For the second time in two years, the Federal Government has increased tertiary education tax from 2.5 percent to 3 percent.
It was increased from 2 percent in the Finance Act 2021 to 2.5 percent and has gone up to 3 percent in the backdated 2023 Finance Act.
Former President Muhammadu Buhari signed the Finance Act 2023 on May 28, 2023 and backdated the commencement date of the Act to 1 May, 2023.
Tertiary education tax is imposed on every company at the rate approved by the President of the assessable profit for each year of assessment.
The funds are disbursed for the general improvement of education in federal and state tertiary institutions, specifically for the provision or maintenance of: Essential physical Infrastructure for teaching and learning; instructional material and equipment; research and publications.
Also contained in this year’s Finance Act is the reintroduction of the payment of taxes for purchasing life insurance policy for an individual or a couple.
According to the Act: “Tax deduction is restored for premium paid in respect of insurance on own life and spouse”.
Other changes made to the old Finance Act include: taxation of gains on the disposal of digital assets including cryptocurrency at the rate of 10 percent; deduction of capital losses on assets for capital gains tax purposes. This may be carried forward for a maximum of 5 years.
There is now the rollover relief on sale of shares. This is however subject to reinvestment of the proceeds within the same year of assessment. There is now the deletion of investment allowance on plant and equipment.
Buhari in his last minute assent to the 2023 Finance Act retained the contentious sharing formula of Electronic Money Transfer (EMT) levy at 15 percent to the federal government, 50 percent to state governments and 35 percent to local governments.