Intervention of Finance Act, 2019 As Amended on Taxation of Dividends in Nigeria: A Legal Appraisal
Keywords:
Dividends, Taxation, Double Taxation, Companies Income Tax Act, Finance ActAbstract
Taxation is the means through which a government imposes or levies a tax on its citizens and
corporate entities as a way of raising revenue which is then used to meet their budgetary
demands. Dividends on the other hand, means a reward by cash or otherwise which a company
pays to its members from profits of the company. Before a company arrives at its profit which is
to be declared and distributed to members as dividends, the income must have been taxed.
Taxation of dividends therefore is imposition of tax on the part of profit which is distributed to
members which said profit had already been taxed. The legal framework for taxation of
dividends which is section 19 of Companies Income Tax (Amendment) Act 2007 has created a
lot of controversies as to whether taxation of dividends amounts to double taxation or not.
Finance Act, 2019 As Amended however, has exempted dividends paid from certain categories
of income of a company from being taxed. The objective of this paper is therefore to examine the
implication of taxation of dividends under the Companies Income Act, viz-a-viz the intervention
of the Finance Act, 2019 As Amended. The work adopted the doctrinal legal Research
Methodology with the use of statutes, case law, textbooks, journal articles and Internet materials.
At the end, the writer concluded that, though taxation of dividends under the Companies Income
Tax Act, amounts to double taxation, the Finance Act, 2019 As Amended came to ameliorate the
seeming hardship likely to be caused by taxation of dividend by expanding the scope of
exempted categories of dividend paid from certain categories of income of a company distributed
to members. The writer recommends a further amendment of section 19 of Companies Income
Tax Act and amendment of section 7 of Finance Act, 2019 As Amended to remove the power to
tax dividends paid to members of company as the profit from which the dividends are paid had
already been taxed.
