TheCable

The federal government is working on exempting small businesses from paying tertiary education tax (TET).

Ajibola Olomola, chairman of the drafting sub-committee of the fiscal policy reforms committee, said the proposed 2020 finance bill will introduce an amendment to the tertiary education tax act to exempt small businesses from tertiary education tax (TET).

Currently, all companies registered in Nigeria are required to pay TET at two percent of assessable profits for each year of assessment.

“However, in line with the federal government objective of incentivising small businesses, there is a need to introduce an exemption for TET,” Olomola said.

“The finance bill 2020 will include certain provisions that allow the tax authorities to deploy information technology for the collection of taxpayer information of tax and reduce the cost of collection.

“In light of this proposal, stringent rules are also proposed to secure taxpayer confidentiality from unauthorised access by third parties. The finance bill 2020 will look to introduce significant penalties for breach of data confidentiality by tax officials.”

He also said there is a proposal to introduce legislation to empower the Federal Inland Revenue Service (FIRS) to deploy technology for general tax administration.

The committee further said there is a proposal for the creation of an unclaimed dividend and unutilised bank balance trust fund wherein dividends declared and unclaimed would be warehoused and owed as a perpetual debt to shareholders.

“This change corrects an anomaly under the companies and allied matters act (CAMA) which extinguishes shareholder’s right to dividend after 12 years and returns the money to the company for redistribution to other shareholders.”

The 2019 finance bill already exempts businesses with an annual turnover of less than N25 million from paying company income tax, while those that have a turnover of between N25 million and N100 million yearly are required to pay 20 percent as company income tax.