May 17, 2019

Indigenous airlines have been told to take the prompt payment of their charges to respective aviation agencies as a top priority in order for the industry to witness the expected growth. Grp. Capt. John Ojikutu (rtd), the Chief Executive Officer (CEO) of Centurion Aviation Securities in an interview with our correspondent in Lagos, said that aeronautic charges and payment of Value Added Tax (VAT) were not the challenges hindering growth of the airlines as claimed in some quarters. Rather, he said that most of the airline operators did not prepare sufficiently for the financial commitment of their business and responsibility before venturing into the sector. Onjikutu posited that the manner of their entries, exits and lifespan showed that many of them did not include in their business plan, the aeronautical charges and taxes as contained in the economic regulation of the Nigerian Civil Aviation Regulations (NCARs). He explained that none of the airlines in the sector airlifts passengers on credit and wonder why they could not remit to the appropriate authorities sums collected from passengers on behalf of the agencies. “Generally, they sell cash and carry tickets not on credits, but owe recurring debts to the services providers and staff salaries in multiple arrears. There were records of some of the airlines collapsing within five years of their entry into operation.  “Some others had to appeal for government intervention funds to bail them out of debts from bank loans and recurring, debts from the various aviation services providers. “Many did not plan their flight operations beyond five airports, but were operating to 10 airports or even more without including the costs into their expected earnings. Others expanded their operations to airports that are not sufficiently equipped to support flight operations beyond daylight or sunset.” He insisted that the issue of multiple taxes as claimed by the airlines were spurious as they were not taxes only, but charges, which were not imposed on the airlines alone, but also on other operators, services providers, allied businesses and the passengers. He explained that there were about 38 taxes and charges, but only 11 of these were charges on the airlines. He emphasised that for the airlines, only VAT was a tax; four were statutory charges, two were non-statutory charges, while four others were operational support or services charges. He added that two out of these were optional, while the remaining 27 were charges on other operators not the airlines.   Source: Independent

The Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, has restated the agency’s commitment to eliminating multiple taxation in the country. Fowler said this at a tax breakfast seminar with the theme: “Tax Controversy and Dispute Resolution,’ organised by KPMG Nigeria in Lagos, recently. According to him, one thing the FIRS did when it initiated the ongoing tax reform was to sign a memorandum of understanding (MoU) with the State Internal Revenue Agencies to streamline tax payments. He explained: “We see things changing this year and I hope that the corporate body would take advantage of this opportunity. “This simply says that if you have businesses operating in more than one state, instead of having five State Internal Revenue Services and FIRS coming to check your books, you can do it at one stop. “You inform the committee, they look at your books and each state would get what is due them and of course the FIRS. He listed some of the issues that cause dispute in terms of tax payment to include income tax, Value Added Tax holding tax in the country. According to him, defaulting in tax payment is one of the reasons for controversies and dispute. He said the decision by the agency to place a lien on defaulting taxpayers with bank accounts with turnover of N100 million and above annually, for over three years was in order. “I don’t really think there should be much concern when you are talking about disputes in this respect. That is because 99 per cent of all these accounts do not even have a tax identity. Without a tax ID at the FIRS level, you can’t make tax payments. “These businesses had collected VAT, they had deducted withholding tax and didn’t file any returns nor did they make any tax payment. So, when we are talking about a dispute here, I think it is an open and closed case,” he added. Continuing, Fowler said: “Some of the reasons for these controversies basically might be wrong computation of taxes, misinterpretation of some section of tax laws and audits and the issue of double taxation. “On the issue of double taxation, politically, the states believe that they have the right to impose sales tax, whereas some people feel VAT should be a federal tax, which the states do share from that revenue. And i think that was the only area in Nigeria where we had an issue of double taxation.” Fowler further noted that one of the reasons for low tax collections, not just in Nigeria, but the entire Africa, was the over-reliance on income from natural resources over the years. “If you look at Nigeria as a country, nobody has been sent to jail for criminal charges when it comes to taxation, because when you file the return which is four times it becomes a criminal case at the same time at the state level the same applies.   Source: This Days