June 19, 2019 – Sunmola David & CO

Chike-Obi Urges FG To Expand Tax Net, Reduce Rate

Pioneer chief executive of the Asset Management Corporation of Nigeria (AMCON), Mustafa Chike-Obi, on Monday in Lagos reiterated the need for the Federal Government to harness the huge economic potentials inherent in taxation to raise revenue and effectively diversifying the economy from crude oil. This, he said, is possible if the tax net is expanded such that much more people attracted into the tax net, thereby reducing the burden on the few that faithfully pay, a situation he expects will reduce tax rate in the country from the current 30%, the highest in the world today. Chike-Obi, Executive Vice Chairman, Alpha African Advisory, who spoke on the theme: Repositioning Nigerian Economy for Sustainable Growth,” at the Finance Correspondents Association of Nigeria (FICAN) Bi-Monthly Forum, an event meant to set economic agenda for second four-year term of the Muhammadu Buhari administration, while addressing key economic issues, challenged government to discourage multiple taxations, as part of efforts to enhance voluntary compliance. Speaking on the plethora of intervention funds and why adequate infrastructure is needed to stimulate the economy instead, also noted the need for a lower interest rate of between 12 to 15% per annum. For him, “all these intervention funds don’t work… Let me tell you why they don’t work. If you lend to a farmer at 5% you think you are helping him, but everything around him is at 26%. So, he gets a little bit of relief on his financing, but he doesn’t get reliefs on his supplies, diesel, food, employees… So, at the end of the day, those things he gets at 26% invades his 5%.” Chike-Obi said intervention funds also don’t work because “the default rates are as high as default rates of non-intervention funds. So, they don’t work. They are not very efficient”. What Nigeria’s economic managers should do in the new dispensation is to provide capital at reasonable interest rates that work for everyone. “There must be access to capital at a reasonable price. With a 26% interest rate, you cannot do business successfully. So, we must find a way to provide interest rate to everybody at a reasonable rate. We must have an interest rate that will support our economy. And it cannot be much higher to the borrower at 12 to 15%. Every Nigerian should be able to borrow money at between 12 to 15%… So, we must have capital available.” He also spoke on what foreign lenders look out for when lending to developed markets, warning that borrowing in US$ may not be cheaper on the long-run than the Naira as widely believed in some official quarters. For example, he stressed, even the country borrows in US$ at 8%, creditors are concerned with the exchange at the time of repayment, as it is unlikely to remain at N360/$, just as the foreign creditors consider borrowers with a capacity to generate needed funds for repayment of such loans. “The reason why they are lending money at 8%, instead of 16%, is because they know that by the time that money matures, your Naira will not be exchanging at N360/$. This is because the Naira always depreciated by approximately 50% every five years,” Chike-Obi argued. Source: Invest Data

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Taxes Killing Ghanaian Companies As Foreign Businesses Thrive

Tax news / Tobi Aminu

The founder of Perez Chapel International, Bishop Charles Agyinasare, has blamed the collapse of Ghanaian businesses on the immediate tax imposed on them by the government. Preaching at a Sunday service on 2 June 2019 at the Perez Chapel International at the Perez Dome in Accra, Bishop Agyinasare wondered why foreign-owned businesses are given tax exemptions to the detriment of indigenous ones.As a result, he said, the majority of the mega businesses in Ghana are not owned by Ghanaians. Bishop Agyinasare told his congregation that: “Do you know that in Ghana we don’t even have businesses? We like foreign businesses, we don’t have businesses, all our shops are foreign-owned – from Melcom to Shoprite to our restaurants; the Papayes, all the telecom companies, we don’t own any of them, from Vodafone to MTN to [Airtel/]Tigo, we don’t own anything.“We say we do chocolate but Nestle doesn’t belong to us, Unilever Brothers doesn’t belong to us, we don’t own anything.“When a foreign company wants to come and do business in Ghana, we’ll give them a 10 per cent tax exemption for them to settle within the period. A Ghanaian businessman starts the same business and from day one, he has to pay tax and, so, our businesses are collapsing.“When a Ghanaian businessman starts a furniture company today, he has to pay tax, a foreign company starts a furniture company, he claims he’s exporting the thing then they export the thing and it still gets back here and the Ghanaian man who has started is paying taxes and so our businesses don’t succeed”.Last year, the President of the African Centre for Economic Transformation, (ACET), Dr K. Y. Amoako said tax holidays for foreign companies is undermining Africa’s growth.He bemoaned the lack of stringent measures by the government to mobilise taxes from international firms who are investing in African countries.Dr Amoako said this in an interview with the media on the sidelines of the opening session of the 2018 African Transformation Forum held in Accra. Source; Afroinsider

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LIRS to Use Taxpayers’ Bank Verification Numbers for Unique Biometric Identification

Tax news / Tobi Aminu

Summary Recently, the Lagos State Internal Revenue Service (LIRS) issued a Public Notice (PN) disclosing its intention to integrate the LIRS’ Personal Identification Digit (PID) for taxpayers with the national Tax Identification Number (TIN) system using taxpayers’ Bank Verification Numbers (BVN). The PID, which is also known as the Lagos State Government Electronic Banking System (LASG-EBS) Taxpayers Identification Digit, is a unique taxpayer identity code issued by the LIRS to taxpayers in Lagos State while the TIN is a national identification number for individuals or corporate entities for the purpose of tax remittance. According to the PN, the integration will facilitate seamless sharing of taxpayers’ information between tax authorities and other relevant stakeholders. Details The PN provides that the integration is designed to be biometric-based and the LIRS intends to employ the existing BVNs to achieve the planned integration. Furthermore, the PN states that access to the LASG-EBS platform for all transactions such as registration and creation of payer ID for new taxpayers, payments of taxes and validation of taxpayers’ profile etc. will now require taxpayers’ BVN. Accordingly, the PN requires all self-employed individuals to provide their BVNs to the LIRS in order to assist in the creation of their unique PID. Corporate Organizations are also required to ensure that their employees who qualify for tax clearance certificate (TCC) include their BVN in their individual e-TCC forms. The LIRS, in the PN, also assured taxpayers of the safety and security of all data and information in its custody. Implications We expect that the proposed integration of the PID into the TIN would provide the tax authorities with more reliable taxpayers’ information to enable them track down tax defaulters and combat tax evasion. However, it is important that the tax authorities safeguard all data and information of taxpayers, which may be obtained from the integration process to boost taxpayers’ confidence in the system. Thus, taxpayers should engage their tax consultants as soon as possible to obtain professional guidance in complying with the directives under the Notice. Source: Andersen Tax

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ANAN urges improvement in ERGP implementation

Accountancy Services / Tobi Aminu

The new President, Association of National Accountants of Nigeria (ANAN), Prof. Muhammad Mainoma, has urged the Federal Government to improve the pace of implementing the Economic Recovery and Growth Plan (ERGP), as the country’s full recovery from recession rests on this. Mainoma, who said during his inauguration as the11th President and Chairman of Council of ANAN, recently, expressed optimism that with the favourable outlook in 2019, resulting from the rising crude oil price, growth in external reserves, declining inflation, and GDP growth, there is hope that these would translate to sustainable economic development. Using his name as an acronym, the new president said it was with a determination to consolidate on the attainments by Making Accountants in Nigeria Ordinarily More Attractive (MAINOMA). He equally urged ANAN members to exhibit characters of proficiency, respect, objectivity, fairness, education, selflessness, service and integrity, organisation, networking, ability, learning, image, standardisation and methodological, which he termed as Professionalism. Under his watch, Mainoma said the council would work with other professional accounting organisations (PAOs) to form a joint accounting body, as formidable platform for advising the government, noting that the Federal Government’s National Anti-Corruption Strategy (NACS) needs the support of PAOs in Nigeria. “PAOs must work alongside government, regulators, law enforcement and international bodies to combat corruption, tax evasion, money laundering and to strengthen transparency and accountability programmes,” he said. While commending efforts in institutional and governance reforms, he said ANAN would partner with the three tiers of government to enhance fiscal transparency and accountability governance. During the ceremony, a new ANAN logo as well as its training arm, Nigerian College of Accountancy (NCA) Jos, was unveiled. In his valedictory address, the immediate past president, Shehu Ladan, listed some progress made to uplift the association and its members. Source: Guardian

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CAC: Steps to start a small business

CAC SERVICES / Tobi Aminu

Experts say there are steps required to start a successful business. Take one step at a time, and you will be on your way to successful small business ownership. Step 1: Do Your Research Most likely you have already identified a business idea, so now is the time to balance it with a little reality. Does your idea have the potential to succeed? You will need to run your business idea through a validation process before you go any further. A brand strategist Lanre Philips says you don’t go into a business just because you have an idea but because you want to solve a problem. “In order for a small business to be successful, it must solve a problem, fulfill a need or offer something the market wants”. Author of ‘Starting a Successful Business’, Mrs Ekatte Umoh also corroborated this. “Simply find a need and fill it. There is always a gap in the market, recognize that gap and provide a solution.” There are a number of ways you can identify this need, including research and even trial and error. As you explore the market, some of the questions you should answer include: Is there a need for your anticipated products/services? Who needs it? Are there other companies offering similar products/services now? What is the competition like? Step 2: Make a Plan You need a plan in order to make your business idea a reality. A business plan is a blueprint that will guide your business from the start-up phase through establishment and eventually business growth. Experts say a business plan is a must-have for all new businesses. Step 3: Plan Your Finances Starting a small business does not always require a lot of money, but it will involve some initial investment as well as the ability to cover ongoing expenses before you are turning a profit. Anticipate what you will need to keep your business running for at least 12 months, like rent, marketing, supplies, employee salaries, your own salary and so on. Step 4: Choose a Business Structure Your small business can be a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. The business entity you choose will impact many factors from your business name and to your liability. You may choose an initial business structure, and then re-evaluate and change your structure as your business grows and needs change. Step 5: Pick and Register Your Business Name Your business name plays a role in almost every aspect of your business, so you want it to be a good one. Make sure you think through all of the potential implications as you explore your options and choose a business name. You can register a business name with the Corporate Affairs Commission (CAC) for N5, 000. The federal government reduced the rate from 10,000 to enable small business register their business names. Source: Daily Trust

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