Minimum tax rule: Assessing the lingering controversies

Imagine a company having to pay taxes on its assets or equity. Eventually, the assets and/or equity would be eroded, right? Such was the fate of Nigerian companies until the signing into law on Monday, 13 January 2020, of the Finance Act 2019 (FA’19). FA’19 made amendments to several provisions of the Companies Income Tax Act (CITA), one of which is Section 33 relating to the payment of minimum tax.

Based on the amendment introduced by FA’19, Nigerian companies are no longer required to pay a minimum tax on their assets or equity capital. The revised Section 33 of CITA now requires minimum tax to be computed as 0.5% of gross turnover, less franked investment income. Gross turnover is defined as the ‘’gross inflow of economic benefits (cash, revenues, receivables, other assets) arising from the operating activities of a company, including sales of goods, supply of services, receipt of interest, rent, royalties or dividend’’. This amendment created new controversies regarding minimum tax computation for Nigerian companies.

To this end, please download our article, Minimum tax rule: Assessing the lingering controversies, wherein we highlighted some of the lingering controversies attributable to the definition of gross turnover, impacts on businesses, and our recommendations.