The legislation increases the VAT from 5% to 7.5% and introduces new income tax exemptions for businesses with an annual turnover of under NGN25mn (approx. USD70,000). It also lowers the tax rate on business earning up to NGN100mn from 30% to 20%.
It removes various tax exemptions, including on withdrawals from pension schemes unless specific conditions are met, and gratuities, and increases taxes on non-resident companies, particularly service-oriented firms.
The government is looking to shore up additional revenue after passing a record budget in December last year, with pledges to spend up to NGN10.59tn, with up to NGN2.18tn of that (approx. USD7.2bn) to be financed through domestic and international borrowing.
