IMPACT ANALYSIS OF THE FINANCE ACT ON CORPORATE TAXATION IN NIGERIA

Abstract

Tax is legal civil responsibility imposed by the government on her citizens, either on individuals or corporate bodies with a view to raising funds to finance its responsibilities, economically, socially and politically. Thus the role of taxation in an emerging economy such as ours needs not be over-emphasized. Even for developed economy, taxation is seen as the most important source of revenue, in some cases accounting for as much as ninety percent of government revenue. However, for a tax regime to achieve the enumerated objectives, such a tax culture shall epitomize the rule on simplicity, coherence, clarity and elegance embedded in its taxing enactments. In that light, the Nigerian government inaugurated the Finance 2020 along with its subsequent amendments to promote fiscal equity by mitigating regressive taxation, reform domestic tax laws and align with global best practices. Thus the Companies Income Tax (CIT) is one of the taxing statutes amended by the Finance Act. The present paper, therefore, using doctrinal research methodology anchored on analytical approach, attempts to examine the impact analysis of the Finance Act on CIT. Thus the paper salutes the impact of the new Act on CIT in such areas as introduction of interest deductible rule for Nigerian companies, moderation of foreign loan exemption and simplification of rules on commencement and cessations, among others. Be that as it may, the new Act, as it were, is still being challenged in these fora; which includes its failure to capture the informal sector, apparent gaps on attainment of transparency and accountability in the nation’s taxing enactments and lurk-warm apparent to sporting-up incentives to enthrone and sustain voluntary compliance. The paper, therefore, concludes with a proposal to further amend the contentious provisions of the Finance Act to embrace current agitations and challenges.