The Coordinating Minister for Economy and Finance in Nigeria has presented the Budget proposal for the year 2015 to the National Assembly on 17th December 2014. The appropriation bill was talked in the second reading of the Senate on 15th January 2015. The purpose of this proposal is to diversify the Nigerian economy to decrease dependency on oil and rise focus on internally generated revenue via progressive expenditure on other projects and tax policies. This alert describes key budget provisions.
Tax waivers and exemptions
The Government proposes to review tax waivers and exemptions, containing the pioneer status exemption approved to some companies. This is expected to reveal N36 billion of extra tax revenue in 2015 deriving from the current misapplication of this exemption.
Luxury surcharges
A surcharge has proposed for certain luxury items like:
- 10% import surcharge for new private jets
- 39% import surcharge for luxury yachts
- For luxury cars, the surcharge is 5%
- For champagnes, wines and spirits, it is 3%.
- For residential properties with a value of N300 million and above, 1% FCT Mansion Tax is required.
Tax policy improvements
The Government wishes to detect tax opportunities and to update certain taxes and levies while it looks to enhance others. It has proposed a 5% increase in the current VAT rate.
Fiscal balance
The estimated or projected fiscal deficit of Gross Domestic Product (GDP) for the year 2015 is 0.79% and it will be projected to remain this under 1% of GDP in the middle term.
Pension
The new statutory rate in the Pension Reform Act 2014 gives 10% effective contribution which has not yet made by the Government.
