This new policy which is aimed at renewing the drive to boost domestic resource mobilization, is part of the latest changes effected in the Finance Act, 2021, which was signed into law by President Muhammadu Buhari on December on 31 December 2021.
In the new changes, additional investment, reorganization or other forms of corporate restructuring shall not qualify for a further tax incentive under the gas investment programme.
Such companies are further barred from similar incentive under any other sections of the Companies Income Tax Act (CITA) or other law.
Companies engaged in upstream petroleum operations would continue to have obligation to withhold VAT, even when they have not commenced commercial operations or have not reached N25 million turnover.
However, profits of companies engaged in educational activities in the country are now liable to tax due to the removal of educational activities from the exempt provisions of Section 23(1)(c) of CITA.
Also, the rate of tertiary education tax has been increased from two per cent of assessable profits to 2.5%. The new tax law further stipulates that capital gains from the disposal of stocks and shares in Nigerian companies, for aggregate proceed amounting to N100 million or more in any period of 12 consecutive months, is liable to Capital Gains Tax (CGT) at 10% where the proceeds have not been reinvested within the same year of assessment in the acquisition of shares in the same or other Nigerian companies.
Also, profits of companies from the exports of goods produced in upstream, midstream and downstream petroleum operations are also liable to tax as clarified in section 23(1)(q) of CITA.
Additionally, it reiterated that nonresident companies liable to tax on profits arising from providing digital goods or services to Nigerian customers under the Significant Economic Presence (SEP) Rule may be assessed on fair and reasonable percentage of their turnover in the event that there is no assessable profit, the assessable profit is less than what is to be expected from that type of trade or business, or the assessable profit cannot be ascertained.
Furthermore, the new amendments to the Finance Act states that capital allowance on qualifying capital expenditure incurred in generating tax exempt income was not deductible from the assessable profits arising from income not exempt from tax under CITA.
By Chibisi Ohakah, Abuja
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