The Federal Government has proposed suspension of tax relief and rebates being granted to companies established in locations lacking public infrastructure, who are providing electricity, water and other amenities for themselves.
In the Finance Bill 2022 under consideration by the National Assembly, the government has sought amendments to the Capital Gains Tax Act, among which seeks to end Reconstruction Investment Allowance and Rural Investment Allowance, among others.
The President, Major General Muhammadu Buhari (retd.), had last week transmitted the Finance Bill 2022 to the National Assembly.
The proposal is billed for passage on Thursday, along with the 2022 Supplementary Appropriation Bill and 2023 Appropriation Bill.
In the bill, a copy of which our correspondent obtained on Friday, the Federal Government is seeking to make amend 34 amendments to 10 existing Acts, namely Capital Gains Tax Act; Companies Income Tax Act; Customs, Excise Tariff, Etc (Consolation) Act; Federal Revenue Service Establishment Act; Personal Income Tax; Petroleum Profits Tax Act; Stamp Duties Act; Value Added Tax Act; Corrupt Practices and Other Related Offences Act; and Public Procurement Act.
The current Section 32 of the CGT Act, which provides for Reconstruction Investment Allowance, partly reads, ‘(1) Where a company has incurred an expenditure on plant and equipment, there shall be allowed to that company an investment allowance as provided in Subsection (2) of this section and shall be in addition to an initial allowance under the Second Schedule of this Act.’
However, the government has prayed the National Assembly to delete the section.
“Without prejudice to any pre-existing rights relating to any qualifying capital expenditure incurred or qualifying capital assets acquired on or before (31st December 2022), Section 32 of the Companies Income Tax Act is hereby deleted, provided that a company that has incurred capital expenditure on plant and equipment on or before the effective date of this repeal shall continue to enjoy the allowance under this section until it is fully utilised.’
Similarly, the government wants Section 34, which provides for Rural Investment Allowance, deleted from the Act.