President Muhammadu Buhari signed the 2020 finance act on December 31, 2020. The Act takes effect on January 1, 2021. Buhari’s administration has perfected ways to borrow funds from unclaimed dividends and dormant bank account balances unattended to at least six years.
Federal government intends to go after the amount of money in dormant account balances which is about N737.5 billion. When combined with the N158 billion outstanding unclaimed dividends, the total amount of money that would be taken over by the FG may be up to N895.5 billion.
Nigeria since 2015 had perpetually grappled with the twin problems of heavy budget deficits and weak balance of payments position. What is the guarantee that the incoming administration and the subsequent ones will have the capacity to repay Nigeria’s debt that has reached a scary situation where total debt stock had rose to N31. 009 trillion ($85.897 billion). Almost every day, Concerns Nigerians and Economists express worries over the country’s rising debt profile. The 2021 budget which is over N3.3trn will go to debt Servicing.
The shareholders had opposed the provisions of the law, saying that the government lacks power to manage funds belonging to private investors. In spite of the existing law related to this financial act which clearly states that there shall be no forceful takeover of any private movable property of any Nigerian without due and appropriate compensation and or valid court order. With guaranteed of rights to own property as provided by the nation Constitution, this move was unnecessary because capital market regulators and operators had leveraged technology to put in place initiatives that are already addressing the issue.
To be fair, how can a shareholder with an unclaimed dividend of about N10,000 be expected to go to Abuja, just to make a claim of the unpaid dividend.
Is this not stressful for an owner to request for returns of his fund considering bureaucratic bottleneck in the country. The inefficiency and unnecessary documentation will not help the claimant to access his unclaimed dividend.
One is surprised too about the speed with which leaders at all level go for questionable bonds, while legislators were preoccupied with determining their immediate benefits with unnecessary allowances which took no account of the state of the economy and the welfare of the people they represented.
Nigerians current concern, however, is who will pay these huge debts? Definitely, we are not going to be the one to pay the debts, but do we ponder that it might be too weighty for the lean shoulders of our children? Does it mean that our children will become slaves in their own country by the creditor nations, just because they want to pay off the debts left by the frivolous political class that have ravaged our common patrimony?
Even though some amendments of the financial act will help small companies (businesses with gross turnover of N25 million or less) exempted from payment of tertiary education tax. This is according to Section 34 of the finance act which amended Section 1 of the tertiary education trust fund act. Tax holiday for small and medium sized companies engaged in primary agricultural production (crop, livestock, forestry and fisheries): Section 23 of the finance act amended Section 1 of the industrial development (income tax relief) act.
It states that “Any small or medium sized company engaged in primary agricultural production shall be granted, pursuant to an application to the President, through the Minister, an initial tax- free period of four years which may be extended, subject to the satisfactory performance of such primary agricultural production, for an additional maximum period of two years, and such company cannot be granted similar tax holiday incentive under any other Act in force in Nigeria.
If the law is enforced appropriately, it will help to boast small businesses. The good side of 2020 financial act is that individuals earning minimum wage or less will no longer pay personal income tax. No more stamp duty on bank transfers: It however imposed an electronic money transfer levy of N50 on electronic receipts or transfer of money in the sum of N10,000 and above deposited in any bank or financial institution. The levy is to be paid by the receiver. While section 38 provides that levy to be paid on imported cars has been reduced from 35% to 5%. Import duty of tractors has been slashed from 35% to 5%; motor vehicles for goods transport and transport of more than 10 persons from 35% to 10%.
Dukawa write in from Kano state and can be reach at [email protected]