October 7, 2019

French issue Google with billion dollar tax bill

Google is to pay French authorities almost €1billion ($1.7b) to end a long-running investigation into its taxes. No caption The settlement includes a €500m ($NZ862.8m) fine and additional taxes of €465m ($802.4m), but it is less than the tax bill authorities had accused Google of evading. It rounds off a four year investigation that saw authorities raid Google’s Paris headquarters in 2016. Investigators said Google owed about €1.6b ($2.67b) in unpaid taxes amid a wider crackdown on tax planning of big firms. French authorities had been seeking to establish whether Google, which has its European headquarters in Dublin, failed to declare some of its activities in the country. The search giant, which is part of Alphabet, pays little tax in most European countries because it reports almost all of its sales in Ireland. It is able to do that thanks to a loophole in international tax law. However, that loophole hinges on staff in Dublin concluding all sales contracts. The agreement allows Google “to settle once for all these past disputes,” said Antonin Levy, one of the firm’s lawyers. In March, the EU hit Google with a €1.5b ($2.59b) fine for blocking rival online search advertisers and last year the European Commission levelled a record €4.3b ($7.4b) fine against the firm over its Android mobile operating system. In January, France fined Google €50m ($86.28m) a breach of the EU’s data protection rules.   Source: BBC

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FG issues 30-day ultimatum to tax defaulters

Federal Government has given a 30-day window to high profile tax defaulters to regularise their tax status with the Federal Inland Revenue Service (FIRS), failing which they risk forfeiting the tax equivalent directly from their bank accounts to the Federal Government. The FIRS Executive Chairman, Tunde Fowler, dropped the hint on Thursday when he appeared as a guest on the Nigerian Television Authority (NTA) programme – Platform. He said that banks have been instructed to “sweep the accounts of tax defaulters into the Federation Account after 30 days.” According to Fowler, bank accounts of the identified defaulters have been put on lien. The FIRS boss noted that since the bank lien on tax defaulters’ accounts was initiated 60 days ago, the Service has granted an additional 30 days – making it 90 days – for the defaulters to regularise their tax status. He said the FIRS has written 23,000 letters to high-profile tax defaulters, whose names appeared on its list of defaulters. Some of the letters, he said, have not been delivered because the addresses of the defaulters may have changed. “The FIRS is determined because the Service is backed by law to sweep the equivalent of what such tax defaulters owe into the federation account. “At the end of the 90 days, banks will be asked to sweep the tax owed into the Federation Account,” he warned.   Source: Timely post

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CSJ urges FIRS to expand tax net

CENTRE for Social Justice (CSJ) has asked Federal Inland Revenue Service (FIRS) to expand the tax net for the proposed increase in the rate of Value Added Tax (VAT) to meaningfully impact on the economy. “The way forward is to ensure that all persons liable to VAT, collect and remit the same to the appropriate authorities,” CSJ said in a statement made available to Tribune Online. The statement endorsed by Lead Director, Eze Onyekpere Esq commended the decision to increase in VAT from the current rate of five per cent to 7.2 per cent. “This will increase available resources for budget implementation and development across the three tiers of government. “We recall that Nigeria’s tax to gross domestic product (GDP) ratio is one of the lowest in the world and indeed in the West African sub-region.  “We further recall that Nigeria’s VAT rate is one of the lowest in the sub-region.   Source: Headlines

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Work on VAT implementation, not increase

Dr Samuel Nzekwe, a former President, Association of National Accountants of Nigeria (ANAN), has advised the Federal Government to intensify efforts in implementing the five per cent Valued Added Tax (VAT) rather than increasing it. Nzekwe gave the advice in an interview with the News Agency of Nigeria (NAN) in Ota, Ogun, on Saturday. Nzekwe spoke while reacting to the announcement of the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed on VAT increment. The Federal Executive Council had on Wednesday, approved the proposed plan to increase the VAT from five per cent to 7.2 per cent. Nzekwe noted that enforcement and implementation of the VAT was the major challenge confronting the country. “Increasing the nation’s VAT is not the problem but the implementation is the major problem facing the country,” he said. Nzekwe explained unless the Federal Government worked on effective implementation of VAT, the proposed policy would not achieve any meaningful result. “VAT system should be reformed because the nation has the problem of implementation,” he said. He said that less than 50 per cent was in the VAT net because the Federal Inland Revenue Service (FIRS) lacked the capacity to collect it. Nzekwe urged the FIRS to redouble efforts to getting more people into the VAT net. He, however, advised the Federal Government to be cautious as the propose increase of VAT from five per cent to 7.2 per cent would drastically affect the new minimum wage in the country. Nzekwe said that the ability of the Federal Government to effectively reform the VAT system would make more funds available for it rather than increasing the VAT to generate additional revenue.   Source: Daily post

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VAT is a consumption tax, only payable by choice

“What that means is, if A wants to impress B, and takes B to eat at the Transcorp Hilton, A will pay VAT for services enjoyed. This is because of the environment. “The cost of the Coca Cola they will drink at Transcorp Hilton at N1,000 could have been bought at N100 in any supermarket without paying any VAT. “Also, A can buy chicken, with all the ingredients in the market, cook it and eat without any VAT. But, instead of spending N5,000 for that meal, if A decides to go to the Transcorp Hilton and spend N20,000, then A must pay VAT. It is a choice A has to make. The only exemption for VAT are items required by everybody, regardless of choice. There is no VAT on those. Items like education, medical etc. These are things that, regardless of choice, one is expected to have. But, if one decides to buy a brand new car, one will be expected to pay VAT. The next question is what VAT is used for? About 85 per cent of VAT goes to state governments that cannot pay salaries or provide good roads or primary healthcare, despite being their constitutional responsibilities to do. If they do not have the funding, either through the pay-as-you-earn (PAYE), personal income tax, or VAT, then they can’t do it. VAT is a personal choice. The same Nigerians go to Ghana, South Africa, England and pay VAT three times the amount they pay in Nigeria. Or they go to Dubai and pay the same amount collected in Nigeria.   Source: Global News

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