Update on Nigeria’s 2022 Finance Bill

The Senate and the House of Representatives have passed the 2022 Finance Bill on Wednesday 28 December 2022.

Both chambers of the National Assembly had published the 2022 Finance Bill on Wednesday 21 December with the Senate inviting stakeholders to a public hearing within 24 hours on Thursday 22 December 2022 while the HoR slated its public hearing for Friday 13^th January 2023. With the passing of the Bill, it is unclear if the public hearing would still go ahead or indeed be necessary.

As a next step, it is expected that both chambers will harmonise the Bill and send it to the President for assent which is likely to happen not later than 31 December 2022.

The key changes in the version of the Bill as passed by the lawmakers include:

1. Increase in Tertiary Education Tax (TET) rate from 2.5% to 3%. It is instructive that the rate was only recently increased from 2% to 2.5% via the 2021 Finance Act. This effectively increases Nigeria’s corporate income tax rate to about 36% which is one of the highest rates in the world (i.e. 30% CIT, and 3% TET equivalent to 6% CIT given the larger tax base for TET)
2. Amendments to change the name of the FIRS to Nigeria Revenue Service and separate the Board from the Service with the latter to be headed by a Commissioner General.
3. Deletion of the proposed taxation of Gaming and Lottery businesses under the CITA
4. Capital losses deductible for CGT purposes may be carried forward for a maximum of 5 years
5. The proposed 50% Investment Tax Credit for investment in gas utilisation has been changed to investment allowance of 10% and 5% per annum for non-associated and associated gas respectively subject to attaining a cumulative production of 300 billion cubic feet.
6. Exemption of companies engaged in upstream and midstream gas operations (along with Agro Allied businesses and manufacturing companies) from the annual restriction of capital allowance utilisation to 2/3^rd of assessable profits.
7. Commencement date of the Bill changed from 1^st January 2022 to 1^st January 2023

Read our earlier summary of the 2022 Finance Bill here and watch the Senate’s Plenary on the Finance Bill here.