Key Amendments to the Personal Income Tax Act (PITA) under the Finance Act 2019

 

Hello tax experts and students of tax! Today, we're covering the main tweaks made to the Personal Income Tax Act (PITA) by the Finance Act 2019. Let’s quickly examine these changes in simple terms to help you stay in the know without the stress!

Quick Overview: What’s PITA Anyway?

The Personal Income Tax Act, or PITA, is Nigeria's law governing personal income tax. If you’re earning money in Nigeria, PITA essentially covers how much tax you're supposed to pay, who's handling the tax collection, and some special conditions that allow you to get a break on your taxes.

Now, the Finance Act 2019 swooped in with a few key updates to make things smoother and to reflect how the Nigerian tax system is evolving. So, what are these changes? Let’s go through them together.

1. Out with “Federal Board of Inland Revenue” and In with “Federal Inland Revenue Service” (FIRS)

The first change was basically a rebranding. Everywhere in PITA that used to say "Federal Board of Inland Revenue" was swapped with "Federal Inland Revenue Service" (FIRS). This makes sense because FIRS is the main body responsible for handling taxes in Nigeria.

Why is this important?

Well, clarity matters! When you know exactly which agency is responsible, it’s easier to follow rules, lodge complaints, or get tax-related assistance.

2. More Freedom to Save for Retirement (Section 20(1) Amendment)

The Finance Act substituted the text "A contribution to a pension, provided or other retirement benefits fund, society or scheme." for the old text.

What’s changed?

This amendment widens the types of retirement contributions that you can deduct from your taxable income. So, whether you’re paying into a pension fund or some other type of retirement scheme, you get a tax break.

What does this mean for you?

More options, more savings! You can choose different types of retirement accounts or funds without worrying about losing your tax deduction benefits. It’s all about having more flexibility to plan your future while saving a bit on taxes.

3. Simplifying Tax Deductibles by Deleting Unnecessary Sections (Section 33)

What was removed?

Sections 33 (4), (5), and (6).

 

Why remove these?

Sometimes, less is more! By deleting these subsections, the Finance Act aimed to streamline PITA, removing parts that were either outdated or unnecessary.

How does this help?

It reduces complexity. The simpler the tax code, the easier it is for everyone to understand what they owe (or don’t owe). Less confusion = less stress!

4. Adding a Definition for “Connected Persons” in Section 49

"Connected persons" includes people or entities with common control, ownership, or management. It also covers those who receive guarantees or deposits for matching debt and related parties under Nigerian Transfer Pricing Regulations 2018.

What does this mean?

If you’re a business owner or deal with different entities that might be connected to you financially, this is important. The definition of “connected persons” clarifies how debts, finances, or management links between people and organizations are treated for tax purposes. This helps prevent people from sidestepping taxes by shifting money among closely related entities.

5. Defining “Debt” Clearly (Section 49)

"Debt" covers loans, financial instruments, finance leases, financial derivatives, or any arrangement with interest, discounts, or finance charges.

Why does this matter?

Now, PITA spells out what types of financial obligations (debts) are eligible for tax deductions. This is particularly helpful for businesses because it tells them exactly which financial items they can deduct as expenses.

6. Welcome to the Modern Era: Adding Email as an Official Communication Method (Section 58)

In the old text communication had to be written and delivered in person. But now, communication can be delivered “in person, by courier, or via electronic mail.”

What’s up with this change?

Say goodbye to unnecessary trips and hello to efficiency! The Act now recognizes electronic mail (email) as an official way to communicate. So, no more stress over physical submissions—you can send your tax documents via email if that's easier for you.

Why you’ll love this:

It's quicker and saves you the hassle of arranging in-person or courier deliveries. Just fire off an email, and you’re good to go.

7. Minor Wording Adjustments to Keep Things Consistent (Section 74)

 

The amendment adjusted a tiny wording error by removing an unnecessary “or” and adding “or 73” to make the section complete.

Why this tiny change matters:

Even small changes can make a big difference. This tweak helps keep the language in PITA accurate and consistent, which is helpful for legal purposes and easy understanding.

8. Cleaning Up the Third Schedule

The Third Schedule of PITA saw a bit of a spring cleaning:

The followings were deleted:

- References to the Railway Loan (International Bank) Act

- Words like “on or after January 1997”

- Entire Paragraphs: 10, 15, 19, 20, and 24

- a Proviso from Paragraph 18

What’s the takeaway?

This is mainly housekeeping. The deletions remove outdated references and unnecessary content. It simplifies PITA.

9. New Definition of “Service” in Section 108

Old Definition: "Board" 

New Definition: "Service" now means the "Federal Inland Revenue Service" as per the 2007 Act.

Why the change?

It’s all about clarity! Defining “Service” formally ensures everyone knows that PITA references the FIRS.

How this helps:

When the language is clear and consistent, misunderstandings are less likely. It also makes it easier for FIRS to enforce tax laws without legal ambiguities.

10. Swapping “Board” with “Service” in the Entire Act

The amendment replaced every mention of “Board” with “Service” throughout the PITA document.

Why it matters:

This change goes hand in hand with the previous amendment. Wherever the Act used to refer to the “Board,” it now means the FIRS. Consistency across the board (pun intended!) helps both tax authorities and taxpayers alike to stay on the same page.

Wrapping Up: Why Do These Amendments Matter?

The Finance Act 2019 updates to PITA might seem like a lot of little changes, but collectively, they’re moving towards a tax system that’s clearer and a little more in tune with our digital, modern world. Here are some reasons to love these changes:

1. Simplicity in Rules! Less clutter and more consistency in PITA make it easier to understand your tax responsibilities.

2. Flexibility – Want to email your documents? Go ahead! The new amendments make space for electronic submissions.

3. Clarity on Deductions – Knowing exactly what you can deduct (retirement contributions, debt payments, etc.) means fewer surprises when tax time rolls around.

4. Consistency Across Terms – Referring to FIRS as “Service” across the board simplifies communication and understanding of who’s in charge.

Whether you’re a business owner, an individual taxpayer, or a curious learner, these amendments help keep you informed and make the Personal Income Tax Act feel just a bit more accessible.