The Finance Act (“the Act”), 2022 received Presidential assent on 21st June 2022. Most of the changes will be effective from 1st July 2022, which is the Government’s fiscal year, while a few will be effective from 1st January 2023.
Most of the proposed changes in the Finance Bill, 2022 have been maintained in the Act, with a few additions. This newsletter covers changes that were maintained in the Finance Act (maintained in colour grey), new additions that were not previously included in the Finance Bill (highlighted in colour blue) and proposals in the Finance Bill that were not passed as law by the Finance Act (highlighted in colour green).
Some of the legislative highlights are as follows:
- Increase in Capital Gains Tax rate from 5% to 15%;
- Tax rate for Digital Services Tax retained at 1.5% as opposed to the proposed 3% (did not go through in the Act);
- Widening of the scope of transfer pricing and reporting requirements for multinational enterprises;
- Introduction of withholding tax on gains from financial derivatives;
- Restriction on VAT return amendments to prevent deduction of input tax that is more than 6 months; and
- Requirement for a taxpayer to deposit 50% of tax in dispute prior to appealing a ruling by the Tax Appeals Tribunal (did not go through in the Act).