The FIRS announces the date of entry into force of the Finance Law 2023 – Sales taxes: VAT, GST

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In a recent update, the Federal Inland Revenue Service (“FIRS”) officially communicated the revised effective date for the implementation of the Finance Act 2023 (“the Act”). This update by the FIRS follows the postponement of the commencement of the Act by the Finance Act (Variation of Commencement Date Order) 2023. The Act, which was promulgated on May 28 2023 with an initial effective date of May 1, 2023, takes effect on May 1, 2023. September 2023, as set forth in the Effective Date Change Order.

Significant changes that will be implemented starting September 1, 2023 include:

  1. Withholding tax and collection of value added tax (“VAT”)
    Persons designated to withhold or collect VAT are required to remit the withheld or collected VAT to the FIRS by the 14th.th day of the month following that during which the VAT was withheld or collected. According to the FIRS, VAT withheld or collected in August 2023 by designated persons must be remitted on or before September 14, 2023.

  2. New definition of “building”
    The Act amended the definition of “building” under section 46 of the Value Added Tax Act (“VAT Act”) to exclude installations or structures which are easily removable from the land, e.g. example radio and television masts, transmission lines, cell phone towers, caravans, trailers, etc. Therefore, these previously exempt items are now subject to VAT from September 1, 2023.

  3. Increase in the higher education tax (TET) rate
    The TET rate under section 1(2) of the TET Act has been increased from 2.5% to 3% of a company’s taxable profits. According to the FIRS, the new rate is applicable to accounting years ending September 1, 2023 and accounting years ending after September 1, 2023.

  4. Investment allocation and convertible currencies
    The Act repeals sections 32, 34 and 37 of the Corporation Income Tax Act (“CITA”), which relate to the reconstruction investment allowance, the rural investment allowance for capital expenditure incurred in certain circumstances and tax exemption on income earned in convertible currencies. by hotels to tourists, respectively. These benefits will no longer be in effect as of September 1, 2023.

For more information on the changes introduced by the 2023 Finance Act, please see our analysis here.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your specific situation.

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