Several bills intended to have a direct effect on the economy have been passed or are at various stages of passage by the two chambers of the National Assembly, Daily Trust reports.
Others have, however, been carried into the year 2022 to complete the processes for their passage with experts saying the bills have the potentials of shaping the economy amidst the various fiscal challenges needed to be addressed.
Our correspondent reports that outdated laws and some of them passed long ago despite apparent loopholes are affecting the smooth running of the economy with attendant consequences on the conducive environment for governance, businesses, revenue generation and provision of services to the people.
The Petroleum Industry Act
The Petroleum Industry Act was one of the most important legislation passed by the National Assembly, which will shape the Nigerian economy in 2022.
The Act signed by the president in August provides a legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, the development of host communities and related matters.
It transformed and unbundled the Nigeria National Petroleum Corporation (NNPC) into a commercial entity and was registered with the Corporate Affairs Commission (CAC) as a Limited Liability company.
Oil was discovered in Nigeria in 1956 at Oloibiri in the Niger Delta and after half a century of exploration, the country has not gotten it right in getting value for the product.
Instead, the government relies on selling the crude oil to import refined petroleum products for domestic use amid subsidy scandal and uncertainty as to the total number of litres being consumed at home, among other issues.
It could be recalled that the Senate passed the Petroleum Industry Bill on July 15, 2021, while the House passed it on July 16, with high expectations to resolve the chronic problems in the industry.
The President assented to the bill in August, which ended almost 20 years of attempts to amend the PIB and make the country’s petroleum industry more transparent and profit-driven as found in most oil-producing countries of the world.
Experts and operators said the PIA would ensure new investment, encourage innovations and a competitive market.
Speaking on the PIA, the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative, NEITI, Dr Orji Ogbonnaya Orji explained that the PIA would change the industry from governance to operation.
He pointed out that the commercialisation of NNPC will usher in a period of growth for the sector and the economy in general.
He said: “I expect the conduct of business by the NNPC to change and I expect the NNPC to be like NLNG and other entities, thinking more of profits. And I think they have the capacity to do so.
“I expect them to change their business models and begin to think like an organisation that will be more open and accountable.”
Finance Act 2021
The Finance bill signed by President Muhammadu Buhari will be the major legislation that will shape the Nigerian economy in 2022. It was passed by the House of Representatives alongside the N17.126 trillion 2021 budget on December 21, 2021, while the Senate passed it the next day, December 22, 2021.
President Buhari assented to the Finance Bill on Friday, December 31st, 2021 which made it an Act.
Economists said when properly implemented, the Finance Act will have sweeping effects on the economy in 2022, as it covered all the facets of revenue in the Nigerian economy and provides the framework, which will support the financing of the year’s budget.
It will amend the major acts that drive the economy, which include; the Capital Gains Tax Act, Companies Income Tax Act, Federal Inland Revenue Service (Establishment) Act, Personal Income Tax Act, Stamp Duties Act, Tertiary Education Trust Fund (Establishment) Act and Value Added Tax Act.
The rest include; Insurance Act, Nigerian Police Trust Fund (Establishment) Act, National Agency for Science and Engineering Infrastructure Act, Finance Control and Management Act and the Fiscal responsibility Act.
The act provides that Capital gains tax should be applicable at the rate of 5% on the disposal of shares in a Nigerian company worth N500 million or more in any 12 consecutive months except where the proceeds are reinvested in the shares of any Nigerian company within the same year of assessment.
A partial re-investment will attract tax proportionately while it exempted transfer of shares under the regulated Security Lending Transaction.
Lottery and gaming businesses including betting, game of chance, promotional competition, gambling, wagering, video poker, roulette, craps, bingo, slot or gaming machines and the likes are to be taxed under CITA.
It further provides that companies in the petroleum sector operating in midstream and downstream operations will not be eligible for exemption on profits in respect of goods exported from Nigeria.
The act empowers the Federal Inland Revenue Service (FIRS) to assess CIT on the turnover of foreign digital companies transmitting, remitting, or receiving signals, sounds, messages, images, or data of any kind including e-commerce, app stores, and online adverts.
Another provision of the act states that the capital allowance claimable on an asset is limited to the portion used for generating taxable profits.
“Assets partially used to generate taxable income will be eligible for pro-rata capital allowance except where the proportion of non-taxable income does not exceed 20% of the total income of the company”.
It also provided that capital allowance or unabsorbed allowances brought forward by a small or medium company, other than a company under pioneer status, will be treated as having been claimed and consumed in each year of assessment.
“The reduction of the minimum tax rate from 0.5% to 0.25% of turnover (less franked investment income) is to be applicable to any two accounting periods between 1 Jan 2019 and 31 Dec 2021 as may be chosen by the taxpayer”.
The Act provides that disputed tax assessment shall be in abeyance until determination while undisputed tax assessment is to be paid within 30 days after service of the notice of assessment on the company except otherwise extended by the FIRS.
It stated that withholding tax on interest earned from a unit trust is to be treated as final tax. Only WHT on dividends is currently treated as a final tax for local companies.
It added that a penalty of N50, 000 is applicable where a company fails to grant access to FIRS in addition to N25, 000 for each day the failure continues.
FIRS is also to be the primary agency of the federal government responsible for the administration, assessment, collection, accounting and enforcement of taxes and levies due to the federation, the federal government and any of its agencies except otherwise authorised by the finance minister.
Tertiary Education Tax is to be paid within 30 days of service of assessment, not the 60 days currently in place.
The Act provides that, Non-residents making taxable supplies to recipients in Nigeria have the primary obligation to charge, collect and remit VAT to FIRS while the VAT withholding obligation of Nigerian recipients is now limited to where the non-resident or its appointed agent fails to collect the VAT.
It provides for mandatory payment of gross revenue collected by federal ministries, departments or agencies to the federation account or consolidated revenue fund as the case may be except otherwise authorized by law.
“Any officer who violates this requirement may be liable on conviction to imprisonment of up to 5 years or a fine of N5m or both”.
The Act amended the Fiscal Responsibility Act to enable the government to borrow for “critical reforms of significant national impact”.
At present, governments at all tiers are only empowered to borrow for capital expenditure and human development. While capital expenditure is defined in the former act as spending on an asset that lasts for more than one financial year, human development and critical reforms were not defined.
With these broad amendments of critical acts, the Finance Act is said to be the path through which the country’s economic policies will be streamlined.
Customs Reforms Bill
The proposed bill had already passed through a public hearing at the House of Representatives. It is titled: ‘Bill for an Act to Repeal the Customs and Excise Management Act, Cap.C45, Laws of the Federation of Nigeria, 2004 and Enact the Nigeria Customs Service (Establishment) Bill; and for Related Matters.
Chairman, House Committee on Customs and Excise, Leke Abejide, had at the public hearing said the Nigeria Customs Act, its regulations and operational guidelines were not in conformity with today’s competitive world.
He said its provisions “Are archaic, obsolete and no longer in tandem with modern-day challenges and this has unfortunately reduced measurably the accruing revenue against the volume of trade.”
According to him, the bill seeks to introduce the needed reforms and introduce new clauses that will enable the Customs to operate and increase revenue for the nation.
If passed into law, the Customs Reform Bill will be another factor that will shape the revenue base of the country.
The N17.126 trillion 2022 budget
The N17.126 trillion budget signed by the president is the backbone of financial policies provided in the Finance Act.
The budget has N869.6 billion statutory transfer, N3.88 trillion for debt service while recurrent (non-debt) expenditure was put at N6.9 trillion and capital expenditure of N5.46 trillion.
It provides the details of expected revenues that will be accrued to the federal government based on certain parameters like crude oil price, exchange rates and other economic determinants for the year 2022.
The budget also determines government expenditures in all sectors through its Ministries, Departments and Agencies (MDA’s) for the whole year as well as other plans.
NDIC Act (amendment) Bill
Another important legislation that will shape the economy in 2022 is the Nigeria Deposit Insurance Corporation (NDIC) amendment, Bill. This proposed amendment seeks to transform the NDIC as a foremost banking risk taker to face the challenges of 21st-century banking.
Chairman, House of Representatives Committee on Insurance and Actuarial Matters, Darlington Nwokocha, stated at the NDIC retreat in November 2021, that they were ready to amend the NDIC Bill in order to have a stable banking sector and an enhanced deposit insurance system in the country.
He said: “One of the machinery to drive that process would come from the legislature and that is why we are calling and saying that NDIC Act, which we have presently, we are ready to strengthen the NDIC by amending that act.”
The Managing Director, NDIC, Bello Hassan who called for the speedy passage of the bill, said the amendment became imperative as a result of the ever-changing landscape of the financial environment impacted by new developments and policies, emerging technologies, payment systems and financial services.
He said: “The Corporation must continue to address the gaps and inherent challenges that threaten the effective implementation of its mandate”.
The NDIC Act amendment Bill when passed into law will, as envisaged, help in transforming and strengthening the banking sector while providing a wider deposit insurance risk coverage through technology-driven policies and monitoring to ensure effectiveness.
Daily Trust reports that the above acts and bills are just a few of the dozens of executive and legislative bills being conceptualised to ease governance and move Nigeria forward.
“But it is one thing to have laws and it is another thing altogether to make them work,” said Umar Sani, a Jos-based economist and consultant.
“We are very good at sponsoring bills and enacting laws but weak in allowing them to guide and dictate what we do. This is a critical year for us to get it right,” he said.
Read More: 5 bills that will shape economy this year