Some trade and financial experts on Thursday said that the new Finance Act would increase revenue generation.
The experts, who spoke in seperate interviews with News Agency of Nigeria (NAN) in Abuja, called for effective implementation of the new Act to achieve its aim of generating more revenue.
President Muhammadu Buhari on Monday signed the Finance Bill into law to reform the tax regime.
An Economist, Dr Chijioke Ekechukwu explained that revenue remained a major factor in economic growth and all avenues geared toward improving same should be encouraged to enable funding of capital projects.
He expressed satisfaction that the bill was designed to develop the Micro, Small and Medium Enterprises (MSMEs) as income levels below N25 million would attract zero per cent taxation in Company Income Tax (CIT).
“Income levels above N25 million but below N100 million will also attract 20 per cent tax and above N100 million income will attract 30 per cent tax,” he added.
Ekechukwu, a former Director-General, Abuja Chamber of Commerce and Industry (ACCI) said that this was designed to eliminate regressive taxation where people at different income levels paid the same amount of tax.
The act also seeks to increase the Value Added Tax (VAT) from five per cent to 7.5 per cent as well as provide more revenue to finance key government projects, especially in the areas of health, education and critical infrastructure
Speaking on the increase in VAT, he said that the increase could make the achievement of a single digit inflation rate in 2020 to be farfetched.
He said that though the bill did not address multiple taxation which had remained a problem for businesses in Nigeria but above all it would enable government to embark on more projects.
“The Ease of Doing Business policy has not resolved difficulties that businesses encounter with multiple taxation and ease of obtaining Tax Clearance Certificates (TCC). I am aware that it is cumbersome,’’ he said.
TCC is an official document issued by revenue authority to a tax payer to confirm that a person’s tax affairs are in order for investment, and immigration purposes among others.
Prince Adetokunbo Kayode, a Trade and Tax Consultant also said that the signing of the new Finance Act was a welcome development.
Kayode, also the ACCI President commended the government on the tax relief to people at lowest rank of the economy, adding that tax exemption would encourage more people to do business.
“Majority of Nigerians are doing informal business and government may not be able to capture them within the tax net, it is also a big challenge and a dangerous part.
“Tax exemption is a means of encouraging more people to do business after all whether people are paying tax or not they are still creating value to the economy by employing people and enhancing the Gross Domestic Product (GDP),” he said.
The expert called on the Federal Inland Revenue Services (FIRS) to be transparent while issuing tax clearance certificates to companies and business owners.
According to him, though the issuance of TCC is free but the cumbersome nature of obtaining the certificate and unnecessary demands are creating an avenue for corruption.
“This makes the way of doing business difficult and expensive, government should make it easy for people to obey the law,” he said.
The new Finance Act is meant to reform the country’s tax laws aligning them with global best practices, support MSMEs, encourage investments in infrastructure and capital markets, as well as increase revenue for the government.