Nigeria’s Finance Act 2023- Insights series

The Finance Act (FA) 2023 is the fourth in the series of Finance Acts in Nigeria. The previous government adopted this fiscal policy model after its re-election in 2019 to support the implementation of the annual budget. The FA 2023 was signed by the former president Mohammadu Buhari on the eve of his last day in office (i.e 28 May 2023) but the effective date is stated as 1 May 2023. 

As stated in the President’s 2023 Budget Speech, the FA 2023 centres on 5 key focus areas: Tax equity reforms; Climate change/green growth; Job creation/economic growth; Reforming tax incentives and Revenue generation/tax administration. 

We have categorised the changes under the five focus areas broadly included under:  Changes affecting the non- oil and gas sector, and Changes affecting the oil and gas sector.

Takeaway

Which tax returns are impacted by FA 2023? One key question is whether the FA 2023 changes impact companies’ income tax returns that are due by 30 June 2023. Based on a recent tax Federal High Court (FHC) judgement in Federal inland Revenue Services vs Accugas Limited, tax law changes should be applied prospectively, implying that FA 2023 should not apply to income earned before its effective date of 1 May 2023.

This is at variance with the general practice of applying FA changes relating to Companies Income Tax (CIT) to the preceding year. However, the title of the law (i.e Finance Act, 2023) now aligns with the year of enactment as opposed to previous years where the FAs were titled based on the year preceding commencement of the changes.