Implications of the Enactment of The Finance Act, 2023

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The Finance Act 2023 was enacted on 28th May, 2023. The Act amended certain provisions in the tax laws.

Below are the top twenty changes introduced by Finance Act 2023:

1. Education tax increased from 2.5% to 3%

2. Excise duties has been introduced on services provided in Nigeria, including telecommunication services

3. Import levy of 0.5% has been introduced on all eligible imports from outside Africa

4. Capital gains tax is now applicable on digital assets such as cryptocurrencies at 10%

5. Investment allowance of 10% previously claimable on capex and leases has now been terminated

6. Rural investment allowance ranging from 10%-100% that was previously offered for provision of infrastructure and amenities in rural areas have now been stopped

7. Tax exemption on income from convertible currencies by hotels is no longer applicable

8. Penalties for various contravention of tax rules by petroleum companies raised by 1000x

9. VAT withholding agents are now expected to file returns on or before 14th day of the following month

10. Artificial transaction rules now applicable to VAT, empowering tax authority do disregard transactions not arms’ length

11. Capital losses incurred on disposal of chargeable assets are now deductible from capital gains with possibility of 5 years carry-forward

12. Roll-over relief now available me for gains on disposal of shares where proceeds are reinvested within same year

13. Downstream and midstream operators to enjoy unrestricted capital allowance claims (just like agro and manufacturing companies)

14. Relief for premium paid on life assurance policies and deferred annuity schemes

15. Deductibility of decommissioning and abandonment cost by upstream companies

16. Non-resident suppliers of taxable goods sold on digital platforms to account for VAT chargeable on the goods if they have been appointed as tax collection agents.

17. Definition of building now exclude movable fixtures under VAT law

18. Requirement for certified financial reports by non-resident shipping and air transport companies and presentation of tax clearance certificates for any application or permit

19. Pre-operational filing requirements for petroleum operators before commencement of bulk sales or disposal of chargeable oil are within 18 months from the date of incorporation (for newly incorporated companies) or within 5 months after the accounting period for any other company

20. Sharing formular for Electronic Money Transfer Levy set as 15%, 50% and 35%: Federal Government, State Government and Local Government respectively.

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