Survey Shows Strong Support for Finance Act 2020

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Zainab-Ahmed
Minister of Finance, Mrs. Zainab Ahmed

By Emma Okonji

A recent survey by PwC has shown 92 per cent public support for Nigeria’s Finance Act 2020.

On the changes to existing laws from the Finance Act, the survey showed that majority of respondents were excited about the reduction of minimum tax from 0.5 per cent to 0.25 per cent of turnover.

The survey which was released during PwC Nigeria’s executive roundtable on the Finance Act 2020 and Economic Outlook for 2021, held virtual recently, targeted CEOs, C-Suite executives and MSMEs and focused on the impact of changes to existing laws by the Finance Act 2020 and other significant government policies, to businesses and taxpayers in Nigeria.

Country Senior Partner, PwC Nigeria, Mr. Uyi Akpata, noted that considering the impact the pandemic was having on Nigeria’s economy, it was important for businesses to understand the forces shaping Nigeria’s economy in 2021.

“That this knowledge will help them minimise potential risks and take advantage of the fiscal policies the government had enacted to stimulate the recovery of the Nigerian economy,” he said.

While delivering the keynote address on the economy and government’s policies towards the recovery, the Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, emphasised that the administration was committed to enabling economic recovery and stimulating inclusive growth through policies and interventions designed to foster economic resilience and business sustainability.

Thus, the Finance Act 2020, was aimed at supporting vulnerable households and businesses while improving fiscal discipline and procurement efficiency, enhancing economic competitiveness, encouraging domestic investors and enhancing macroeconomic stability amid the challenges posed by the COVID19 pandemic.

Partner and Chief Economist PwC Nigeria, Dr. Andrew Nevin, noted 10 themes that policymakers and businesses needed to consider in 2021, saying Nigeria must as a priority find its development path.

According to the report, Nigeria holds as much as $900 billion worth of dead capital in residential real estate and agricultural land.

“The value of the federal government’s abandoned properties alone, according to the Nigerian Institute of Builders, is projected to be about N230 billion.

“And about a half of Nigeria’s population live in cities, of which almost 80 per cent of them are living in substandard conditions. Finding the political will to act and unlock Nigeria’s dead real estate assets will have a transformative impact on the lives of Nigerians.

“Out of the 10 themes, another important theme to consider was Nigeria’s Gross Fixed Capital Formation, which in 2019, stood at less than 20 per cent,” it added.

And PwC estimated that Nigeria would need an investment rate of at least 26 to 28 per cent of GDP to achieve seven per cent growth.

Speaking about Nigeria’s economy, Nevin further noted that it was distorted by the exchange rate volatility; fuel subsidy regime; and the power sector.

He said addressing these three big distortions would be taking the giant step to restructure the country’s economy holistically; achieve the 7 per cent GDP growth, and improve the lives of the average Nigerian, Kevin added.

Fiscal Policy Partner and West Africa Tax Leader PwC Nigeria, Taiwo Oyedele, who shared insights on how the Finance Act 2020, and other significant changes that have been made to existing laws, will shape Nigeria’s tax environment in 2021, noted that there were no easy choices or a silver bullet given the limited fiscal space for incentives and to deliver on counter-cyclical measures. He commended the policy direction of the government not to introduce new taxes or increase the rate of existing taxes. While commending the government for the reduction in minimum tax rate, he advocated for a permanent removal of the tax which often tax companies that are vulnerable especially when they are loss making.