July 11, 2019

Countdown Begins to Expiration of VAT Exemption on Stock Exchange Transactions

It is now one month to the expiration of the Value Added Tax (Exemption of Commissions on Stock Exchange Transactions) Order, 2014 (“the Order”). The Order was made in 2014 by the then. Co-ordinating Minister for the Economy and Minister of Finance in exercise of her powers under section 38 of the Value Added Tax (VAT) Act, Cap. V1, Laws of the Federation of Nigeria, 2004 and confers exemption from VAT on commissions:    Earned on traded value of shares; Payable to Securities and Exchange Commission; Payable to the Nigerian Stock Exchange; and Payable to the Central Securities Clearing System. The Order, which became effective on 25 July 2014, was to operate for 5 years as part of the Federal Government’s policy measures to encourage investments in the Nigerian capital market. Subject to any extension of the Order by the Minister of Finance, VAT would become applicable to commissions earned or payable on transactions conducted on stock exchanges in Nigeria effective 25 July 2019. Affected taxpayers should therefore take note and be guided accordingly.   Source: Proshare

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NECA rejects FG’s call on states to increase VAT

The Nigeria Employers’ Consultative Association (NECA) has rejected calls by President Muhammadu Buhari to state governments to increase Value Added Tax (VAT) in order to increase their Internally Generated Revenue (IGR). The group said, yesterday, that such move would do more harm to the already burdened private sector. Speaking in Geneva, capital of Switzerland, where the International Labour Organisation (ILO) conference is holding, NECA Director-General, Mr. Timothy Olawale, stated that though the president meant well by urging state governments to increase their Internally Generated Revenue (IGR), considering the reported over N2 trillion in bailout funds to many of the states, increase in VAT or any other form of tax as a way to increase IGR at this time is not only misplaced, but will do more harm to the already burdened private sector and further impoverish the citizens that the president promised to take out of poverty. Olawale e said that state governments cannot unilaterally increase VAT without amendment to the Value Added Tax Act by the National Assembly. The NECA boss averred that “the common man will definitely be at the receiving end of any increase in VAT. Even if businesses are taxed more through likely illegal levies and rates outside the provisions of the law, they will naturally pass the cost to the customers whose purchasing power is already at the lowest ebb.” While proposing a way out for the state governments, he noted that “what needed to be done by the governments and indeed the Federal Government in an aggressive taxpayer enlightenment and expansion of the tax net to capture more citizens as has been posited, arguably as less than 40% of Nigerians are tax compliant.” “Secondly the states should put mechanisms in place to eliminate leakages as a large chunk of the IGR realised does not find its way into government coffers.” “Finally as reiterated over and over again they should drastically cut the cost of governance. Several unnecessary retinues of aides kept by them at prohibitive cost to the state are needless. Besides, ingenious idea of corrupt practices in the name of security votes and frivolous foreign travels by state government functionaries are veritable examples of cuttings in avoidable expenses draining state government purses,” Olawale said.   Source: Daily trust

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Gombe gets new Accountant General

Governor Muhammad Inuwa Yahaya of Gombe state has approved the appointment of Umar Babagoro Bello as the new Accountant-General of the state with immediate effect. The appointment was contained in a statement issued to newsmen on Monday by Yakubu Mamman, on behalf of the Head of State Civil Service, Alhaji Bappayo Yahaya. Babagoro, who was a Director for several years at the Treasury House, the office of the Accountant General of the state, was recently promoted to Permanent Secretary by Governor Yahaya.  A graduate of Accounting from Kaduna Polytechnic; he previously worked at the National Orthopaedic Hospital, Dala in Kano state and the Federal Medical Centre, Gombe. Babagoro later transferred his services to the state government and joined the treasury department. Meanwhile, the head of service has reshuffled twelve permanent secretaries in the civil service. The affected permanent secretaries are: Barrister Obel Yaji from Ministry of Metropolitan Development to Agriculture; Usman Sambo Abubakar, Deputy Governor’s office to Land and Survey; Mohammed Salisu Waziri, office of the Head of Service to Metropolitan and Urban Development; Adamu Musa Kumo from Special Duties to Information; Laraba Ahmed Kawu from Health to State Pension Bureau and Zainab I. Haruna from State Pension Bureau to Health. Others are: Ibrahim Sulaiman from Ministry for Local Government to Animal Husbandry and Nomadic Affairs; Mohammed Manu Malala from Trade and Industry to Local Government; Sule Bappaji from Rural Development to Education; Musa Umar Sani from Local Government Service Commission to Deputy Governor’s office; Benjamin Wabida from Housing and Transport to Rural Development and Muhammad A Umar from office of the Head of Service to Government House.   Source: Daily trust  

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RMAFC explains involvement in tax monitoring, verification

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), says on-going monitoring and verification exercise on tax collections by Deposit Money Banks appointed by FIRS and Customs is within its mandate. It said this in a statement issued by Mr Ibrahim Mohammed, Head, Public Relations, on Sunday in Abuja, adding that the exercise was in order. Mohammed said as contained in Section 6(1) of the RMAFC Act, 2004, the mandate provided that the commission should have powers to among others, monitor accruals to and disbursement of revenue from the Federation Account. NYSC Ogun tasks 2438 Corps members on skills acquisition(Opens in a new browser tab). He said the organisation was not a tax authority but a revenue watchdog that monitored revenue collections by revenue generating entities like the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS). Other entities it monitored revenue collections from were the Department of Petroleum Resources (DPR), Nigeria National Petroleum Corporation (NNPC) and others that remited directly into the federation account. Envoy assures diaspora commission of safety of Nigerians in Ghana(Opens in a new browser tab). Mohammed said the revenue streams that accrued into federation account under the watch of RMAFC included tax (Withholding Tax and Value Added Tax) royalties, signature bonuses, customs duties and tariffs among others. According to him, the has clarification is imperative following reports that challenges the legality of the exercise by vested interests. “It is worth clarifying that RMAFC do not deal with individual tax payers directly but monitors collections by collaborating with sister agencies like Central Bank of Nigeria (CBN),NNPC, DPR, Customs and FIRS.  “This is to ascertain how much was actually collected and remitted into the federation account to minimise revenue leakages,” he said. He recalled that in an earlier exercise covering January 2008 to June 2012, RMAFC had announced the recovery of N4.2 billion from banks, promising that more recoveries would be made. “Buoyed by the huge success recorded, the commission following the approval of the National Economic Council (NEC) launched the second phase of the exercise covering the period of July 2012 to December 2015 which so far establishes N57.7 billion. “Thus far, N48.7 billion has already been recovered and remitted into federation account while the remaining balance of N9.07 billion which relates to withholding tax on dividend only has been duly released to benefitting states Boards of Internal Revenue (SBIR),” he said. Mohammed, however, said the commission was working to ensure transparency and accountability in revenue generation and remittance with a view to reducing revenue leakages. He added that to achieve that, the commission sought further collaboration and cooperation of revenue generating and regulatory agencies, anti-corruption agencies, Civil Society Organisations (CSOs) and the media. RMAFC was established to monitor accruals into and disbursement of revenue from the federation account, review from time to time, the allocation formula and principles in operation to ensure conformity with changing realities.   Source: Vanguard

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COA Upholds FHC’s Decision On The Applicability Of VAT To Services Provided Outside Nigeria

The Court of Appeal (COA) in its judgement delivered today Monday, 24 June 2019 upheld the decision of the Federal High Court (FHC) in Vodacom Business Nigeria Limited (“Vodacom”) and Federal Inland Revenue Service (FIRS) on the applicability of value added tax (VAT) to satellite-network bandwidth capacities provided to Vodacom outside Nigeria by New Skies Satellites, a Netherlands-based non-resident company. The FHC’s judgement which adopted the “destination principle” for imported services to determine what was liable to VAT in Nigeria, was a significant departure from conventional practice where VAT was based on the “origin principle”. The destination principle holds that VAT is applicable in the territory where goods and services are consumed while under the origin principle, VAT is applicable in the territory where they are produced. The implication of the COA judgement is that Nigerian companies carrying on business with other companies outside Nigeria would be required to self-account for VAT on their transactions notwithstanding that the services were provided outside Nigeria, and regardless of whether the service providers charged VAT in their invoices.   Source: Proshare

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