July 5, 2019

The Tax Appeal Tribunal, South East Zone, has declared that gratuities payable to pensioners are tax exempted under the Personal Income Tax Act (PITA).  The tribunal made the declaration while delivering judgment in appeal brought before it by Nigerian Breweries PLC in 2017, challenging the decision of the Abia State Board of Internal Revenue for taxing gratuities paid to its retirees. Nigerian Breweries in the suit No. TAT/SEZ/002/17 set out three grounds of appeal. “That Respondent Abia State Board of Internal Revenue (ASBIR), erred in law when it assessed the Appellant’s employees to tax on gratuities paid by the Appellant.” NB through its Counsel Moshood Olajide contended that under the finance (Miscellaneous Taxation Provision) No. 2) Decree 1996 amended section 3(1)(b) of PITA 1993 by deleting gratuities as income chargeable to tax, that by the clear wording of the 1996 Decree, gratuities is no longer taxable, and therefore, remains the extant position in the PITA 2011 (as amended). He therefore urged the Tribunal to discharge the assessment notice issued by the Respondent and a declaration that by virtue of Decree 1996 all gratuity are tax exempt. But, the Respondent through its Counsel, Obike Onyemeru, urged the tribunal to dismiss the appeal and sustain the demand notice. While he argued that there was no law expressly exempted gratuity in excess of N100,000 from tax, he contended that item 18(b) of the 3rd schedule to the PITA, CAP P. 8 LFN, 2011 (as amended) has not been repealed and remains the extant law. Delivering judgement in the appeal the three-man panel of tribunal agreed with the submissions of the Appellant and resolved all three grounds of appeal in its favour. The Chairman of the Tribunal, Chukwuemeka Eze, who read the judgement cited the decision of the Supreme Court which held that “it has been settled principle of statutory interpretation that although schedules of a statute can be useful handmaid in construing the provisions of a statute, they cannot however be interpreted to over-rule the plain words in the body of the statute.” The Tribunal therefore, held that Paragraph 18(b) of the 3rd Schedule to the PITA does not apply to the Appellant. It said: “The stand of the law before the charging section captured in section 3, PITA of 1993 was that gratuities were chargeable under section 3 PITA. That PITA of 1993 did not provide for exemption of gratuities from personal income tax. The remedy provided by PITA 2004 was the deletion of gratuities from the charging section of PITA of 1993 in order to cure the mischief. “So, by applying the mischief rule of interpretation, the same result ensues, that is: gratuities are tax exempt under the extant Personal Income Tax. Therefore, the Tribunal is resolved in favour of the Appellant. “Consequently, an order is hereby made discharging the revised assessment notice issued by the Respondent to the Appellant on April 24, 2017.”   Source: Today

Rivers State Internal Revenue Service (RIRS) has set July 1, 2019 as a final plan and rollout date for the rollout of the state’s much-talked about informal sector tax drive. The state has also completed tax delineation of the state into tax zones. The executive chairman of the RIRS, Adoage Norteh, who broke the news weekend at a full meeting with stakeholders at the Hotel Presidential, Port Harcourt, said the Nyesom Wike administration had made it clear in launching the tax drive in the informal sector. The executive chairman said he was determined to make Rivers State move into informal tax regime without violence and chaos. He announced the formation of a committee to join the RIRS and review the policy and make suggestions. Speaking at the meeting, Norteh told the over 300 tax group leaders that the market and business unions would help to make the drive seamless and without rancour. He said the members would represent the opinions of the informal business people and may help in collection by submitting list of their members. He announced that the union leaders might get some commission for their effort instead of giving the money to tax consultants. He however made it clear that the RIRS would not concede the task of tax assessment and collection to touts or untrained groups. He asked for collaboration instead. The RIRS at the meeting forged an alliance with trade groups to fight touts. Norteh said he was determined to reduce or eliminate revenue touting in the state. He marvelled at the lamentations of groups who recounted encounters with touts that had since printed RIRS receipts and collected money in the name of the government using youth bodies, councillors and others. He educated them once again on critical issues that bring friction between the tax authority and taxpayers. He said directors of tax were only on salaries and not the profit made by the company, which must be taxed too. He warned against under-declaration of income, saying there were many other ways of discovering the truth because of red flags, and made it clear that though religious houses do not pay tax but their operators must be taxed for incomes they personally take home. Some stakeholders made contributions but many urged RIRS to continue the tax education. Speaking, the president of the Port Harcourt Chamber of Commerce, Industries, Mines and Agriculture (PHCCIMA), the chief, Nabil Saleh, said Norteh has done exactly what has been lacking. Youths made presentations and demanded to be involved in the drive but the RIRS boss explained that the agency raises money which the state government spends to develop the state.   Source: Business day

The Chartered Institute of Taxation of Nigeria, CITN, has berated firms and government agencies for tax default. Ikemefuna Ede, President, CITN, expressed concern over an audit report indicting the National Assembly and some government agencies over tax default. Speaking during the annual general meeting of the institute, Ede said the development was “worrisome” and contradicted government efforts in enforcing compliance from individuals and corporate organisations. “Of momentous concern to the institute was the revelation from an audit report by Auditor-General of the Federation submitted to the National Assembly in 2018 that the Presidency; both chambers of the National Assembly; the Economic and Financial Crimes Commission; and over 100 other ministries, departments and agencies defaulted in remitting various taxes, including VAT and withholding taxes deducted from their contractors and PAYE of their members of staff.” Ede, however, expressed satisfaction at the financial position of the organisation. Samuel Agbetuyi, treasurer, CITN, presented the 2018 financial position at the meeting. The finances showed that the professional tax body grew its total income by 43 percent from N399 million in 2017 to N570 million in 2018. The breakdown showed that the organisation recorded 62 percent increase in membership fees from N167.361 million to N270.6 million, while self-financing programmes had an increase of 40 percent from N172.95 million to N242.566 million between 2017 and 2018 respectively. In the year under review, however, it experienced dip in the money market, especially on treasury bills and fixed deposit, resulting in “significant fall in the investment income representing 33 percent decrease”. The total expenditures for the year under review showed the organisation incurred 28 percent increase over 2017.   Source: Real news Magazine