Nigeria’s N13.5 trillion 2021 budget – A move in the right direction?

In October 2021, President Buhari presented to the Senate a proposed 2021 budget of N13.082 trillion. Read more on this here. However, on Monday, 21 December 2020 the Senate passed the appropriation bill of N13.588 trillion. This is N505 billion higher than the proposed N13.588 trillion.

Snapshots of Nigeria’s 2021 Approved Budget – Budget of Economic Recovery and Resilience

  • Total budget size – N13.588 trillion
  • Projected revenue – N7.886 trillion
  • Budget deficit – N5 .196 trillion
  • Statutory transfer – N496.528 billion
  • Debt servicing – N3.324 trillion
  • Capital expenditure – N4.125 trillion
  • Recurrent expenditure – N5.641 trillion

Key Budget Assumptions

  • Official exchange rate – $1: N379
  • Inflation Rate: 11.95%
  • GDP Growth Rate: 3%
  • Oil Production: 1.86mpbd
  • Oil Price: $40pd

Funding of N5.196 trillion Budget Deficit?

According the Senate, below are how they plan on financing the budget deficit

  • Sale of Federal Government assets projected at N205.153 billion
  • Debt financing projected to be valued at N4.281 trillion
  • Multilateral and bilateral project-tied loans of N709.685 billion.

According to the Senate, one of the reasons for the increase in the budget is due to the N365 billion spending request for the upscaling of the National Social Investment Programme (NSIP).

The increase in the 2021 budget is quite worrisome, as the effects of the COVID-19 pandemic are still lingering, and the economy is yet to recovery. The projections of some key items on the budget can only be achieved when normalcy returns. One of such is the oil price. Global demand for oil is declining.

Take full advantage of FIRS Palliative measures before the end of 2020

As you may be aware, the Federal Inland Revenue Service (FIRS) and several States’ Internal Revenue Services rolled out several palliative measures to cushion the effect of the COVID-19 pandemic on taxpayers.

Some of the palliatives measures that were offered by the FIRS to taxpayers was the waiver on interest and penalty on outstanding tax debts arising from tax desk review, audit and/or investigation exercise. The FIRS exercised its powers to waive the interest and penalty on outstanding tax audit liabilities. This is one of the numerous initiatives by the FIRS to aid in cushioning the negative impact of COVID-19 on taxpayers. The FIRS has stated that this waiver does not explicitly apply to interest and penalty on tax liabilities that have not been established through a tax desk review, audit and/or an investigation exercise.

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Q3 2020 Company Income Tax Report: What You Should Know

Companies Income Tax (CIT) is a tax collected on the profits of registered companies in Nigeria. This also includes the tax on the profits of foreign companies carrying on any business in any part of Nigeria. CIT is one of the many means through which the country generates revenue. Companies founded in Nigeria which are referred to as Resident companies are liable to remit CIT on their global income while non-residents are required to remit CIT on their Nigeria-source income. Corporate income tax is based on accounting profits adjusted for tax purposes.

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First Thoughts:

The Downward Spiral and the Glimpse of hope.

So early last week, we had the official confirmation that Nigeria had sunk into recession yet again, the second one in five years. This was courtesy of the nation’s GDP contracting by 3.6 percent in Q3 2020 after shrinking by 6.1 percent in the previous quarter. According to the International Monetary Fund (IMF)’s forecast, the Nigerian economy will contract by 4.3 per cent this year, which would be the largest contraction in nearly 40 years. What a year it has been!

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Internal Generated Revenue by State Government in H1 2020: Summary

Internal Generated Revenue by State Government in H1 2020: Summary

The realities of the Covid-19 pandemic affected internally generated revenue across various states in Nigeria but in spite of the significant drop in revenue, the economy has rapidly gotten back up from the Q1 to the Q2.

The National Bureau of Statistics recently published the Internally Generated Revenue at State level for the Half year of 2020. The 36 states and FCT IGR figure hits N612.87bn in H1 2020 compared to the N693.91bn recorded in 2019. This shows us a negative growth of -11.7% from the previous year.

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How to Avoid the Cost of Non-compliance of Taxes in 2021

Value Added Tax (VAT): The Major Highlights

A quick question for you.

Have you ever tried to play smart and ended up regretting it? Chances are you have. Well that is exactly how it feels when you fail to remit your taxes by the due date, and it comes biting back.

Let us take a little trip down memory lane. The Value Added Tax (VAT) Decree of 1993 was the first to introduce VAT to the Nigerian economy. Since then, it has witnessed series of amendments including the most recent Finance Act 2019. The amendments are geared towards ensuring simplicity and compliance. The regulation that currently governs the administration of VAT in Nigeria is the Value Added Tax Act CAP V1 LFN 2007 (as amended) and the Finance Act 2019.

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First Thoughts: Like the Phoenix; Like Nigeria.

I grew up reading a lot of fantasy story books and believed for a very long time in the existence of a lot of mythical creatures. I looked forward to encounters with fairies, centaurs, bush babies, unicorns, dinosaurs and mermaids among others. I was almost a teenager before I got to finally accept that I was never going to actually see any of these creatures and so had to settle for the encounters with them in these story books and movies. I read all the 7 Harry Potter Books by J.K. Rowling from my early teens and into my early twenties and of course watched every single one of the movie adaptations and this simply reinforced my fascination with the imaginary world.

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