On 13 January 2020, the President, Muhammadu Buhari, signed the 2019 Finance bill into law. It was submitted alongside the 2020 budget to the National Assembly. The new law contains over 90 changes to 7 different tax laws.

Corporate income tax

Under the Finance Act 2019, a lower 20% CIT rate applies for medium size businesses with revenues between NGN25 million and NGN100 million. Also, the standard 30% rate which will now only be applicable for large companies with revenues above ₦100 million. However, businesses with a turnover below NGN25-million are exempted from CIT rate.

Thin-capitalization rules

The Finance Act 2019 introduces thin-capitalization rules of an interest deduction is equivalent to 30% of EBITDA for loans received from non-resident associated parties, with any additional interest expense allowed to be carried forward up to five years.

VAT

The Act increases VAT rate from 5% to 7.5% and it will be effective as from 1 February 2020. This also introduces an annual VAT registration threshold of NGN25-million.

Taxability of other income

According to the Act, dividend distributed from petroleum profits are subject to 10% withholding tax. Accordingly, additional dividend other than profits are exempted from tax and franked investment income only to un-taxed distributions.

Withholding tax on technical and management fees

In accordance with the Finance Act 2019, a final 10% withholding tax applies condition that a deemed tax presence for non-residents with respect to imported technical and management services.