Analysis: Finance Bill, Budget Deficit and Revenue Shortfall

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Well i thank you very much yes the federal government has been grappling with budget deficits as a result of revenue shortfall in the country now this has led to series of borrowings from foreign countries are raising the country’s debt level now with the view to consolidating this macroeconomic effect and to help reduce budget deficits president muhammadu

Buhari submitted a finance bill to the national assembly to our main various tax laws in the country the bill which has now been passed into law by the uh senate seeks to promote fiscal equity reform domestic tax laws to align with global best practices introduce tax incentives for investments in infrastructure and capital markets supporting msmes as well

As raising revenues for government before the finance bill was passed companies are charged to tax at 30 on their dividend distributions where such dividends exceed the taxable profits for the year not withstanding their profits being distributed may have been taxed in prior years except from tax or taxed under a different tax law now that the finance bill

Which has been receiving loads of support from the financial and economic sector has been passed into law how well would this tackle budget deficit in the country well to answer this question and more i have in the studio she is the council member of the chartered institute of taxation of nigeria and a charter tax practitioner doctor uh titillator any tough

Worker thank you very much for your time good afternoon yeah it’s great to have you on the show after the last time we were talking about your conference yeah no no no frank we’ve seen what’s been happening government is running helter skelter to be able to address budget deficit and finance bill has come into take us through what this really stands for a lot

Of people have given us what it means but for you i think we’ll get to really understand it better what it stands for okay thank you julie um let me first start with bill is like that we should be doing an amendment obviously uh if if i recall correctly i have to finance business about 30 years ago yeah once you have a projection and it’s coming out you’ll

Get the finance absolutely and this comes out to another income tax act and i remember that that we had last september the company’s income tax and since then everything associated with another amendment in 2011. finance field that we now have which is the first one tonight that we run so that they’re not getting ready to get back to interview and making the

Tax environment to be conducive for businesses and also for uh the tax authorities to be able to get their their their rights on on the law uh because um whatever you’re talking about tax you’re not just talking about something that is hanging it’s based on a law and if that law is not amended to face realities of today then you’re not going to be able to

Get the best of of that supposedly they’re going back we’re just moving out of the general culture of people wanting to say wasn’t it for me why am i paying tax but we we just have to comply because there’s a law now you do your part by obeying the law that you cannot ask government i have done my part then do your part so when you talk about social contracts

Fine it’s unwritten but i know that there’s a law that says i must pay my tax i pay my taxes and when do and i said there’s a there’s a expectation from the government also to make my business environmentally conducive for me so it should be going hand in hand that i’m doing my path and the government is also making me happy like someone will say should be a

Win-win yeah no no so it’s not like there’s going to be one tax burden on us because we’re always scared when we hear tax when we hear taxes no no sincerely everybody’s always like i don’t so it’s not like there’s going to be a tax well because some have argued that there is this doesn’t need to expand the tax net bring in i think the informal into the net so

That we can get more money instead of maybe increasing because at the moment my salary has not been increased so i don’t want my tax to be increased yeah um the bill is not looking at increasing rates okay um i i i can say that um if you look at the finance activities it’s trying to make business conducive business and 2020 financial is also what we’re really

Looking at because so when is inputting people the economy is not that balanced but they don’t build for 20 20’s 100. i’ll give you an instagram significant economic interest business is the generating concentration but they look like a way of tracking people like that and then i get to share the tax once you get that contract now we have it was only financed

At 2019 significant economic price for this i’m not talking about you foreign and other things the principle information is five percent of them i will be able to get that it’s very there should be way okay so you can actually apply it to the gym and there must be a legal basis like that and trying to put tax regime so these are some of the things that have

Come up for individuals well i may not say entirely your tax may not go up well let me not be too optimistic on that but there’s an amendment to the basis of your taxes okay if you’re well maybe if you were paid and your income is that high then you may be having some some adjustment to your taxes it’s not the rate but just the base in which the tax will be

Applied and that is the definition of gross income for the purpose of conservative relief allowance so those are some of the highlights of what has come up and things about stamp duty yeah finance act 2019 brought in stamp duty now everybody is now conscious of every agreement has to be spammed if it’s stampable if you have electronic agreements electronic

Documents so so those are areas that government is seeking to see how they can deal with the revenue shortage and then see how the deficit can be addressed and this is part of what the finance bill has put together we’re not really talking about the rate but if we can widen the base have more people so it’s easier than you putting burden on those who already

Comply because when you talk about rates increase you are mean the people that are paying for instance employees are paying now you’re given more rates and then numbers employees be paying more but what about those who are not chasing the net so what this financial is trying to do is to say let’s bring let’s cast our net white get more fishes into the net and

Then let’s start attacking will not be paying taxes i haven’t had the vice president so saying that earlier in the week then some between 25 million and 100 million the bill also proposes to reduce taxation for them so in all of this i think the business interest is kind of being protected here is this part of the ease of doing business thing that we’re looking

At yes yes um let me say that um smes we need to encourage them and these are the people affected by the amendment uh 2019 we have what we call small medium large classification of businesses the small are 25 million and below they have zero percent income tax now the finance bill 2020 i don’t know what to say for you because the initiative act there was no

Income tax now you’re going to have income taxes your education tax that’s also smes encourage them get them to be up running to develop our economy and when the economy is developed they can employ more people we get more pay taxes dj talked or touched on something before he went uh left uh discussion and that came to me we’ve always talked about tax to gdp

Ratio saying nigeria is not doing very well we are i think six percent are around that and we’ve been trying to move our head from that and many always we we always have projections just like gas flaring next year we’ll stop flaring gas next year we’re going to move the gdp of uh our tax ratio why do we still over around this where countries around us are doing

Better i hear ghana is doing approximately 18 to 20 i’m not i’m not very sure but i know the figure is better than what we are doing here now i i well the issue about tax to gdp ratio we kept on talking of six percent six percent i want us to know that um our tax paying culture in nigeria is actually not there it’s not there uh what we are trying to do now is

To start to encourage people to pay tax a lot of people believe that is it not nigeria you can go away and a lot of things have to also do with the political will you’re talking about ghana you don’t do some things in ghana and go score free today and the government will show it to them why am i paying tax government my rules are not fixed i don’t have light

There’s no this there’s no doubt and that’s coming to the social contract i was talking about so why don’t you first of all do what the law says obey the law as the citizen and then you can actually hold the government well i used to refer to a way whereby you have your community development how many of us have even started to hold our local government chairman

That’s where we should start from if i have a local government chairman that we voted in and i can talk about that how much tax have you paid give your tax cut this second choice before you can go for the election then take the cost of taxpayers after the attacks should be saved for those i would say foreign i could bring more people we bring them in democracy

And their mother to show each other it’s important because of the great people to want to say i can see my liberties i should not be baffled let me also like i always tell the story because yes because i live in an now it’s it’s been a year of kovid it’s been a year of lockdowns evening of enters protests uh tax practitioners everybody’s been affected media has

Been affected we all have we’ve been all been affected so how’s your house been like tell us how practitioners are you faring as we move on to 2021 yeah i i would say that um i’ve always said this that we are the new number what is your name is for us we can’t go to the tax office but we shouldn’t communicate switch to this and i started finally talked to more

Than when i was physically losing because emails from your business you’re on top of the game has not changed they are still there you get into was just another way of life you can be on one meeting on zoom another one microsoft teams and your years at work so we have to start multitasking because you’ve got to be right on speed and respond to your client so

It was really a time for us to start looking at other areas the normally conventional way of doing tax practice move faster than you used to do before frs will tell you you can file returns online so you don’t have excuse or well you have to have more than one network that’s that’s the the big part of it you may be on a call and the network goes yeah she might

Be able to switch immediately so you have like three three service providers going on and they’re all on and the i.t guys are making the money i think covered first for community has been a blessing to some people some told me someone told me i said look this coffee that i sold that i sold before as an sme and someone said no coffee is not good for me because

I couldn’t do my business so it’s a mixed feeling but first of all we have to change things some i was saying i know your financial experts are saying nigeria will move out of recession nigeria things will get better i don’t know if you think what role do you see taxation playing in our stability in 2021 um i i told i always say this anytime we talk about

Things about taxation i would say that the the the environment has created a lot of opportunities for tax practitioners um and it’s not that are on top of their basic advantage i don’t see us going behind because a lot is having tax environment finance act comes up 2019 finance act 2020 will now come up yeah we have things happening in the international tax

Environment uh um transfer pricing is coming up new things of doing things new ways of doing things internationally there are tax environment they’re tax palliative that are this and that and your client wants to be on top of this thing so it’s just for you to be ahead and say hang on look this thing is coming up you can take advantage of this you can find

Your tax fraud so i see 2021 to be a good deal for tax practitioners who are on top of their game they should be ahead they should think ahead they should think i always tell people don’t just think outside the box think beyond the box thank you for your time thank you

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Analysis: Finance Bill, Budget Deficit and Revenue Shortfall By TVC News Nigeria