Wages and salaries of military personnel, revenues accruing to non-profit-oriented organisations like religious bodies, pension fund, schools, trade unions and cooperative societies are to be exempted from tax payment when the Tax Reforms Bills become law.
The Tertiary Education Trust Fund (TETFund) will also enjoy 50 per cent of funds accruing from the development levy contained in the Report on the bill as submitted on Thursday to the House of Representatives by its Finance Committee.
The Senate is expected to considered and pass its version of the bills this week.
Barring to the unforeseen, the bills will tomorrow go into third reading in the House for their passage.
Those exempted from taxation are contained in Section 164 of the Tax Bill.
The exemptions are: “(a) the profits accruing to, or gains from disposal of assets of, any person being – (i) a statutory or registered friendly society, where the profits or gains are not derived from a trade or business carried on by such society, (ii) a co-operative society registered under any enactment or law relating to co-operative societies, not being profits or gains from any trade or business carried on by that society, (iii) engaged in educational, religious or charitable activities of a public character where the profits or gains are not derived from a trade or business carried on by such person, (iv) a trade union registered under the Trade Unions Act where the profits or gains are not derived from a trade or business carried on by such trade union, (v) a Federal, State or Local Government in Nigeria, their Ministries, Departments and Agencies and other public institutions, other than profits or gains derived from trade or business or any instrumentality established for the purpose of trade or business, and (vi) a government purchasing authority established by an enactment and empowered to acquire any commodity for export or redistribution;
“(b) Dividend distributed by authorised collective investment scheme;
“(c) dividend or rental income received by a real estate investment company on behalf of its shareholders, where not less than 75% of the dividend or rental income is distributed within 12 months after the end of the financial year in which the dividend or rental income was earned, provided that nothing in this subsection shall be construed to exempt a— (i) shareholder from tax on the dividend or rental income received from a real estate investment company (ii) real estate investment company from tax on management fee, profits or any other income earned for and on its own account; and (iii) real estate investment company from tax on dividend or rental income if it does not meet the conditions stipulated in this paragraph.
“(d) compensating payments, which qualify as dividends under section 5(2)(c) of this Act, received by a lender from its approved agent or a borrower in a Regulated Securities Lending Transaction;
“(e) compensating payments, which qualify as dividends or interest under section 5(2)(c) of this Act, received by an approved agent from a borrower or lender on behalf of a lender or borrower in a Regulated Securities Lending Transaction;
“(f) consular fees received on behalf of a foreign State, or by a consular officer on behalf of the State, and the employment income of such officer, other than income in respect of any trade, business, profession or vocation carried on by the officer or in respect of any other employment exercised by him in Nigeria, provided that this exemption shall not apply to the income of an employee engaged in domestic duties, or where the officer or employee ordinarily resides in Nigeria and is not a national of the foreign State.
“(g) an income in respect of which tax is remitted or exempt under the provisions of the Diplomatic Immunities and Privileges Act or of any enactment, order or notice continued in force or effected by that Act.
“(h) pension funds and assets created pursuant to the Pension Reform Act;
“(i) pension, gratuity or any retirement benefits granted in accordance with the Pension Reform Act;
“(j) wound and disability pensions granted to members of the armed forces or of any recognised national defence organisation, or to a person injured as a result of enemy action;
“(k) a sum received by way of death gratuities or as consolidated compensation for death or injuries;
“(l) subject to the provisions of part VIII of chapter two of this Act, redundancy lump sum payment and other compensation of capital nature for loss of employment;
“(m) gains accruing from the disposal of assets by an angel investor, venture capitalist, private equity fund, accelerators or incubators with respect to a labelled startup provided the assets have been held in Nigeria for a minimum of 24 months
“(n) income earned from bonds issued by a State or the Federal Government of Nigeria.
“(o) emoluments of any person serving as other rank and other personnel serving in combat zones, hazardous areas or in designated operations, provided that where any other income accrues to the person, not being income by way of personal emoluments, that income shall be liable to tax under chapter two of this Act.
“(p) income generated by companies engaged in agricultural businesses including crop production, livestock, aquaculture, forestry, dairy, and such other businesses as described in the Fourteenth Schedule to this Act, for the first five years upon commencement of business.
“(q) dividend received from investments in wholly export oriented businesses
“(s) profits of a company engaged in sporting activities.”
“(t) dividend, interest, rent or royalty derived from outside Nigeria and brought into Nigeria through approved channels
“(u) income of a person from an employment where such person earns gross income of National Minimum Wage or less from such employment.
“(v) wages and salaries of military officers.”