July 16, 2019 – Sunmola David & CO

SEC lays out plans to leverage FIRS, NSE, and CAC in nailing Oando

The Securities and Exchange Commission (SEC) is planning to partner the Federal Inland Revenue Service (FIRS), the Corporate Affairs Commission (CAC), and the Nigerian Stock Exchange (NSE), over Oando Plc‘s alleged corporate infractions. The capital market regulator disclosed that it plans to share findings from Oando Plc’s forensic audit with other regulatory institutions in order for further actions to be taken. SEC,NSE,FIRS,CAC,Oando Plc, Oando’s forensic audit. SEC is referring to the alleged corporate infractions leveled against the oil and gas company that include –corporate governance lapses, insider abuse, internal control failure, and capital market abuse. The Plan: The capital market regulator will refer to the alleged violation involving the over-deduction of withholding tax on dividends paid to shareholders in 2014 to the FIRS. A statement from SEC disclosed the following. “There were several corporate governance lapses stemming from poor board oversight. These include irregular approval of directors’ remuneration, directors’ participation in matters in which they had declared interest, unjustified disbursements to directors and management of the company, and failure of the audit committee to hold meetings with management, internal auditors and external auditors. “Oando Plc deducted an amount representing 24 per cent of the dividend paid to shareholders in 2014 as withholding tax; this exceeded the statutory requirement of 10 percent as required by the Companies Income Tax Act. “Oando Plc failed to comply with several tax laws such as the Companies Income Tax Act and Value Added Tax Act, etc. These tax-related violations are being referred to the FIRS.” More so, SEC will refer to the issue of an alleged failure of internal control, issue arising from the sale of its subsidiary, as well as insider and suspected market abuse. to the NSE. “Oando Plc failed to establish an effective system of internal control as required under section 61 of the Investment and Securities Act 2007 over its financial reporting thereby compromising the integrity of the company’s financial controls and reporting as revealed by the misstatements in the financial statements, high number of related party transactions and unjustified disbursements to directors. “In 2013, Oando Plc reported the sale of its subsidiary, Oando Exploration and Production Limited to Green Park Management Limited without obtaining the approval of the commission in violation of the provisions of the Investment and Securities Act 2007 and the consent of the Minister of Petroleum as required under the Petroleum Act, 1969. “The purported sale of OEPL enabled Oando Plc to report a profit instead of a loss, thereby misstating its financial statement in 2013 and 2014 and consequently misleading investors. This ‘fictitious’ profit reported in 2013 enabled Oando Plc to declare dividends.” “The 2013 misstated accounts and quarterly reports of Oando Plc were included in the 2014 rights circular, thereby misrepresenting the financial status of the company to the public in violation of section 64 of the provisions of the ISA 2007. “In 2012, 2013, 2014 and 2015, certain insiders of Oando Plc sold shares of the company during ‘closed periods’ despite having the knowledge of active closed periods by the company and contrary to the rules of the NSE.” On the issues to be recommended to the CAC for further action, the document said these included alleged false disclosures and non-disclosure of beneficial ownership. The Genesis: Oando Plc and SEC have been at loggerheads since the regulatory body released its investigation into the activities of the management of the company. SEC accused the management of market abuses and false disclosures, demanding the resignation of Tinubu, the Board chairman, and other executives and directors of the company. Source: Nairamatric

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VAT hike: PDP, CUPP berate Buhari over directive to govs

Tax news / Tobi Aminu

The Peoples Democratic Party and the Coalition of United Political Parties on Saturday criticised President Muhammadu Buhari for asking the governors of the 36 states to increase Value Added Tax in the next four years. Buhari had, while inaugurating the National Economic Council for its 2019-2023 session at the Presidential Villa in Abuja, told the governors to raise their internally generated revenue and VAT in the next four years. He told the governors to increase the taxes in such a manner that there would be no disruptions to business operations. But the National Publicity Secretary of the PDP, Mr Kola Ologbondiyan, in an interview with our correspondent in Abuja, said VAT increment would further impoverish the already traumatised Nigerians. He urged Buhari to rather explore more revenue generation platforms by harnessing the abundant natural resources and investment opportunities in the country than inflicting more taxes on Nigerians. According to him, PDP will never support VAT increment. Ologbondiyan said, “How can we support VAT increment? It will further traumatise the people. We cannot support it. There are several opportunities for government to get money and deliver dividends of democracy to the people that have not been explored in this country. “What is the government doing about opening more frontiers for investments in our nation? It is not just going after the people and increasing taxation at the slightest opportunity. That is not governance. PDP can never support increase in VAT.” The CUPP spokesman, Mr Imo Ugochinyere, said it would be insensitive to increase VAT. He accused Buhari of not managing national resources at his disposal very well, adding that Buhari should close up all avenues for revenue leakages. According to him, VAT increase will collapse many businesses and worsen unemployment in the country. Ugochinyere said, “This matter came up during the election and we said clearly that the timing was wrong. It is the height of insensitivity. The little resources that have been available, the President has not shown judicious use of them. He has not taken control of the government. There has been a lot of waste. He still has about N2bn or N3bn for feeding in Aso Rock. “They should close all the loopholes that have been taking our money. He can save a lot. The economy is not stable for you to start taxing people the more. By doing that, more businesses will close and unemployment will increase. “This is not the right time to increase VAT. They should first of all stabilise the economy and secure the country.” Source: Punch

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New JTB TIN Registration Will Bring Convenience, Transparency

Tax news / Tobi Aminu

Mr. Babatunde Fowler, Chairman, Joint Tax Board (JTB) and Federal Inland Revenue Service (FIRS), explains to select journalists, how the new tax identification number registration system, scheduled for launch on Monday, will bring convenience to the taxpayer, boost tax compliance and revenue collection. Olaoluwakitan Babatunde was there There is a plan by the Joint Tax Board, which you chair, to introduce a new a New Tax Identification Number (TIN) Registration system. What is this about? We call it a new TIN Registration process and will be launched by the Vice President on 1 July. Before now, we have had people undergoing training on how to utilise this. And what this system basically does is to take information already in our system plus what we have in our national tax database. So once it is launched, we have to run it and have it come on the national database for the whole nation, both for companies and individuals. What this implies is that if you have a tax clearance in Kano State, for example, and you are coming to Lagos for transaction, instead of the man in Lagos confirming your tax clearance documents that you brought from Kano, he only needs to click the button and everything shows live. That is what the system does. The system brings innovation, convenience and transparency to tax authorities and taxpayers by enabling tax authorities efficiently manage their taxpayer base, while enabling taxpayers to view, retrieve and update their tax profiles at the comfort of their homes or offices. The new JTB TIN will be universal throughout the country and can be used by taxpayers to pay for any tax type. This reduces the burden of having to register for multiple TIN numbers from different tax authorities and states, as it lever ages on the biometrics we’ve got on BVN, from tax agencies, the Corporate Affairs Commission (CAC) and National Identity Management Commission (NIMC). So it brings in all onto a common platform. It also notifies taxpayer through a robust and secure system-to-system integration. What are the benefits to tax authorities? Clearly, the benefit would be convenience and transparency. If you are resident in one state and you go to transact business in another state, say, quote for a contract, it is in the law that part of the criteria is to have a tax clearance certificate. Immediately, an officer in the ministry will check if the individual name or your company name and your tax data are clearly are available. On the other side, if you have underpaid, like you paid a N100, 000 in Ogun State and you want to buy a property in Lagos for N10 million, the man clicks the button and asks how you can afford a N10 million property in Lagos based on the income on which you paid a tax of N100,000. So basically, it is a situation that is open and provides the taxpayer and the tax administrator with the same knowledge. So, it is not a matter of you trying to tell the tax official I pay adequate tax or for the tax official to demand inducement for tax clearance. How much trust can the taxpayer have in this new system and does it completely remove the need to physically visit tax offices? You don’t have to because we do all these things online. Now when you talk about trust, basically what the system does is to keep all your tax payments. And that currently operates in Lagos, which is one of the few states where it operates. Any payment in Lagos State, for example, over the last five years or six years, is available at the click of a button. This is what we have done with this new system. So even for some states that do not have the capacity of the financial muscle to do it, we have put it all together in one place. So, once you key into that system, you have the same benefit as the taxpayer. Source: This day

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Court orders Shell to pay $17.9 million to FIRS

Tax news / Tobi Aminu

A Federal High Court,in Lagos south west Nigeria, Presided over by Justice Chuka Obiozor, today ordered four multinational Oil companies, namely Shell Nigeria Exploration and Production Company Limited, Esso Exploration and Production Nigeria( DEEPWATER) Limited, Nigeria Agip Exploration Limited, and Total E&P Nigeria Limited to pay a total sum of $17,900,484.80., as penalty and interest respectively on the imposed education tax of $75,381,332.00. The judgement of the court was as as a result of appeal filed before the court by Federal Inland Revenue Service, FIRS, against the judgement of the Tax Appeal Tribunal that set aside the demand notice, including penalty and interest and ruled in favour the oil companies. Dissatisfied with the judgement of the tribunal, FIRS filed an appeal before the Federal High Court. In a notice of appeal filed and argued before the court, by Ladipo Ojo, the appellant contended that FIRS issued a notice of assessment and serve it on Shell Petroleum Company, following which the company raised objection that the basis period used was incorrect. FIRS responded by withdrawing the assessment and re-issue same and inform the companies, the observed Error and corrections was over the proper basis period and the parties whose names it should be addressed to and that the error to be corrected were never the amount of $75,381,332.00. It said the error in the original assessment notice did not preclude the Tax Payer from discharging its Tax obligations arising thereof, which in this case should have been the payment on due date of the tax liability owed. The companies were not only privy to the amount involved in the assessment but also wilfully held on to Government Revenue for almost two years. Ojo further submitted that FRIS had therefore discharged its obligation to serve the assessment on the representative of the contract area in tax matters pursuant to section 39 of the Petroleum profit Tax Act. Consequently, he said the demand notice for the penalty and interest were valid, therefore the appeal should be allowed while the judgement of the Tribunal should be set aside, and also uphold the FIRS demand note. In his judgement, Justice Obiozor upheld the submission of Ladipo and allow the appeal. Source: PM News

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Google endorses ‘international tax deal’ for multinational

TAX SERVICES / Tobi Aminu

Google said Thursday it supports a global agreement on taxation that could allocate more taxes from multinationals to jurisdictions outside their home countries. “We support the movement toward a new comprehensive, international framework for how multinational companies are taxed,” said a blog post from Karan Bhatia, Google’s vice president for public affairs and public policy. “Corporate income tax is an important way companies contribute to the countries and communities where they do business, and we would like to see a tax environment that people find reasonable and appropriate.” The announcement from Google comes with Group of 20 leaders discussing plans for a global tax system that aims to help some countries get more revenue from tech firms. At the same time France is moving toward imposing its own tax on digital giants based on revenue instead of profits amid opposition from Washington. Google said the change would probably mean Silicon Valley tech giants would pay less in the United States and more in other jurisdictions, in a departure from the longstanding practice of paying most taxes in a company’s home country. Google said its overall global tax rate has been around 23 percent for the past 10 years, in line with the 23.7 percent average rate across the members of the Organization for Economic Cooperation and Development, and that most of this is paid in the United States. “We’re not alone in paying most of our corporate income tax in our home country,” Bhatia said. “That allocation reflects longstanding rules about how corporate profits should be split among various countries. American companies pay most of their corporate taxes in the United States — just as German, British, French and Japanese firms pay most of their corporate taxes in their home countries.” Google said a global agreement could avoid squabbles on the best way to allocate taxes from digital giants. “Without a new, comprehensive and multilateral agreement, countries might simply impose discriminatory unilateral taxes on foreign firms in various sectors,” Bhatia said. “Indeed, we already see such problems in some of the specific proposals that have been put forward. That kind of race to the bottom would create new barriers to trade, slow cross-border investment, and hamper economic growth.” A new treaty, he said, “will restore confidence in the international tax system and promote more cross-border trade and investment. “ Source: France24

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