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

  • Why must I file Annual Returns?

    It is a mandatory statutory requirement under the Companies and Allied Matters Act to file Annual Returns yearly. 
  • What is the first thing I must do to register a business in Nigeria?

    To register a business in Nigeria; you would need to conduct a name search of the business. You can achieve this using your CAC-CRP account.
  • Why is mutual assent important in a contract?

    This is one of the key elements of a contract because is shows the meeting of the minds of both parties
  • What are the penalties for not registering my products with the SON?
      1. Seizure of goods by the Inspectorate and Compliance Directorate
      2. Payment of a fine.
      3. Prosecution

     
  • What is personal data?

    This is any information that can be used to identify an identifiable human person such passport photograph.
  • What is the importance of registering a patent?

    The main reason to register a patent is to ensure that the inventor is able to exclusively commercially exploit an invention. The rights to a patent are vested in the “Statutory Inventor” i.e. the first person to file and register the patent.
  • Do I have to physically drop off my product sample at NAFDAC office?

    No, you can choose to have it sent to NAFDAC office
  • 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. 
  • What is a trademark?

    A trademark can be any word, sign, symbol or graphic that you apply to your company, goods or services to distinguish them from those of your competitors; for example, a brand, product or company name, or logo. The trademark serves as a badge of origin for your business and its brands and products, and can consist of words, logos, slogans, colours and shapes, or a combination of all of these.
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