8 things every business owner should know about the new Finance Act

8 things every business owner should know about the new Finance Act

January 31, 2020
  1. The Act comes into effect on Saturday the 1stof February, 2020.
  2. Value Added Tax (VAT) has increased from 5% to 7.5% but items in the VAT exemption list are tax free.
  3. If you have a business that reports less than ₦25million turnover as at last filed returns, you will not be filing returns/charging VAT as from 1st February, 2020 until you achieve this threshold in a singular or in cummulative transaction(s) in a calendar.
  4. The decision not to charge can only be taken based on your cummulative performance as at 31stDecember, 2020.
  5. Companies are now classified into three (3) different categories:
COMPANY SIZE TURNOVER COMPANY’S INCOME TAX
Small Company N25, 000, 000 or less Exempted from CIT
Medium Company Above N25m & less than N100m 20% of profit as CIT
Large Company N100m and above 30% of profit as CIT

 

  1. Stamp duty on bank transfers to apply only on amount from N10, 000 and above, while transfers between the same owner’s account in the same bank to be exempted.
  2. Bonus of 2% of tax payable (medium-sized companies) and 1% for large companies for early payment of CIT.
  3. Email correspondence to be recognized for communicating with the tax authorities.

Ensure you adjust your invoices to reflect the new VAT rate starting February 1, 2020. We would love to hear from you if you have any more inquiries about the new Finance Act.

 

 

The information in this blog post (“post”) is provided for general informational purposes only, no information contained in this post should be construed as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through this post without seeking the appropriate legal or professional advice from the particular facts and circumstances at issue from a lawyer. This post is protected by intellectual property law and regulations. It may however be shared using appropriate sharing tools provided that our authorship is always acknowledged and this Disclaimer Notice attached.

 

 

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Frequently Asked

  • When are Annual Returns due for filing?

    A company’s first Annual Returns are due for filing after 18 months of its inception, subsequently it should be filed annually as the name implies. The filing dates could differ for each company depending on their financial year end but must be filed not later than 42 days after its Annual General Meeting.

    The Annual Returns for Business Names is due not later than the 30th of June each year except in the year the business was registered.
  • Must my Company Secretary be a Lawyer?

    Although it’s ideal to have a lawyer as a company secretary, it is not compulsory for small private businesses.
  • What is a testimonium clause in an agreement?

    This is the part of the agreement where the witness attests to have witnessed the execution of the agreement.
  • What are the benefits of Registering with SON?
    1. Product traceability in the Nigerian market
    2. Detection of counterfeit products
    3. Barriers to the circulation of substandard goods
    4. The official SON Product Registration Logo and number are displayed on registered products.
  • Is it legal to transfer the personal data you obtained legally to another person?

    No, its not legal. This is because the law prohibits anyone from transferring the data of a third party to another person without consent from the third party to do same even if the data was rightfully obtained in the first instance.
  • Who benefits from copyright protection?

    The creator of a copyright work, usually referred to as the “author” of the work owns the copyright in the work in the first instance. However, the author is at liberty to transfer his rights to a third party. In such a case, the person who has obtained the right by transfer or other legal means becomes the owner of the copyright.
  • When can I start renewal of the registration of my product(s) with NAFDAC?

    You can start renewal 6 months to the date of expiry.
  • What’s the difference between a business name and an LLC?

    • A business name is a sole proprietorship, usually owned and managed by one individual only. Legally, the sole proprietor and his business are one. It simply means an individual trading with an alias. The sole proprietor is personally liable for all business related obligations.

    • A limited liability company on the other hand is a separate business entity from the individuals that hold its shares and act as directors. Legally, it’s a separate business entity and a person on its own who can transact business, own property separate from its owners and can sue or be sued. 
  • Why do I need a trademark?

    You need to register your trademark because if you don’t register it, someone else can! It helps identify you as the source and indicates a consistent level of quality of your products and services. Securing a registered trademark protects your brand, and provides you with tools to prevent someone else from using similar signs and riding off the back of your business.
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