A bill seeking to exempt companies recording losses from paying the minimum income tax has scaled the second reading in the House of Representatives.
The bill aims to amend the Companies Income Tax Act to “provide adequate security and guarantee” for businesses and companies that record losses in each “assessment year”.
Sponsored by Oboku Oforji from Bayelsa, the bill scaled through the second reading during plenary on Thursday.
Section 33 of the extant Act states that companies having no taxable profits for the year shall pay a minimum tax.
Such tax shall be 0.5 percent levied on the gross turnover of the company excluding franked investment income.
The proposed legislation seeks to introduce a new subsection to the aformentioned section to exempt companies that record losses in the “assessment year” from paying the minimum tax.
Leading the debate, Oforji said the objective of the amendment is to provide fairness to taxpayers to ensure continued economic growth, especially in the wake of the economic realities that have resulted in a lot of companies recording losses and having to pay minimum tax despite the losses incurred.
“This amendment primarily proposes an exemption for such categories of companies under the Companies Income Tax Act in each assessment year,” he said.
James Faleke, chairman of the committee on finance, supported the bill, saying the amendment is part of the tax reform bills proposed by President Bola Tinubu.
Lawmakers voted in support of the bill when it was subjected to a voice vote by Tajudeen Abbas, speaker of the house.
