June 7, 2019

Assessing the FIRS Tax Reform

Federal Inland Revenue Service, FIRS, is one of the establishments charged primarily with the responsibility of accessing, collecting and accounting for the various taxes to the federal government. Tax paid by the citizens and businesses are used to meet budgetary demands to finance public projects and make the business environment conducive for economic growth. In consonance with the belief by experts that the way to grow the economy is taxation, FIRS had embarked on series of reforms to achieve the aim. Hence, the service generated revenue from below two trillion naira per annum in 2015 to three trillion naira in 2016, four trillion naira in 2019 and five point three trillion naira in 2018. Analysts say the recent figure is more than half of 2019 federal budget. No wonder the Chief Executive Officer of the Nigerian Financial Intelligence Unit, Mr. Modibbo Tukur applauded FIRS for revolutionalising tax administration in the country. For instance, up to forty-five million taxpayers have been brought into the federal tax net with the introduction of Tax Identification Number, TIN. Also, the comprehensive audit exercise embarked upon to verify major organizations self-assessment claims was described by tax experts as a step in the right direction. Apart from the aforementioned, the service made good its words by going after tax defaulters with huge funds in Nigerian banks through a process known as tax substitution or tax recovery through third parties. As commendable as these measures are the ultimate is to ensure that the benefits cascade to the general populace. Situations where individuals provide themselves with essential services and infrastructure such as water, electricity, good roads and healthcare should no longer arise. Hence, proceeds from tax should be properly guarded by relevant agencies and invested in key projects that will make life more meaningful for the citizens. When people begin to enjoy the dividends of governance, it boosts confidence in the tax process and encourages more compliance. At this juncture, investment in data management support structures is needful for proper monitoring of the whole process. There should also be continuous enlightenment for tax payers and collaboration with relevant stakeholders to sustain the process.   Source: Radio Nigeria

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Nigeria’s Ecommerce 5% Challenge As FIRS Introduces VAT on Online Transactions

The ecommerce sector will experience a minor slowdown as government begins implementing automatic and direct collection of VAT on online transactions in Nigeria. See it this way: if a physical open market sells electric iron for N8, 000 and Jumia sells the same for N8,000, because Jumia’s customer will be required to pay VAT (5% of cost), the price will jump to N8,400. This extra N400 for online purchase will inflate the price against the open market which typically does not collect VAT.  (In U.S., the reverse was the case: ecommerce firms were originally not required to collect taxes unlike physical stores even though the ecommerce companies expect customers to self-report during tax filing. The non collection of online taxes helped Amazon significantly when it started.) The Federal Inland Revenue Service (FIRS) says it will soon begin collection of Value Added Tax (VAT) on online transactions. The Chairman of the agency, Mr Babatunde Fowler, made the disclosure in an interview with Journalists in New York on Saturday. Fowler said: “soon, we will ask banks to impose VAT on online transactions for purchases of goods and services. “Not that it is something new; it actually should be in existence. “We will certainly follow up to make sure that every VAT that is due to be collected is collected.” He explained that the move was part of measures by FIRS to meet its N8 trillion revenue target for 2019. This program is going to be extremely challenging since government must ensure it is only commercial transactions that are charged VAT. Yes, it cannot effect VAT on online transactions like refund, loan payment, etc. Also, payments to foreign merchants may be excluded unless those foreign merchants are mandated to remit money to Nigeria. A good strategy will be to have regulations that any online commercial transaction must add VAT which will go direct to the bank. But if they make it that 5% will be deducted at source bank account after any online payment, chaos will be created. We will be watching how the government plans to roll out this online VAT collection in the nation. I expect a detailed publication in coming weeks that would define the rules for all the stakeholders.   Source: Tekedia

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DAPPMAN, MOMAN, IPMAN decry multiple taxation, beg govt.

Members of the Depot and Petroleum Products Marketers Association of Nigeria, Major Oil Marketers Association of Nigeria and the Independent Petroleum Marketers Association of Nigeria on Thursday declared that the government and its agencies should not kill oil marketers’ businesses with multiple taxation. DAPPMAN, MOMAN and IPMAN made the call at a stakeholders’ meeting on compliance monitoring of the midstream and downstream oil sector organized by the National Oil Spill Detection and Response Agency in Abuja. Also at the event, the Director General, NOSDRA, Idris Musa, told the oil marketers that his agency was now set to monitor operations in the midstream and downstream oil sector, adding that it would further enforce stipulated regulations. “We have seen a lot of oil pollution from midstream and downstream operations and we want those operating in these arms of the sector to understand some of the activities we will be carrying out shortly, just as we’ve been doing with those in the upstream arm of the industry,” Musa stated. He added, “So NOSDRA will start sending officers to oil stations belonging to members of DAPPMAN, MOMAN and IPMAN to ensure that your underground storage tanks and other facilities are in compliance with our regulations in order to effectively mitigate the pollution of our ground water and other parts of the environment.” Responding to comments made by the NOSDRA boss, the Executive Secretary, DAPPMAN, Olufemi Adewole, stated that ironically executive members of the oil marketers’ associations were just coming from a meeting where the issue of multiple taxation on marketers was discussed. He said, “For this same business of ours, the Department of Petroleum Resources, Federal Ministry of Environment, state governments and their agencies, as well as many others come with various tax demands. With all these taxes, how can the marketer break even? “Our plea is that when taxing marketers, do it in a way that our businesses are not forced to close down. This is because right now oil marketers are closing shop on a monthly basis due to the high cost of operation and excessive taxation. This, of course, is not healthy for our economy and the nation.” Adewole noted that the landing cost of petrol was over N200 per liter and that the government was spending about N700 annually in subsiding the commodity, adding that this was too high for marketers, which was why they (marketers) stopped importing the commodity. He urged NOSDRA to work in synergy with the Federal Ministry of Environment and other similar agencies in states so as to reduce the multiple taxes levied on marketers. Both the Executive Secretary of MOMAN, Clement Isong, and the National Vice Chairman, IPMAN, Abubakar Maigandi, corroborated the position of Adewole and urged the agency and the government to approach the matter pragmatically if they wanted the pump price of petrol to remain within the reach of the masses. But in a quick response to their concerns, the NOSDRA boss explained that what his agency was looking at was not majorly about taxation or to levy oil marketers.   Source: Punch

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FG plans 100% tax increase on cigarette

The Federal Government on Friday said the tax being paid on a packet of cigarette containing 20 sticks would increase from N20 to N40 this month. Speaking at an event in Abuja to mark the 2019 World No Tobacco Day, the Permanent Secretary of the Ministry of Health, Abdulaziz Abdullah, also  said  the National Assembly on May 28 approved the tobacco Regulation Act. He said  based on the Nigeria Global Youth Tobacco Survey conducted in 2008 at sub-national level, 15.4 per cent of  pupils  between 13 and  15  in the country were tobacco users, with 4.5 million adults found to be consumers  of the product. According to him, a survey  has shown  that 16,100 persons die every year due to tobacco-related diseases in Nigeria. He said, “I am delighted to inform you that the long awaited Regulations to the Act which the National Tobacco Control Committee drafted and vetted by the ministry and submitted to the National Assembly through the Federal Executive Council has finally been approved by the National Assembly on May 28, 2019 in line with Section 39 of the Act,” he added. Meanwhile, despite the campaign against the consumption of tobacco, the number of Nigerians who smoke cigarettes presently stand at about 3.1 million, the Pediatric Association of Nigeria, has said. The organization put the daily number of Nigerian smokers at 2.4 million and warned that by 2030 it had been estimated that about eight million persons worldwide would die annually from tobacco use. The Technical Director of PAN and Chief Medical Director of Bingham University Teaching Hospital, Jos, Prof. Edwin Eseigbe, said while delivering a paper on Friday that smoking has a record of causing respiratory tract infections, decreased lung function, asthma attacks, ear infections and tooth decay. Others were sudden infant death syndrome, death from respiratory infection, asthma, cognitive and behavioral issues.   Source: Punch

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