On 13 of January 2020, the President signed the Finance Act 2019
('the Act") into law. The implementation of the Act
commenced in February 2020, as announced by the Federal Ministry of
Finance. The Act amended seven existing tax laws but most of the
changes where in the Companies' Income Tax Act (CITA) and Value
Added Tax Act (VATA). The new changes have generated several
reactions from taxpayers and other stakeholders in various
industries.
This article examines the impact of these changes on the
manufacturing industry and how the affected companies can seek to
drive compliance going forward.
WHAT HAS CHANGED - DIRECT TAXES
Introduction of turnover threshold
In order to improve the ease of doing business and stimulate
economic growth, the Act introduced a progressive tax system. Under
the new tax regime, a general corporate tax exemption is allowed
for small companies with turnover of less than ₦25 million in
a year, while medium sized companies with a
