August 2, 2019

Trump seeks court help block release of tax papers

US President Donald Trump on Tuesday sued the Democratic-controlled House Ways and Means Committee, the New York state attorney general and a New York state tax official to block any potential efforts by lawmakers to obtain his state tax returns. Trump filed the lawsuit in federal court in Washington, D.C., alleging that House Ways and Means Committee Chairman Richard Neal (D-Mass.) is considering using a recently passed New York state law to get the tax returns. “Because the Committee’s jurisdiction is limited to federal taxes, no legislation could possibly result from a request for the President’s state tax returns. The Committee thus lacks a legitimate legislative purpose for using the TRUST Act,” the lawsuit states. This lawsuit comes on the heels of a separate complaint filed by the House Ways and Means Committee seeking Trump’s federal tax returns.   Source: P.M news

Investors Want VAT Exemption in Stock Market Extended

Some investors in the Nigerian capital market have called on the federal government to extend the exemption of Value Added Tax (VAT) charges on transactions on the Nigerian Stock Exchange (NSE) so as to attract more patronage to the market. The federal government, had in 2014 exempted brokerage commission and transactionsfees charged by Securities and Exchange Commission(SEC), NSE and Central Securities Clearing System(CSCS) Plc from the five per cent VAT. The then Coordinating Minister for the Economy and Minister of Finance, Dr.NgoziOkonjo-Iweala had announced the exemption as part of efforts to resuscitate the market. The exemption was for five years. Following the expiration of the exemption, the NSE has notified stockbrokers that effective Thursday July 25, 2019 (tomorrow) the five per cent VAT would now be charged. In a notification to stockbrokers, signed by Head, Broker/Dealer Regulation, NSE, Mr.Olufemi Shobanjo, said that exemption, which became effective on 25 July 2014 and valid for a period of five years, has expired July 24, 2019. “To that extent, all dealing members of the NSE are to note that effective 25 July 2019, barring any further extensions from the federal government: VAT is to be charged on all commissions applicable to capital market transactions. These are commissions: earned by dealing members on traded values of shares; and payable to the NSE and CSCS. The CSCS will automate the deduction of VAT charged on commissions payable to the NSE and the CSCS; and dealing members are required to resume the deduction of VAT on commissions earned. Consequently, dealing members are required to engage their software vendors for the automation of VAT deductions, and communicate to their clients the above ahead of the effective date. Furthermore, dealing members are reminded to ensure that the VAT charged on the commissions earned are remitted to the Federal Inland Revenue Service (FIRS) as and when due,” the notification said. Speaking to THISDAY on the development, the National Chairman, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, said VAT charges should not be reintroduced into the market. According to him, there are already many charges in the market that investors are contending with, saying that the resumption of VAT charges would discourage more investors from the market. “In my humble opinion, the government should not allow VAT charges to return to the market. Shareholders are already paying withholding tax on their dividends. Before the declaring dividends, companies pay various taxes, which also reduce the dividend shareholders are getting. Now coming to ask them to pay VAT on transactions on the floor of the exchange, will amount to too much taxation and it will not encourage patronage of the market,” Okezie said. Another investor, Mr. Moses Igbrude of Independent Shareholders Association of Nigeria(ISAN), said given the current state of the market, resuming VAT charges on the market would worsen the situation. “At present the market is very volatile and the bears have remained in control since the beginning of the year. Many investors are not willing to come into the market and if VAT charges are reintroduced, it will further dampen investor confidence. I plead with capital market regulators to prevail on the federal government to extend the exemption so as to attract more investors to the market,” Igbrude said. According to him, while there is no minister of finance now, the regulators should reach out to the Permanent Secretary, who is overseeing the ministry so that the exemption of VAT charges should be continued.   Source: This days

Kenya’s revenue agency introduces electronic taxing system to curb evasion

As a means of fighting tax evasion, the Kenya Revenue Authority (KRA) has announced plans to install Electronic Tax Registers (ERTs) at business establishments in the country. The ETRs will grant KRA real-time access to invoices issued by traders around the country. By law, businesses with an annual turnover of at least Sh5 million will be required to get this electronic tax register. Traders, manufacturers, and suppliers will also be required to install the new Internet-enabled ETRs which allow the taxman track business conducts using invoices of every transaction and assess the tax due on a real-time basis. The planned deployment has the legal backing of VAT Act 2013, a law which prohibits the use of hard copy cash sale receipts and invoices. To ensure compliance, the system will require traders to seek permission before performing any business the next day. This means incorrect or incomplete data logged in the previous day could lock them out. More so, control units are required to send end-of-day summary after all the invoices for the respective day have been transmitted and before starting invoice transmission for the next day. Once the new device is out, however, manufacturers are expected to bear the cost of compliance and procurement. Traders and manufacturers may as well choose to pass it to the customers.  On the aspect of procurement cost, Nikhil Hira, a tax expert and director at law firm Bowman’s Kenya said, “I assume that once the machines have been sourced, taxpayers will be told to purchase and start using them – of course, this means additional cost for taxpayers.”  KRA has consistently missed its targeted annual growth in tax returns for reasons being tax-related misconduct such as theft, cheating in the declaration of return, corruption, collusion and soliciting bribes from tax cheats. The agency, under the newly appointed Commissioner-General James Mburu, is expected by the Treasury to collect Sh1.87 trillion in taxes in the current financial year, up from the Sh1.65 trillion it was expected to rise in the just-ended financial year. The government of Kenya has over the years tried to restrain tax evasion by implementing different systems ranging from the Integrated Customs Management System (iCMS) to the Simba System and now, the ETR. Recently, seventy-five KRA staffs were arrested and detained in a tax evasion scandal. In April 2018, KRA got a businessman arrested in a sophisticated tax evasion case ever witnessed in the country. He was charged with counts relating to evading payment of about Sh7 billion in value-added tax (VAT) and income taxes. In November last year, President Uhuru Kenyatta directed the KRA to use the Sh3 billion Huduma Namba (a new National Integrated Identity Management System) biometric data to catch tax cheats. With this new system coming into play, KRA can monitor businesses incomes and businesspersons will not be able to reduce their tax liability without being noticed. This will allow the government to put taxes generated into public service development. Improving tax revenue has always been a top issue on the agenda of most African governments. In March 2019, the Nigerian government introduced new taxes in a bid to increase the revenue of the country. Also, the Togo Revenue Authority (OTR) is the first in the 14-member CFA franc zone to unify national tax and customs services. Since it was created in 2014, the OTR has successfully streamlined both processes and cut staff numbers by 17 percent. Togo saw tax proceeds increase by 23 percent the year after the OTR was created.   Source: Ventures Africa

VAT Charges on Capital Market Transactions Resume Today

The re-introduction of Value Added Tax charges on transactions in the Nigerian capital market takes effect from today, July 25, 2019. The VAT charges on transactions in the capital market were suspended in 2014 by the then Minister of Finance, Dr Ngozi Okonjo-Iweala, to encourage increased trading activities in the market. Okonjo-Iweala had set up a committee to revive activities on the Nigerian Stock Exchange, following the financial crisis and extended periods of negative market sentiments recorded on the bourse in previous years. The committee reached a decision to waive the 0.075 per cent stamp duties payable on stock exchange transaction fees and exempt from VAT commissions earned on traded values of shares, commissions payable to the Securities and Exchange Commission and commissions payable to the Nigerian Stock Exchange, the Central Securities Clearing System and the NASD OTC Securities Exchange. While stakeholders in the capital market have called for an extension of the waiver period, the NSE and the NASD are set to resume deduction of VAT on commissions applicable to capital market transactions referred, while awaiting further directives emanating from ongoing engagements with the Federal Government on the issue. The NASD said, “We shall notify the market of any new developments, but in the absence of none, kindly take this as a notice to resume deduction of VAT on commissions applicable as this will ensure a smoother and more transparent OTC market.”   Source: Investor king

Oxfam Urges FG to Fast-track Action on New Tax Policy

Oxfam in Nigeria has called on the federal government to fast-track action on the approved new National Tax Policy in order to tackle corporate crimes. Oxfam Country Director, Constant Tchona, made the call in Abuja at the public unveiling of the ‘Fair Tax Index report and the Commitment to Reducing Inequality Index (CRII)’ report, with the theme ‘West Africa Inequality Crisis: The Fight Against Inequality through Progressive Taxation’ in Abuja. He said Oxfam had developed policy recommendations and strategies, saying it would be used to advocate for a fairer tax system that helps to redistribute prosperity from the richest in the society to the very poorest. Tchona, explained that a 2015 Oxfam’s report highlighted the inefficiency of Nigeria’s tax incentives where it submitted that the country loses N580 billion annually through tax incentives to multinational corporations. To put this in perspective, he noted that the health budget was only one third of this amount in 2015. The country director added that Nigeria needs to rework its strategies and sets its economic priorities right by investing in agriculture, manufacturing and infrastructure rather than waste its hard-earned resources on unproductive and redundant tax incentives. Tchona explained further that the official Federal Inland Revenue Services (FIRS) numbers suggest that the entire tax system was fraught with crippling challenges of weak enforcement, corruption and outright evasion. According to him, “The records show that about 30 per cent of companies in Nigeria are involved in tax evasion and also 25 per cent of registered companies in the country are not paying tax. “Taxpayers often opt to negotiate with corruption tax administration staff in return for gratifications and reduced sums to the coffers of the government.” Tchona said the fiscal incentives granted with the hope of stimulating investments into the country’s economy were eroded with poor governance and lack of transparency, especially when the central bank had confirmed that there was no cost benefit analysis to justify the exemptions and when there was no check in discretionary powers residing with the Executive in granting exemptions. He stressed that the Voluntary Assets and Income Declaration Scheme (VAIDS) was designed to increase tax revenue by encouraging voluntary disclosure of any previously undisclosed income liable for tax and to bring as many people as possible into the tax net. This, he said resulted in $5 million extra revenue which was about N1.8 billion, but this was only 10 per cent of the expected amount. Tchona, however, called on the federal government to opt for aggressive taxation of the informal sector in order to meet the revenue target. “There is need for the Nigerian government to fast-forward action on the New National Tax Policy approved and clamp down on corporate crimes. “New legislation and rules to cope with current realities should be enacted along with introduction of cutting edge technology. “The National Assembly should enact a law to punish enablers of tax evasion such as lawyers, accountants and bankers and should be made to face fines of up to 100 per cent of tax evaded. “The National Assembly should enact law that will criminalise totally the actions of middlemen- banks, auditors and lawyers that facilitate illicit financial flows. When such professionals act contrary to existing regulations, they should be held accountable in Nigeria. “This can be enforced through strengthened professional association bodies.” While presenting his paper on, ‘Understanding the Impact of Inequality in Nigeria and Policy Recommendations,’ the Country Director of Plan International Nigeria, Dr. Husseini Abdul, said tax was not only about income for government, but one of the best way to tackle inequality According to him, “We can’t have conversation about the development of this country without talking about inequality. The trajectory of development is a problem and economic policies are needed to deal with them.”   Source; Investor king