PwC MSME Survey 2020
THE IMPACT OF THE FINANCE ACT 2019 ON MSMES IN NIGERIA
Value Added Tax:
A
Registration
threshold
The Law sets a VAT
registration threshold
of N25 million turnover
in a calendar year.
This implies that SMEs
that do not meet the
threshold would not
need to register for
VAT and as a result
would not be able to
recover input VAT on
their purchases.
B
Cash basis
Remittance of VAT
now to be on a cash
basis, that is, the
difference between
output VAT collected
and input VAT paid
in the preceding
month.
Exempt basic food
items and definitions
The meaning of supply
and the definition of
goods and services
have been expanded
to cover intangible
items while basic food
items have been
specifically defined.
These include bread,
cereals, live meat or
poultry.
D
Increased penalties
Penalties for failing to
register has increased
from N10,000 to N25,000
for the first month of
default and N5,000 to
N20,000 for each
subsequent month. It is
important for MSMEs to
take note of the increase
in penalties as payments
for default will significantly
affect their profit where
their returns are not filed
in time.
The Stamp Duties Act:
The Stamp Duties Act has been amended to include
payment of N50 duty on electronic bank transfers of
N10,000 between accounts except same accounts of
an individual in the same bank. Before the
amendment to the SDA, the Central Bank of Nigeria
("CBN") had mandated banks to charge N50 as
stamp duty on all electronic transfers between
accounts although the SDA did not have this
provision.
This amendment has provided the legal backing for
the charge and a minimum threshold for the
applicability of stamp duty. It is important for SMEs to
be aware of this provision.
PwC MSME Survey 2020
PwC
June 2020
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