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Business Finance Info & Updates

Cash-strapped FG to borrow unclaimed dividend, banks’ dormant account balances

In a desperate move to get funds to run the 2021, the Federal Government has concluded plans to borrow from the unclaimed dividend stock and dormant bank account balances unused  for six years and more. The fund is tagged Unclaimed Funds Trust Fund. 

According to the Finance Act 2020 recently signed into law by President Muhammadu Buhari, the trust fund will be a sub-fund of the Crisis Intervention Fund.

It states: “Any unclaimed dividend of a public limited liability company quoted on the Nigerian Stock Exchange and any unutilised amounts in a dormant bank account maintained in or by a deposit money bank which has remained unclaimed or unutilised for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account shall be transferred immediately to the trust fund,” the act read.

The Act, however, exempts official bank accounts owned by the Federal Government, state government or local governments or any of their ministries, departments or agencies.

The Act further notes that the monies transferred to the trust fund will be a “special debt owed by the federal government to shareholders and dormant bank account holders”. It adds that the original owners of the money can claim it at any time.

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The operation of the trust fund will be supervised by the Debt Management Office (DMO) and governed by a governing council chaired by the finance minister and a co-chairperson from the private sector appointed by the president.

This move will make needed funds available to the Federal Government without foreign exchange worries or conditions attached to loans from multilateral lenders.

Other members of the governing council shall include the governor of the Central Bank of Nigeria (CBN), director-general of the Securities and Exchange Commission (SEC), managing director of the National Deposit Insurance Corporation (NDIC), a representative of the registrars of companies, two representatives of the shareholders’ association, a representative of the Bankers’ Committee and the director-general of the Debt Management Office as the secretary of the trust fund.

The Finance Act includes provisions that create a nexus for the taxation of income earned by foreign companies from technical, management, consultancy or professional services that are remotely provided to a person resident in Nigeria. The tax on these foreign companies will be limited to the tax withheld (deducted) from payments made to them.

The Finance Act also introduces provisions to tax any foreign company that: transmits, emits or receives signals, sounds, messages, images or data of any kind from cable, radio, electromagnetic systems or any other electronic or wireless apparatus to Nigeria in respect of any activity, including electronic commerce, application store, high frequency trading, electronic data storage, online adverts, participative network platform, online payments and so on, to the extent that the company has significant economic presence in Nigeria and profit can be attributable to such activity.

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Sunnews

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