Finance Act (FA) 2023 contains changes in different provisions in the tax and other fiscal laws in Nigeria. FA 2023 will take effect from September 1, 2023 rather than May 1, 2023 based on the Finance Act (Effective Date Variation Order) 2023. Further to the new effective date for the FA 2023, the Federal Inland Revenue Service (FIRS) has released a public notice.
FIRS public notice on enactment of the Finance Act 2023 shows the four guidelines on some provisions:
1. VAT Withheld or Collected
Persons appointed to withhold or collect VAT must remit the amount withheld or collected to FIRS by the 14th day of the month following the transaction. Taxable persons must remit every VAT withheld or collected in August 2023 to FIRS by September 14, 2023. The same rule will apply to VAT withheld and collected in succeeding months, that is, September 2023 and onward.
2. VAT on Items Excluded from Building
Any structure that can be detached with ease from the land does not qualify as a building. Items excluded from the meaning of building are radio and television masts, transmission lines, cell towers, mobile homes, caravans, and trailers. Such items are chargeable to VAT from September 1, 2023.
3. Rate of Tertiary Education Tax (TET)
The new TET rate of three percent (3%) of assessable profits will take effect for a company’s accounting period that ends on or after September 1, 2023.
4. Investment Allowance and Convertible Currencies
Investment allowance on capital expenditure for rural investment and reconstruction, and tax exemption on income earned in convertible currencies from tourists by hotels have been revoked. The rule affects companies filing tax returns for accounting periods ending on or after September 1, 2023.
Taxpayers, tax practitioners, and the general public should take note of the effective date of the Finance Act 2023 and the respective changes in the tax provisions.
