Finance Act 2021: Highlight of Changes to Various Tax and Fiscal Legislations (Part 2)


Customs, Excise Tariffs, ETC. (Consolidation) Act (CETA)

Imposition of Excise Duty on Non-Alcoholic, Carbonated and Sweetened Beverages

Excise duty of N10 per litre will now be charged on all non-alcoholic, carbonated and sweetened beverages in line with the insertion of Section 21(3) in the CETA.

Federal Inland Revenue Service (Establishment) Act (FIRSEA)

Automation of Tax Administration Process

A new Section 25(4) of FIRSEA was introduced in the FA21. The new provision allows the FIRS to deploy proprietary or third-party technology to automate the tax administration process, including tax assessment and information gathering, after giving a 30 days notice to the taxpayer. A taxpayer that fails to grant access to the FIRS will be liable to an initial administrative penalty of N25,000 for each day it fails to grant access. 

Information to be Delivered by Bankers

Section 28(3) of the FIRSEA has been amended to increase the administrative penalty charged to banks for not furnishing information to the FIRS to N1,000,000 for each of the returns or information not provided or incorrect returns or information provided. The penalty will be payable in respect of each quarterly return.

Relevance of Other Laws

Section 68 of the FIRSEA has been amended by deleting the erstwhile provisions and introducing new ones. Based on the amendments, the FIRSEA will take precedence over any other laws regarding the administration, assessment, collection, accounting and enforcement of taxes and levies due to the Federal Government of Nigeria (FGN). If there are inconsistencies between the provisions of the FIRSEA and any other law, the provisions of the FIRSEA will prevail.

Further, the FIRS is the only agency of the FGN for the administration, assessment, collection, accounting and enforcement of taxation in Nigeria. It is now an offence for any other person or agency to carry out these functions if such person or agency has not been authorized by the Finance Minister. Hence, relevant Ministries, Departments, Agencies or institutions of the FGN are required to notify the FIRS to carry out investigations, enforcement or compliance of a taxpayer if in the course of carrying out their duty become aware of any incidence that requires investigation, enforcement or compliance.

Any person convicted of an offence under the provisions of Section 68 of the FIRSEA will be liable on conviction to imprisonment of five years or a fine of N10,000,000 or both.

Personal Income Tax (Amendment) Act (PITAM)

Condition for the Relief of Life Insurance Premium

The life insurance premium paid by an individual on his life or the life of his spouse will be allowed for deduction based on Section 33 of the PITAM. However, the premium must be paid at arm’s length and be consistent with the provisions of Section 17 of the PITA.

Power to Call for Returns, Books, Documents and Information

An officer of the relevant tax authority not below the rank of a Senior Manager or Grade Level 14 can issue a notice to request for taxpayers information for examination in line with the amendment to Section 47 of the PITAM.

The Chairman of the relevant tax authority through a signed letter, may require a bank to disclose taxpayer's information. The penalty for any bank that fails to comply with the provisions of Section 47 has now been increased to N1,000,000 for each returns not provided or incorrect returns/ information.

Information to be Delivered by Bankers

Based on the amendment of Section 49 of PITAM, bankers are no longer required to prepare monthly returns specifying the names and address of each new customer. Rather, the returns are now to be prepared quarterly. 

The penalty for any bank that fails to prepare quarterly returns to the relevant tax authority specifying the names and address of its new customer is now N1,000,000 for each returns not provided or incorrect returns provided.

Offences and Penalties

The penalty upon conviction for contravening any provision of the PITAM where no other specific penalty has been provided is N20,000. Other penalties are:

  • For failure to furnish a return, statement or information or to keep records, N2,000 for everyday the failure continues, commencing from the following day after conviction.
  • For default of payment, the applicable penalty is six months imprisonment.

Stamp Duties Act (SDA)

Electronic Money Transfer Levy

Subject to the approval of the National Assembly, the finance minister shall make regulations for the imposition, administration, collection, and remittance of the Levy. The finance minister shall also make regulations relating to the auditing, accounting, allocation, and distribution of arrears of the relevant stamp duties and Electronic Money Transfer Levies (EMT Levy) collected between 2015 and 2019 fiscal years within 30 days from the date when the FA2021 becomes effective.

Subsequent EMT Levy collected shall be distributed within 30 days from the month of collection.

Value Added Tax Act (VATA)

Taxable Person to Render Returns

Companies in the upstream petroleum operations that do not fall within the N25 million threshold are not exempted from the provisions of sections 8(2), 13A, 29, 34, and 35 of the VATA in respect of registration, charging, collection and rendering of VAT returns.

Registration by Non-Resident Companies

Section 10 of the VATA has been amended to specify the modalities for withholding VAT from the invoice of a non-resident company. Where a non-resident company makes a taxable supply to a company in Nigeria, the FIRS may appoint the company in Nigeria or may appoint any other person to withhold or collect VAT and remit to the FIRS on or before the 21st day of the following month.

A Nigerian taxable company cannot withhold VAT from a company or person appointed by the FIRS, except where the appointed company or person has failed to collect the VAT

Nigeria Police Trust Fund (Establishment) Act (NPTFA)

Administration of the Fund

The NPTFA has been amended to include a provision empowering the FIRS to assess, collect, account, and enforce the payment of the Police Fund Levy imposed on companies in Nigeria.

National Agency for Science and Engineering Infrastructure Act

Fund of the Agency

Companies in the banking, oil and gas, mobile telecommunication, ICT, aviation and maritime with turnover of N100 million and above will now be required to pay a levy at the rate of 0.25% on profit before tax. 


The FA21 is a welcome development. The various amendments introduced in the FA21 has further emphasized the Federal Government’s commitments to align Nigeria’s tax legislations and fiscal policies with the global best practice and current realities. While some of the amendments are newly introduced, others are further amendments to the changes introduced by Finance Act 2019 and 2020.

The provisions in the FA21 which further amends changes from the old Finance Acts have resulted from challenges experienced by taxpayers and administrators in the application and administration of those changes.

It is almost certain that similar challenges would be experienced in applying some of the amended provisions resulting from the FA21. Therefore, it is expected that the FIRS or the finance minister would issue clarification circulars to the public in the coming weeks to provide guidance on the application of the various amendments.  



Olufunso Ola-Ojo

Director, Tax & Regulatory Services