WELCOME ADDRESS BY DR. (MRS.) ZAINAB SHAMSUNA AHMED. HONOURABLE MINISTER OF FINANCE, BUDGET AND NATIONAL PLANNING AT THE PUBLIC CONSULTATION FOR THE FINANCE ACT, 2020 – 8* FEBRUARY 2021
1. Good morning, Distinguished Guests from the National Assembly; my colleagues, Honourable Ministers: Director Generals, here present; ladies and gentlemen. I am delighted to welcome you all to today’s virtual consultation on the Finance Act, 2020. I would like to start by appreciating all attendees who have made out time to attend this Public Consultation, as well as those sessions that were held on Tuesday, Thursday and Friday last week.
2. Permit me to also appreciate the comprehensive work of the Fiscal Policy Reforms Committee that has led to the development of the Finance Act, 2020. We are also grateful to KPMG for collaborating with the Federal Ministry of Finance, Budget and National Planning to host these stakeholder consultation events.
3. You may recall that Mr. President indicated in his 2021 Executive Budget Presentation Speech, that the Finance Act, 2020 will support the realization of our 2021 revenue projections, adopt appropriate counter cyclical fiscal policies and enhance the efficiency of fiscal incentives. As such, our focus is on incremental fiscal reforms that support the 2020 Budget of Economic Recovery and Resilience.
4. In response to ongoing health and economic challenges caused by the COVID-19 Pandemic, we have adopted appropriate counter-cyclical fiscal policies to accelerate economic recovery from the recent recession, as well as to stimulate economic growth in key sectors of the economy.
5. As we are aware, the COVID-19 pandemic triggered an economic downturn across most economies of the world. By the end of 2020, the world’s economy fell into recession with the contraction estimated at – 3.5% compared to global growth of 2.8% in 2019. The Nigerian economy was also impacted by the pandemic, reflected by the contraction in economic growth in the second and third quarters of 2020, respectively. Economic activities in the country are recovering gradually, reflected by a reduced contraction of 3.6% in the third quarter of 2020, compared to the 6.1% contraction in the previous quarter. Given the impact of the pandemic on the domestic economy, there was a clear need for proactive implementation of macroeconomic strategies that would support domestic revenue mobilization, enhance investment inflow. stimulate job creation and restore the economy on the path of sustainable, diversified and inclusive growth.
6. As such, the Finance Act, 2020 provides fiscal relief for Minimum Wage Earners (who are exempt from Personal Income Tax), as well as commuters and other consumers of road transportation goods and services (who will now pay lower levels of duties and levies on imported vehicles). The Finance Act, 2020 extends the Corporate Income Tax exemption in the Finance Act, 2019 for Micro and Small enterprises with an annual turnover of N25 million or less to include exemption from paying Tertiary Education Tax.
7. The Finance Act, 2020 also consolidates on the fiscal reforms introduced in the Finance Act, 2019. The Act has introduced 80 changes to about 14 different tax laws including the Company Income Tax Act, the Capital Gains Tax Act, Stamp Duties Act, Oil & Gas Export Free Zone Act, Customs & Excise Tariff Etc. (Consolidated) Act, Value Added Tax Act, amongst others.
8. However, given the Government’s current challenges with increasing Domestic Revenue Mobilisation in a recovering economy, it is not possible to provide all the tax incentives that various interest groups have been clamoring for. Consequently, our fiscal stance in the Finance Act, 2020 is to moderate fiscal incentives, defer tax increases and new taxes till the economy recovers, and to foster greater congruence across the Government’s fiscal, monetary, trade and investment policies.
9. The Public Stakeholder Consultations of last week, and today, demonstrate our commitment to continuously consult and engage on the Finance Act that was assented to by President Buhari on 31 December 2020. As you are aware, extensive public consultations were also held in November last year on the Finance Bill, 2020.
10. I have charged the Fiscal Policy Reforms Committee to take note of important issues raised during last week’s sessions and collate any concerns that taxpayers, investors, businesses, individuals and other key stakeholders may have regarding the Finance Act, 2020. Furthermore, the window is open for ideas and concepts for inclusion into next year’s Finance Bill. As we had promised, this consultative process with all stakeholders will begin earlier to facilitate greater stakeholder engagement.
12. In closing, it is important to note that the tradition of enacting annual Finance Bills does not preclude the need for more fundamental legislative reforms to our key taxing statutes. These laws are being reviewed and efforts to reform them are ongoing. For example, the Petroleum Industry Bill currently being considered by the National Assembly will fundamentally change the way in which our petroleum producing companies are currently being taxed under the extant Petroleum Profits Tax Act.
13. Consequently, if any reforms proposed by key stakeholders have not been reflected in the Finance Act, 2020, there will be other opportunities to include deserving reforms in subsequent Finance Acts, or indeed, the wholesale amendment of other fiscal and economic laws.
14. Once again, many thanks for participating in this important Public Consultation event and we look forward to more extension engagements on our ongoing fiscal reforms.