• Grants SMEs, agricultural production businesses tax holidays for 6years

Nigerian’s new Finance Act 2020 has stated that any unclaimed dividend of a public limited liability company quoted on the Nigerian Stock Exchange and any unutilized amounts in a dormant bank account maintained in or by a deposit money bank which has remained unclaimed or unutilized for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account shall be transferred immediately to the trust fund.

The Finance Act 2020 recently signed into law by President MuhammaduBuhari created special money to form a sub-fund of the Crisis Intervention Fund in the system.

The Act, however, exempted the official bank accounts owned by the federal government, state government, or local governments or any of their ministries, departments, or agencies.

“The monies transferred to the trust fund will be a “special debt owed by the federal government to shareholders and dormant bank account holders”.

The operation of the trust fund will be supervised by the Debt Management Office DMO and governed by a governing council chaired by the finance minister and a co-chairperson from the private sector appointed by the president.

Other members of the governing council shall include the governor of the Central Bank of Nigeria CBN, director-general of the Securities and Exchange Commission SEC, managing director of the National Deposit Insurance Corporation NDIC, a representative of the registrars of companies, two representatives of the shareholders’ association, a representative of the Bankers’ Committee and the director-general of the Debt Management Office as the secretary of the trust fund.

This move will make needed funds available to the federal government without foreign exchange worries or conditions attached to loans from multilateral lenders.

Although it also stated that the original owners of the money can claim it at any time, however, unclaimed dividends and bank account balances unattended to for at least six years will be available as special credit to the federal government through the Unclaimed Funds Trust Fund.

The Finance Act also stated that owners of Small and Medium Enterprise SMEs and other agricultural production businesses may be granted pioneer status for almost six years. This was disclosed by a member of the PwC Global Board for Leadership Development the MrTaiwoOyedele in a tweet yesterday.

Pioneer Status Incentive PSI is a tax holiday provided under the Industrial Development Income Tax Relief Act that grants qualifying industries/ products relief from the payment of corporate income tax for an initial period of three years, renewable for one or two additional years.

According to MrOyedele, small businesses and companies engaged in primary agricultural production in the pioneer industry such as crop, livestock, forestry, and fisheries may be granted pioneer status for an initial period of 4 years and an additional 2 years – making a total of 6 years.

This reform as captured in the 2020 Finance Act demonstrates the FG’s commitment to supporting business owners and other stakeholders in the agricultural sector with a view to fostering increased participation. The tax expert played a major role as a member of the Inter-Ministerial Committee that drafted the 2020 Finance Bill.

The Finance Act 2020 which takes effect from 1st January 2021 introduces over 80 amendments to 14 different laws. The finance bill 2020 seeks to support the implementation of the 2021 budget by proposing key reforms to specific taxation, customs, excise, fiscal and other laws.

 


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