8 things every business owner should know about the new Finance Act
- The Act comes into effect on Saturday the 1stof February, 2020.
- Value Added Tax (VAT) has increased from 5% to 7.5% but items in the VAT exemption list are tax free.
- 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.
- The decision not to charge can only be taken based on your cummulative performance as at 31stDecember, 2020.
- 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|
- 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.
- Bonus of 2% of tax payable (medium-sized companies) and 1% for large companies for early payment of CIT.
- 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.