On 31 December 2021, the President, Muhammadu Buhari, signed the Finance Bill 2021 into Law at an event at the state house. The Act introduces various changes to 12 different laws in Nigeria. On 21 December 2021, Senate passed this Finance Bill 2021. Some of the key changes introduced by the Act are given below:

Capital gains tax

Disposal of shares of a Nigerian company will be subject to Capital gains tax at the rate of 10% except, the proceed are reinvested in the acquisition of shares in the same company or another Nigeria within the same year of assessment; or b. disposal proceed is less than N100m in any 12 consecutive months; or c. transfer of shares is under a Regulated Security Lending Transaction.

Corporate income tax

Minimum tax is to be levied at 0.5% of gross turnover less franked investment income that is the three accounting periods between 1 January 2019 to 31 December 2021. Profits of companies carrying on Upstream, Midstream or Downstream petroleum operations which are export – centric are not exempted from taxes. Where an objection or appeal is yet to be determined, the collection of tax shall be suspended until determination, however the undisputed tax assessment should be paid. Where the objection or appeal has been determined, the tax is to be paid within one month after service of the notice of assessment on the company.

Custom and Excise Duty

Non-alcoholic, carbonated, and sweetened beverages is subject to excise duty of N10 per liter.

Federal Inland Revenue Service Establishment Act

The penalty for contravening Section 28 of the FIRS (Establishment) Act will now be N2,000,000 for each return not filed or incorrect returns or information not provided and the penalty shall be payable for each quarter of default.

VAT

The exemption from VAT registration and compliance obligation applicable to small companies with annual turnover less than N25m should now exclude companies engaged in upstream petroleum operations irrespective of turnover. Non-residents that make taxable supplies to persons in Nigeria shall register for tax, charge, collect and remit VAT to FIRS. The VAT will only be withheld when the non-resident or its appointed agent fails to collect the VAT.