The federal government has clarified that deposits into savings accounts that is up to N10,000 are not exempted from the payment of N50 stamp duty under the Finance Act of 2020.
Director-General of Budget Office of the Federation, Mr. Ben Akabueze, said in Lagos at the weekend that the Finance Act, 2020 did not make any distinction to that effect.
He spoke in Lagos at the weekend during the KPMG Nigeria’s Tax Breakfast Seminar on 2020 National Budget and Finance Act.
“The Finance Act makes no distinction between savings and current accounts. So, if people are now planning to become owners of savings account, let them know that it won’t work,” Akabueze said.
Also at the occasion, Executive Chairman of the Federal Inland Revenue Services (FIRS), Mr. Muhammad Nami, warned owners of businesses who would divert payments due to their businesses to their personal accounts, saying they should not get away with the unwholesome act as FIRS has the software to trace such diversions with account holders’ BVN.
Nami also said filing of returns on goods and services consumed in 2019 but were paid for after the Finance Act of 2020 came into effect would be computed at the old Value Added Tax (VAT) rate of five per cent.
“I think that is the way to go for now. But for every service that was consumed from February 1, 2020, will be charged the new VAT rate of 7.5 per cent,” he said.
He added that the FIRS and the Federal Ministry of Finance, Budget and National Planning would issue a public statement to clarify the confusion trailing the issue of taxation of a foreign business with significant presence in Nigeria.
The statement, according to him, would be ready once the agencies are through with their deliberation on the subject.
“We have a very competent team that is working on that and in a very short while you will get the public notice.
“We cannot hope to see any improvement in the delivery of public services if we don’t increase tax revenues. The good thing about paying taxes is that it awakens the citizens to hold their government more accountable,” he said.
Akabueze also stated that there was no going back on the payment of minimum taxes by businesses whether they make profit or not.
“The truth is that a business imposes demand on government budget whether it is running at a loss or not because it uses public infrastructure provided and maintained by public revenue. That is why we need to push back the insinuation against the imposition of minimum tax obligations on companies. Otherwise we will not make a head way in improving government services,” he said.
However, the Chairman of KPMG Africa, Mr. Kunle Elebute, advised the government to introduce reforms that would catalyse Nigeria’s economic growth rate and enhance activities for firms so that they would earn more taxable income.
“We need to see more robust growth in this economy for the government to register higher tax revenues. We need to see growth in the housing sector by having long term mortgage market for 20 to 25 years on a single-digit interest rate. This will enable the housing sector to drive most businesses,” Elebute said, adding that the Finance Act would bring clarity in government fiscal policy.
The Chief Executive Officer of Seplat Petroleum Development Company Plc, Mr. Austin Avuru, in his speech, said: “Let me say that every operator wants to make as high a taxable margin as possible. Because government will collect high tax and he will collect high profit. There is none of us that will want his tax margin room to be low. It doesn’t pay us anything.”