April 29, 2019

Gucci owner Kering to pay record fine

The owner of Italian fashion giant Gucci is set to pay a record fine of nearly 1.5 billion euros ($1.7 billion) in a tax evasion case, according to media reports Friday. “Lawyers are still negotiating with the tax authorities over a few hundred million euros, but the fine that the (French luxury) Kering group is about to pay is the highest (in Italy),” the La Stampa newspaper said. “It’s a cheque for nearly 1.5 billion euros,” it added. It follows a probe by Milan’s public prosecutor into the fashion house on suspicion of declaring several years worth of Italian sales in Switzerland, thereby saving around 1.3 billion euros in domestic tax. Kering is expected to sign an agreement on the amount due on May 2, according to the financial newspaper Il Sole 24 Ore. “At this stage, no agreement has been reached on any specific amount,” the French group told AFP.   Source: Punch

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Average Nigerian business pays 48 taxes, says Elumelu

The Chairman and founder of Heirs Holdings, Tony Elumelu, has said that an average business concern in Nigeria pays 48 taxes. He noted that with this trend Nigeria would be unable to keep its investors and entrepreneurs if the issue of multiple taxation was not abolished. He said this in Abuja on Thursday while delivering the keynote address at the 21st annual tax conference of the Chartered Institute of Taxation of Nigeria. While he called for a far-reaching tax reforms and an urgent need to pass the executive tax bill, he decried the plight of the average Nigerian entrepreneur, saying that an average business was a local government authority providing his own electricity, water and waste disposal method. According to The Cable, he said the government should make life easier for Small and Medium Enterprises by creating favourable tax policies that will support them. He called on the government to eliminate the regime of multiple taxation. He said, “Until there is a reduction in what SMEs pay as tax, elimination of multiple taxation, the abolition of minimum income tax and excess dividend tax, it will be difficult for us to attract investors into this country, and it will be difficult for us to retain the ones already in the country. It will be difficult for us to mobilise our SMEs to help create employment that we need so much in this country.” “The average number of taxes businesses pay in Nigeria is 48, compared to 33 in other sub-Saharan countries. In Hong Kong, it’s just three. Multiple taxation remains a significant burden for SMEs and corporates operating in the country. “With a population of close to 200 million people in Nigeria, we have only 75,000 registered SMEs in the country. No one needs to tell us that people are avoiding tax or refusing to be a part of the system.” According to the Heirs Holdings chairman, to increase the tax to GDP ratio from its current six per cent to 16 per cent will amount to an additional $40bn in government revenue, which is similar to the size of the nation’s foreign reserves. He said, “Government should drive mass mobilisation of citizens – let citizens know why they need to pay taxes and give them the assurance that their tax will be properly utilised.” “Government should employ the use of smart tax incentives to attract and incentivise local and foreign investors. “Nigeria has 14 taxation treaties while a country like South Africa has 79 double taxation treaties, and we are the largest economy in Africa. Our embassies should adopt a target in the next two years to sign tax treaties with our top 100 trading partners in the world.” Also, the Chartered Institute of Taxation of Nigeria said there was the need for an amendment of the country’s tax laws in order to address some of the loopholes in the tax system. It said while the dynamic nature of the economy had made it imperative for the nation’s tax laws to be amended annually, it was almost eight years now since Nigeria last amended its tax laws. The last time the country’s tax laws were amended was in 2011. The Vice- President of the Institute, Mrs Olajumoke Simplice, urged the National Assembly to pass the tax amendment bill into law without further delay. The conference which is the single largest gathering of tax practitioners in Nigeria has ‘Unlocking the potentials of taxation,’ as its theme. She expressed optimism that the new tax amendment bill when passed into law would encourage more people to pay tax. She said, “The National Assembly is not helping in the development of the nation. Certain things should be considered as priority. Taxation is a dynamic thing. “There should be amendment of the tax laws every year but the last time there was amendment of tax laws in Nigeria was in 2011. They should put their personal interests aside and approve the bill. Nigerians should be encouraged to pay tax.”   Source: Punch

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Nigerian Business Owners Groan Under Poor Infrastructure; Ask For Tax Breaks

Chairman, Heirs Holdings and Founder, Tony Elumelu Foundation, Tony O. Elumelu has called for far reaching Tax reforms and for the National Assembly to urgently pass the Executive Tax bill into law.  Elumelu made this statement as he delivered the keynote address at the 21st Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN), titled, “National Development: Unlocking the Potentials of Taxation”. Mr. Tony O. Elumelu CON, delivers keynote address at the 21st Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN), titled, “National Development: Unlocking the Potentials of Taxation. Speaking on the challenges that stifle small businesses, Elumelu quoted a young entrepreneur beneficiary of the Tony Elumelu Foundation, “The average business owner in Nigeria is a local government authority on his own because he caters for his own electricity with generators, he builds his own borehole, handles his own waste disposal, and the government can make his life easier by creating favourable tax policies that support SMEs.”  Elumelu also lamented the plight of SMEs at the mercy of the tax system revealing, “The average number of taxes businesses pay in Nigeria is 48, compared to 33 in other Sub-Saharan countries. In Hong Kong, it’s just 3. Multiple taxation remains a significant burden for SMEs and corporates operating in the country.” Elumelu continued: “With a population of close to 200 million people in Nigeria, we have only 75,000 registered SMEs in the country. No one needs to tell us that people are avoiding tax or refusing to be a part of the system,” he said.  Permanent Secretary, Ministry of Finance, Dr. Mahmud Isa-Dutse; President, Chartered Institute of Taxation in Nigeria, Dr. Ikemefuna Nwobodo; Executive Chairman, Federal Internal Revenue Service,  Babatunde Fowler; Keynote Speaker and Founder, Tony Elumelu Foundation, Mr. Tony O. Elumelu CON;  and Chairman, Lagos Internal Revenue Services, Ayo Subair. With high cost of compliance, complex and costly business registration processes, many SMEs are choosing to remain informal, which in turn results in a low tax base and low tax contribution to GDP. “Nigeria’s tax to GDP ratio is only circa 6%, compared to far smaller populations like Rwanda at 16%. Imagine the economic transformation we can achieve as a country if we can move our Tax to GDP ratio by 10%. We will raise an additional $40billion in government revenue – identical to the sum of our foreign reserves,” Elumelu explained.  But it won’t be easy. Elumelu advised government to educate, inform and raise tax awareness, “Government should drive mass mobilisation of citizens – let citizens know why they need to pay taxes and give them the assurance that their tax will be properly utilised.” In addition he stated that, “government should employ the use of smart tax incentives to attract and incentivise local and foreign investors.” Elumelu also tasked the country’s ambassadors and embassies with a two year timeline to increase the number of double tax treaties between host countries and Nigeria.  “Nigeria has 14 taxation treaties while a country like South Africa has 79 double taxation treaties, and we are the largest economy in Africa. Our embassies should adopt a target in the next two years to sign Tax treaties with our  top 100 trading partners in the world.” Speaking as the leading proponent of entrepreneurship in Africa and an advocate for entrepreneurs, Elumelu charged government to put in place tax systems to encourage SMEs-— the engine for job creation in the economy. “Until there is a reduction in what SMEs pay as tax, elimination of multiple taxation, abolition of minimum income tax and excess dividend tax, it will be difficult for us to expand the tax base. It will be difficult for us to attract investors into this country, and it will be difficult for us to retain the ones already in the country. It will be difficult for us to mobilise our SMEs to help create employment that we need so much in this country. It will be difficult for us to have the citizens hold leaders accountable.” In conclusion, he reminded the National Assembly members of their mandate in office, “We must encourage government to pass the Executive Bill immediately. Let’s get the National Assembly to fulfil their obligation to society and pass the bill immediately, so we can start making progress”. Speaking in response to the presentation, Former President of the Chartered Institute of Taxation in Nigeria, Chief Mark Anthony Dike emphasized the urgency for the Executive Tax bill to be passed into law. He said: “Every year during the military regime, there was a Finance Miscellaneous Provision Decree aimed at looking at what has happened and review the areas that need to be amended. As they say, the taste of the pudding is in the eating. We may conceptualise, but in order to know the efficacy of a theory, we have to test it. Until the provision of the Executive order is tested, we cannot know how efficacious it will be.” Also present at the event were Dr. Ikemefuna Nwobodo, President, Chartered Institute of Taxation in Nigeria, Permanent Secretary, Ministry of Finance, Dr. Mahmud Isa-Dutse, Babatunde Fowler, Executive Chairman, Federal Internal Revenue Service, Ayo Subair, Chairman, Lagos Internal Revenue Services, Members of the council of CITN and the Auditor General of the Federation, Mr. Anthony Ayine.   Source: Proshare

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NLC, forum caution FG against increase in VAT

The Nigeria Labour Congress (NLC) President, Ayuba Wabba, has warned the Federal Government against any attempt or means to increase the Value Added Tax (VAT). Wabba, represented by NLC Deputy National President and President of Nigeria Union of Teachers (NUT), Dr. Nasiru Idris and Ibrahim Walama, stated this yesterday at the 11th state delegates’ congresses of Kano and Kaduna chapters of the NLC. He vowed that any move by government to mull such policy would be rejected. He also urged immediate implementation of new minimum wage of N30,000. In a related vein, experts at the ongoing yearly conference of the Chartered Institute of Taxation of Nigeria (CITN) have urged the Federal Government to tread cautiously in its plan to increase VAT, urging it to look into expanding its tax base to the informal sector. The experts, who spoke yesterday in Abuja, said the informal and electronic sector still remained untapped and it could triple the current VAT collection. A tax expert, J. K. Eniayeju, the past president of CITN, said that increase in VAT at the present time would send an uproar to the business community and it would have a negative effect on Nigeria’s economy. But the Executive Director of the Kano State Inland Revenue Service, Sani Abdulkadri Dambo, said the issue of VAT increment must be give and take wherein the consumption income tax and the company income tax are reduced and the VAT is increased, saying that by so doing, the public can be easily convinced. Other participants urged the government that rather than increase VAT, the economy should be stimulated to attract investors. Meanwhile, Governor Samuel Ortom of Benue State, his Plateau State counterpart, Simon Bako Lalong, Abdullahi Umar Ganduje of Kano State and Governor Oluwarotimi Akeredolu of Ondo State have pledged to pay the new national minimum wage of N30,000 recently assented to by President Muhammadu Buhari. The governors, who spoke at the NLC delegates’ conference, noted that the workers constitute the backbone of government who should be encouraged in their duty. Ortom and Akeredolu urged the government to review the revenue allocation sharing formula in favour of states to facilitate the smooth implementation of the new minimum wage. Lalong, who spoke at the NLC delegates’ conference in Jos, represented by his Special Adviser on Labour, who also was the immediate past chairman of NLC, Jibrin Bancir, noted that the workers constitute the backbone of government who should be encouraged in their duty.   Source: Guardian

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FG to boost non-oil revenue via aggressive tax collections

President Muhammadu Buhari on Wednesday said the Federal Government would deploy dynamic initiatives towards boosting the country’s revenue from taxation. He said this in Abuja at the opening session of the 21st annual tax conference of the Chartered Institute of Taxation of Nigeria. The conference, which is the single largest gathering of tax practitioners in Nigeria, has ‘Unlocking the potential of taxation,’ as its theme. Represented at the event by the Permanent Secretary, Federal Ministry of Finance, Mahmoud Dutse, the President explained that his administration was committed to diversifying the country’s revenue base through the use of taxation. This, he noted, was the major reason why key reforms were being implemented in the country’s tax system. He called for a change of attitude by Nigerians towards the payment of taxes, adding that situations where people deliberately refused to pay their taxes were inimical to the objectives of the government to grow the economy. He added that his administration was aware of some of the loopholes in the country’s tax system, noting that efforts were being made to change the narrative. He said, “Our tax system must reflect the nature of our commercial activity levels. Oil is just above 10 per cent of our GDP but it represents a disproportionate share of our tax revenue. “We will, therefore, develop a framework that mobilises revenue from the non-oil sector. Our tax system must be dynamic in order to respond to an ever- evolving commercial landscape and to increasing technology-driven business models. “As part of our drive to increase non-oil revenue, we have set an aggressive target for increasing tax collection. This is a reflection of the fact that the current level of compliance is low and in some cases, the effective tax rate paid by those that are compliant is lower than expected.” Buhari said his administration had been instrumental to critical reforms in the Nigerian tax system, through the introduction of the Voluntary Asset and Income Declaration Scheme and the Voluntary Offshore Assets Regularisation Scheme. He said, “On the Voluntary Asset and Income Declaration Scheme, for instance, 5,122 applications were received, at the end of July 2018, when the Scheme had gone through a 12-month cycle and entered sunset. “Out of these applications, 1,006 made full payment, 1,613 had outstanding payments to make and 2,503 fell under those who did not furnish adequate information on their tax status. “Arising from these applications, N92.67bn tax liability was declared. N34.67bn had been paid out of declared liability. The outstanding liability of N56.81bn will be paid in instalments. “In all, 16,906 assets were declared under VAIDS. Of these, 3,317 are immovable assets, 13,771 are moveable assets, while 205 represented intangible assets and Investments.” Buhari said his administration was clear about the overriding need to use taxation in achieving its objectives, noting that the government would continue to give its support for increased revenue performance.   Source: Punch

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Rivers revenue agency seals NDDC office over alleged N50bn tax

The Rivers State Internal Revenue Service has sealed off the corporate headquarters of the Niger Delta Development Commission in Port Harcourt over unpaid withholding tax allegedly running into N50bn. This is as the NDDC insisted that its records had indicated that they were not indebted to the state government to the tune of N50bn in unpaid taxes, adding that the sealing of its office on Tuesday did not follow due process. Speaking with our correspondent on Wednesday, the Chairman of RIRS, Adoage Norteh, said the NDDC premises were sealed off because the commission refused to make their (NDDC) financial records available for audit. Norteh said, “The place is sealed off; we got a court order to seal off the place. We had gone to court to say that we are frustrated by the antics of NDDC. They had assessed themselves last year and admitted that they were indebted to the tune of N671m, but they did not pay. “When we now seal the office (last year), they then paid. We told them that we are going to audit their books, but since last year to this time, they (NDDC) has refused to allow us have access to its books. “The N50bn that is being talked about is our best of judgement; that is the amount we assessed because they refused to open their books. That they did not object to it means that it is the amount they owe. If they have nothing to hide, why would they not show us their records; for many years, these people have refused to open their books.” The RIRS chairman, however, explained that the agency had opened talks with the Commission with a view to resolving the feud over unpaid tax. “We are talking with them now; they are asking that we should come and do the audit now and that whatever we come up with, they will pay. I am reluctant because we have gone past that process; we have got a court order. “We would not have gone to court if they had done the needful. But if they say it is not N50bn, how much do they owe? We are not interested in sentiments, we are interested in the records,” Norteh said. But a statement from the NDDC maintained that it had not defaulted in meeting its tax obligation to the RIRS, even as it expressed surprise that the state revenue agency claimed the Commission owed N50bn. The statement issued on Tuesday by the Commission’s Director of Corporate Affairs, Charles Odili, read, “It is rather curious that the RIRS would rush to seal the gates of the Commission, disrupting activities at its headquarters, without any form of notification. “We have had cause to discuss our tax obligations with officials of the RIRS in the past and all the grey areas were resolved amicably. It is, therefore, an act of bad faith for the revenue agency to begin to take actions that impugn on the reputation of an interventionist agency that is serving the people of the Niger Delta region. “For the avoidance of doubt, the Commission has as recently as January this year settled its outstanding tax obligations to the RIRS. We have cleared all withholding tax on enterprises and Pay as You Earn up to March 2019, including arrears.” The NDDC, however, called on the RIRS to remove the sealing order on its premises to enable both parties to enter into dialogue and resolve their differences. “If there is any other issue of outstanding tax obligation (underpayment), it will only come up after reconciliation. Until then, we cannot establish or determine under payment or overpayment. And our books are open for audit or reconciliation. “We can under the circumstances safely say that the RIRS came to seal off our premises without due process. As the notice of non-compliance was neither issued nor served on NDDC before the RIRS action,” the statement read.   Source: Punch

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