The Finance Act 2023 was passed by Nigeria Bicameral Legislature on May 26, 2023 and the Finance Bill was signed by the former President, Muhammadu Buhari on May 28, 2023 with an effective date of May 1, 2023.
1.Digital Assets(Crypto: Taxation of chargeable gains on the disposal of digital assets including cryptocurrency and non-fungible tokens are now liable to Capital Gains Tax (CGT) at the rate of 10%.
2. Deduction of capital losses on assets: For capital gains tax purposes, losses on assets of the same class may be carried forward for a maximum of five (5) years from the date on which the loss was incurred.
3. Investment Allowance: Deletion of the investment allowance on qualifying plant and equipment expenditure will not apply to assets that are acquired after the effective date of the Finance Act 2023. Any investment allowance claimed by a company will now reduce the value of the asset on which the allowance is claimed.
4. Import Levy: The imposition of a 0.5% levy will now apply to all eligible goods imported into Nigeria from outside Africa. This is aimed at financing Nigeria’s capital contributions, subscriptions, and other financial obligations to various multilateral institutions as may be designated by regulation issued by the Finance Minister.
5. Telecommunications: All services, including telecommunication services provided in Nigeria are liable to excise tax at rates to be prescribed by the President via an order.
6. Sharing of Electronic Money Transfer Levy: The recognition of the revenue derived from electronic transfer of money is to be shared proportionately between the three (3) tiers of governments: 15% for the Federal Government, 50% for the State Government, and 35% for the Local Government.
7. VAT Deduction at Source: Companies appointed to withhold VAT at source on invoices received from vendors are to remit such to the FIRS on or before the 14th day of the following month (and not the 21st day of the following month).
8. VAT on goods purchased via Electronic or Digital platforms: From a non-resident supplier appointed as an agent of the FIRS to be chargeable to VAT and paid by the importer unless proof of appointment and registration with the FIRS is provided.
9. Increase in Tertiary Education Tax: The rate has been increased from 2.5% to 3% of assessable profits. Thus, the TET rate has effectively increased by 50% within a two-year period.
10. Upstream and Midstream Gas Operation: Companies within this operation are now permitted to fully relieve their capital allowances against their assessable profits, same as what is applicable to the manufacturing sector or operations in the agro-allied sector.
11. Application of transfer pricing rules to VAT on transactions between connected persons considered to be artificial or fictitious.
12. Tax deduction restored for premium paid in respect of insurance on one’s life and spouse.