of cacti agent, loss adjuster and insurance Bill, 00.p

6 of Section A, No. 0. of Section. of Section. No.. No.. of Section broker, the date the services were employed and terminated, as applicable, and payments made to each such agent, loss adjuster and insurance broker for the period covered by the Payment of tax returns. dividend by. There is substituted for Section A of the principal Act as inserted a Nigerian by company. Section of the Act,, the following new Section A A. Where a dividend is paid out of profit on dividend by which no tax is payable due to (a) no total profits; or (b) total profits, which are less than the amount of dividend which is paid, whether or not the recipient of the dividend is a Nigerian company, the company paying the dividend shall be charged tax at the rate prescribed in Subsection () of Section of this Act, as if the dividend is the total profits of the company for the year of assessment to which the accounts out of which the dividend is declared, relates.. Section of the principal Act is amended by (a) deleting the existing paragraph (b); and (b) re numbering the existing paragraph (c) as paragraph (b).. Section of the principal Act is amended in Subsection () by (a) inserting a new paragraph (k) immediately after paragraph (j) as follows (k) the profits of any company or any corporation established by an Act of the National Assembly for the purpose of fostering the economic development of Nigeria, not being profits derived from any trade or business carried out by that corporation from any share or other interest possessed by that corporation in a trade or business in Nigeria carried on by some other persons or Authority; (b) re numbering the existing paragraph (k) as paragraph (kk), Bill, 00.p

7 0 0 (c) renumbering paragraph (o) and (p) as inserted by Section of the Act, as paragraphs (p) and (q) respectively; and (d) re numbering paragraphs (q) and (r) as inserted by Section of the Act, as paragraphs (r) and (s) respectively.. Section of the principal Act is amended in Subsection () by substitution the words investment allowance for the words investment tax credit.. Section of the principal Act is amended by substituting for the existing Subsection (), the following new Subsection () () Any provision which is applicable to ail initial allowance in the Second Schedule to this Act shall also apply to ail investment allowance, except that (a) an investment allowance shall not be taken into consideration in ascertaining the residue to qualifying expenditure; or (b) the unabsorbed investment allowance shall not be carried forward to subsequent years. 0. Section A of the principal Act is amended as follows (a) in Subsection () by substituting the words assessment years for the words calendar years; (b) inserting a new paragraph (d) as follows (d) for the purposes of paragraph (c) of this section, a fund shall qualify as imported equity capital only if it is brought in through government approved channels as detailed in Section (l) (m) of this Act.. Section F of the principal Act is amended by (a) substituting the words investment allowance for the words investment tax credit wlierever they occur in paragraphs (i) and (ii); and (b) inserting a marginal note to Section F as follonvs Investment tax. of Section. of Section A. of Section F. of Section 0. No.. Deletion of Section 0A. of Section 0AA. Bill, 00.p

8 of Section 0B. No. 0. of Section. Deletion of Section A. of Section. Deletion of Section 0. of Section. of Section Section 0 of the principal Act as inserted by Section of Finance (Miscellaneous Taxation) Act, No. is amended by substituting for the words investment tax credit the words investment allowance. Filing of selfassessment.. Section 0A of the principal Act is hereby deleted.. For Section 0AA of the principal Act there is substituted a new Section 0AA, as follows 0AA (l) Every person who fails to file a self assessment retain on a due date is liable to a penalty equal to the aggregate of (a) % of the tax payable for the first month in which the failure occurs; (b) an amount equal to % of the tax payable for each subsequent month in which the failure continues; and (c) interest at prevailing commercial rate of the Central Bank of Nigeria re-discount rate on the tax payable for the period the failure occurs.. Section 0B of tile principal Act as amended by Section of the Act, No. 0 is amended by substituting for the words from Every to shall in the running paragraph the following new running paragraph Every company filing a return under Sections,,and of this Act shall. Section of the principal Act is amended by deleting Subsection ().. Section A of the principal Act is hereby deleted.. Section of the principal Act is amended (a) in Subsection () by substituting Section 0B for Section in line four; and (b) in Subsection () (a) by deleting all the words after the word return. Section 0 of the principal Act is hereby deleted. 0. Section of the principal Act is amended by Bill, 00.p

9 0 0 0 (a) deleting Subsection (); (b) inserting a new Subsection () as follows () Where in assessment notice is served on a company within the approved period of payment of provisional nix, the tax shall be paid within two months after the end of the approved period and in any cise not later than st December of the year of assessment in which tax was charged ; and (c) renumbering the existing Subsections () and () as Subsections () and () respectively.. Section of the principal Act is amended in Subsection () by substituting for the amount x00 and x0 respectively wherever they occur in that subsection the amount x0,000 and x,000 respectively.. The Second Schedule to the principal Act is amended (a) in paragraph () by substituting the word obsolete for the words old ones ; and (b) in paragraph, by inserting a new sub paragraph () as follows () Nothing in this Schedule shall entitle the lessor or lessee to assign capital allowances to each other or cede the right of claim of capital allowances. Part III Personal Income Tax Act,. The Personal Income Tax Act, (in this Part of this Act referred to as the principal Act ) is amended as set out in this Part.. Section of the principal Act is amended by inserting after the word individuals on the first line, the following words in parenthesis (other than the pensions of public servants). Personal. relief. Section of the principal Act is amended in Subsection () (e) by inserting after the word pension the words in parenthesis, (other than pensions in respect of service in the public service of the Federation or of a State).. There is inserted immediately after Section a new Section A as follows of Second Schedule. of No. 0. of Section. of Section. Insertion of new Section A. of Section. Bill, 00.p

10 to Third Schedule. to Sixth Schedule. of Cap. LFN. of Section. of Section. of Section. of Section 0. No A Any allowance approved by the government or an employer for workers shall be treated as non taxable in both public and private sectors subject to the following limits (a) transport allowance x0,000; (b) housing allowance x0,000.. Section of the principal Act is amended by substituting for the existing Subsection () (b) the following new Section () (b) (b) one member from each State, being the Executive Chairman of the State Board of Internal Revenue, to be appointed by the Governor of the State from within the service of that State.. The Third Schedule to the principal Act is amended in paragraph by (a) inserting a new subparagraph (a) as follows (a) pensions granted to public servants of the Federation and the States ; and (b) re numbering the existing paragraph its subparagraph (b).. The Sixth Schedule to the principal Act is amended by substituting for the existing Income Tax Table the following new Income Tax Table Income Tax Table Income to be Taxed Rate of Tax For every Naira of the first x0, % For every Naira of the next x0, % For every Naira of the next x0, % For every Naira of the next x0, % For every Naira of the next x0, %. Part IV Petroleum Profits Tax Act 0. The Petroleum Profits Tax Act (in this Part of this Act referred to as the principal Act ) is further amended as set out in this Part of this Act.. Section of the principal Act is amended by deleting Subsections () and () of that section.. Section of the principal Act is amended by deleting Subsection 0 Bill, 00.p

11 0 0 0 () of that section.. Section of the principal Act is amended by substituting the words qualifying capital expenditure for the words chargeable profit wherever they appear in the section and marginal note.. Section 0 of the principal Act, as inserted by Section of the of the Act,, is further amended by inserting immediately after Subsection () the following new Subsection () () Nothing in this section shall be construed as applying to a company that signed a Production Sharing Contract with the government after.. The First Schedule to the principal Act is amended by inserting after the figure in line seven, the figures and respectively. Part V Value Added Tax Act. The Value Added Tax Act as amended (in this Part of this Act referred to as the principal Act ) is further amended as set out in this Part of this Act.. Section of the principal Act is amended by substituting First Schedule for the word Schedules.. Section of the principal Act is amended by inserting the words and services after the word goods wherever it appears in the section.. Section of the principal Act is amended by (a) substituting for Subsection () the following new Subsection () () A taxable person shall, within six months of the commencement of business, register with the Board for the purpose of tax ; (b) substituting for the existing Subsection () the following new Subsection () () Every taxable person shall register the branch or sales outlet of that body wherever the branch or sales outlet is located for the purposes of this Act. 0. Sections A () and 0 (l) and () of the principal Act are amended by substituting the words taxable person for the word contractor wherever it occurs in those subsections. () There is inserted a new Subsection (A) as follows of First Schedule. of No. 0. of Section. of Section. of Section. of Sections A () and 0 () and (). of Section. Insertion of new Section A. Bill, 00.p

12 of First Schedule. No.. of No.. of Section. of Section (IA) A Ministry or a government statutory body shall on the production of a clearance certificate issued by the Board, be given its statutory allocation from the office of the Accountant-General of the Federation.. Section of the principal Act is amended in Subsection () by Objection to value added substituting Section for Section. tax.. lmmediately after the existing Section of the principal Act, there is inserted the following new Section A. A () Where a taxable person objects to an assessment made on the taxable person by the Board to the Board he may object on the assessment made. () The Board shelf seek to reach an agreement with the taxable person as to the amount of taxable supplies that is liable to the value added tax and upon reaching an agreement, the Board shall assess the person and accordingly give him notice of the assessment. () If the Board, upon objection by a taxable person as to the assessment made, fails to reach all agreement with the person on the amount at which tile taxable person is liable to the assessed, the Board may revise Ile assessment as it deems fit and shall give notice of its determination to the person of the refusal to revise or the revision of the amount.. The First Schedule to the principal Act is amended in Part I by (a) in Item by inserting the words Locally produced before the words basic food items ; (b) in Item by deleting the words locally produced before the word fertilizer as inserted by the Act,. Part VI Taxes and Levies (Approved List for Collection) Act. The Taxes and Levies (Approved List for Collection) Act (in this Part of this Act referred to as the principal Act ) is amended as set out in this Part of this Act. Bill, 00.p

13 . Section of the principal Act is amended by inserting a new Subsection () immediately after Subsection () as follows () Subject to the provisions of Subsection () of this section, the Federal Government, State Government and Local Government shall not, collect any taxes or levies other than those listed in Parts I, Part II and Part III, respectively of the Schedule to this Act.. Section of the principal Act is amended by inserting Subsection () of before the word section in line. Part VII Short Title. This Act may be cited as the Finance (Miscellaneous Taxation Provisions) Bill, 00. Short Title. Explanatory Memorandum Bill, 00.p