August 19, 2019

Withholding tax is an advance payment of income tax – Companies Income Tax (CIT) and Personal Income Tax (PIT). Withholding tax is deducted at source when payments are made to companies or individuals. Tax withheld from payments to a company or an individual is a tax credit or withholding tax credit, which is used to reduce the tax liability of a company or an individual when the final tax liability is determined. Payments to companies exempted from income tax are not liable to withholding tax deductions. Tax withheld from payments to companies not exempted from income tax are paid to the Federal Inland Revenue Service (FIRS). Tax withheld from payments made to individuals or individuals trading as business name, ventures or enterprises – legal firms, accounting firms, partnerships, etc., are paid to the Tax Authority of the State where they reside. Transactions liable to withholding tax deductions include payments for contracts, professional fees, consultancy fee, directors fee, management fee, legal fee, commission, royalty, rent, interest and dividend. The due date for filing withholding tax returns is on or before the 21st day of every month. The penalty for non-compliance is 10% of amount not withheld or not remitted plus interest at the commercial lending rate.   Source: insight

The board of telecommunications giant- MTN Nigeria Communications Plc, on Friday, hinted the Nigerian Stock Exchange (NSE) of its pending “technical disagreement” with the Federal Inland Revenue Service (FIRS) on whether it ought to pay corporate tax on a N330bn (about $1.1bn) fine. The matter, according to a statement by Uto Ukpanah, its company secretary, is now before a Tax Tribunal for adjudication. The tribunal, the brainchild of FIRS Chairman, Babatunde Fowler, and former Minister of Finance, Mrs. Kemi Adeosun, is to determine whether MTNN ought to pay taxes on the 2015 fine imposed by the National Communications Commission (NCC). Notwithstanding the disagreement, MTNN said, “the monies (disputed tax) have been paid to FIRS. Reuters, however, quoted MTN Nigeria’s spokesman as saying however that government cannot access the money, given that the case is “with the tax tribunal the government can’t access the money. “We believe that the fine should be treated as part of the cost of running the business but the FIRS thinks otherwise,” he stressed. MTNN, in the statement to the NSE, assured of its readiness to abide by the decision of the tribunal, assuring of the company’s readiness to continue complying with the Nigerian tax laws, as well as meeting its fiscal responsibilities and contributing to the social and economic development of the country. MTNN recalled that since incorporation in 2001, it has invested over N2tr into the nation’s economy, besides paying over “N1.7tr in taxes, levies, and other regulatory fees.” Recall that the company was originally fined N1.04tr for failing to deactivate more than five million unregistered SIM cards, but this was negotiated downward, clearing its path to list on the Nigerian Stock Exchange earlier this year. The MTN spokesman said the group was waiting for the tribunal’s decision, as it could set a precedent for how penalties are treated by companies registered in Nigeria.   Source: invest data

The Oyo State government has expressed its determination not to increase tax on small and medium scale enterprises (SMEs) in its drive to increase its revenue base. The Chairman, Oyo State Board of Internal Revenue (BIR) John Adeleke, who made the disclosure while speaking with journalists in Ibadan weekend, also said the government would rather look into areas that were not captured in the tax net in the state to improve internally generated revenue (IGR). Adeleke said the plans of the administration of Governor Seyi Makinde is to build and nurture the growth of SMEs in the state and not to burden them with heavy tax that could drive them out of business. According to him, “It is in line with the promise of Governor Seyi Makinde to empower small scale businesses in the state to propel growth in our economy. “As he works assiduously to attract foreign and domestic investments to the state, he is also working to establish and sustain small and medium scale industries in Oyo State. So the idea of tax increment on businesses is not even to be discussed here. We will rather nurture them to grow and be self-sustaining than to overburden them with tax. “The government nonetheless expects all SMEs to comply with all extant tax laws, especially the ones on personal assessment of business proprietors, withholding tax and VAT payable to the state.” Adeleke however enjoined commercial vehicle owners and drivers as well as motorcycle riders and owners to collect necessary documents from approved agencies and tax stations under the state internal revenue services instead of doing same in neighbouring states. “We assure everyone of quick turnaround time of registering or renewing vehicle documents. We also promise all our patrons quick availability of number plates for all categories of vehicles,” he said. Adeleke also called on members of staff of the board to be quick, responsive and work with utmost integrity and professionalism, which he said, was the best way to support the present administration in its drive for improved internally generated revenue.   Source: This days