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Nigerian cabinet approves draft of new Finance Bill, to be sent to N/Assembly

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The Nigerian federal cabinet on Wednesday approved a new draft Finance Bill to be sent to the National Assembly to complement the spending estimate for the fiscal year 2021.

According to the minister of finance and budget, Zainab Ahmed, the new Finance Bill, which will replace the one passed and assented to by the president this year was approved by the Federal Executive Council (FEC) at their weekly meeting presided over by President Mohammadu Buhari.

She said the 2020 Finance Bill was meant to support the 2021 budget estimate.

The minister gave an assurance that the introduction of the bill will not lead to an increase in tax because the situation in the country does not warrant an increase in taxes. “This is not the time to increase taxes,” she said.

Nigeria hike its Value Added Tax (VAT) to 7.5 percent this year from 5 percent previously and commenced the implementation of the new consumption tax rate after president Buhari signed the Finance Act 2020 into law.

At a webinar to usher in the new bill on Monday, Muhammad Mamman Nami, executive chairman of the Federal Inland Revenue Service (FIRS) said that the economy was facing challenges caused by the pandemic, so the federal government had no plans to introduce new taxes; however, it would not grant tax waivers to businesses.

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“The economy is not doing very great because of the impact of COVID-19 and all other challenges so ordinarily government should be spending more money. However, government is not able to raise the taxes; in the same way, we still balance the budget to reduce the deficit as much as possible. Therefore, there will be no new waivers,” he said.

Nami said that the African Continental Free Trade Area (AfCFTA) agreement would increase Nigeria’s trade volumes and be a boost for the economy.

“The essence was to ensure that local industries grow because once the African Continental Free Trade Area (AfCFTA) takes effect our borders will be opened and we will have goods from other countries competing with goods in Nigeria,” she said.

This is being reinforced in the 2021 proposal by removing completely for the small businesses the obligation to pay education tax.

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