Highlights of tax bill

Key highlights of the tax bill include: increment in Value Added Tax from 7.5 to 10 per cent, 4 per cent tax on gaming, 4 per cent development levy on companies among others.

Increment in VAT

Section 146 of the bill proposes to raise the value added tax (VAT) from 7.5 per cent to 10 per cent by 2025, with further increases to 12.5 per cent from 2026 to 2029, and 15 per cent from 2030 onwards.

However, it stated that the value of taxable supplies involves the total consideration plus VAT for monetary transactions or the market value for non-monetary transactions.

4% Development Levy on Companies

Checks on the Act show that section 59 provides for a development levy on the assessable profits of companies, excluding small and non-resident companies. Accordingly, 4 percent will be charged in 2025 and 2026, 3 percent from 2027 to 2029, and 2 percent from 2030 onwards.

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27.5% Company Tax

Section 56 of the bill outlines tax rates to be imposed on the total profits of companies, with small firms taxed at 0 percent. All other companies will face a tax rate of 27.5 percent in 2025, which will reduce to 25 percent from 2026.

However, if a company’s effective tax rate is less than 15 percent in any assessment year, it must recompute and pay an additional tax to bring it up to the 15 percent threshold.

5% excise tax on lottery and gaming income

Section 62 and Schedule 10 of the Bill provides for a 5 percent excise duty on revenue of lottery and gaming trade or business.

“In determining the assessable profits of lottery and gaming trade or business, the following deductions shall be allowed, in addition to others permitted under Chapter Two of the Act: Any amount paid as winnings, prizes or similar payments from the relevant Prize Fund; statutory contributions to the Lottery Trust Fund; agency commission expenses incurred; and levies paid to relevant regulatory and government authorities as contained in relevant federal or state laws,” the bill outlined.

5% Telecoms Tax

In the same vein, the bill is proposing a five percent excise duty on telecommunications services, including postpaid and prepaid services regulated by the Nigerian Communications Commission (NCC).