FINANCE ACT, 2020
Act · Finance
Policy date: 2020-01-01
An Act amends tax laws to provide COVID-19 relief and improve compliance. It targets all Nigerian taxpayers, including companies, individuals, and insurance firms. This aims to ease economic hardships and expand the tax base.
FINANCE ACT, 2020
What Is This Policy?
Nigeria's second Finance Act, further amending multiple tax statutes to provide COVID-19-related tax relief, improve compliance, expand the tax base, and make technical corrections to the 2019 Finance Act.
Who Does It Target?
All Nigerian taxpayers: companies and individuals Insurance companies Technology companies Capital markets participants
What Does It Aim to Achieve?
Provide targeted tax relief in response to the COVID-19 economic impact, further widen the tax base, and make additional amendments improving Nigeria's fiscal framework.
Key Features
COVID-19 Tax Relief: Provides for suspension of interest and penalties for tax defaults attributable to the pandemic in prescribed circumstances. Insurance Taxation: Reforms the taxation of insurance companies to align with international practices. Capital Gains: Extends Capital Gains Tax to gains from disposal of shares in Nigerian companies where thresholds are met. Excess Dividend Tax: Introduces provisions to address the payment of dividends from tax-sheltered profits.
Current Status
Rollout Stage: Active Coverage: Nationwide Beneficiaries: Taxpayers with pandemic-related arrears; insurance sector; capital markets Funding: Revenue measure
How to Access
Engage FIRS for COVID-19 relief applications where applicable Insurance companies must update tax computation methodology Capital markets participants must track and report qualifying share disposals Application method: Engage FIRS at https://www.firs.gov.ng for compliance guidance.
Important Terms
Finance Act 2020 amends Finance Act 2019 in specific areas COVID-19 relief provisions have defined eligibility conditions Capital gains on shares now taxable in qualifying circumstances
Official Resources
Website: https://www.firs.gov.ng Contact: Federal Inland Revenue Service (FIRS)
Legal Framework
The Finance Act 2020 amends multiple tax statutes including the Companies Income Tax Act, Value Added Tax Act, Petroleum Profits Tax Act, and others. It derives constitutional authority from Section 59 of the 1999 Constitution. The Act aligns with IMF guidance on COVID-19 fiscal responses, the OECD BEPS framework for multinational taxation, and the Federal Government's Economic Sustainability Plan 2020 as the policy context for the tax relief measures introduced.