October 9, 2019

MIXED reactions on Thursday trailed the 7.2 per cent Value Added Tax (VAT) proposed by the Federal Executive Council (FEC). The Chartered Institute of Taxation of Nigeria (CITN) lauded the increase, saying it was long overdue. According to the institute, the proposal will help government to realise its developmental objectives. But, the Manufacturing Association of Nigeria (MAN) faulted the timing, saying it is inappropriate. The association said the step will spur spontaneous increase in price of goods and services. However, the President of the Chartered Institute of Taxation of Nigeria (CITN), Dame Olajumoke Simplice, defended the new rate, urging the government to sustain it. Speaking on Thursday with The Nation, she said despite the increase, Nigeria’s VAT is still one of the lowest in the world, adding that the new rate should be pegged at 7.5 per cent or 10 percent. Noting that the last VAT review was 25 years ago, she said Nigeria has the lowest VAT rate in the ECOWAS sub-region. According to the CITN boss, the VAT review should take place every five years, stressing that it should be tax on consumption. She said: “VAT is a tax on consumption and is only paid when you consume goods or pay for services. Nigeria’s decision to raise VAT is good for its trade relations with other countries. Besides, VAT is very easy to collect and should be utilized for development of the economy.” Simplice said government should also be held accountable for the funds from the VAT are spent. In her view, the funds should be judiciously used for developmental projects. Acknowledging that the new VAT rate will increase prices of goods, she said manufacturers will pass the effects to consumers. Simplice advised tax payers to form pressure groups to monitor tax revenue spending and ensure accountability on the part of government. The International Monetary Fund (IMF) has consistently advised Nigeria to raise its VAT and channel the funds to developmental projects and budget funding. At the conclusion of the IMF 2018 Article IV Consultation with Nigeria , its Executive Board emphasized the need for a growth-friendly fiscal adjustment, which front-loads the non-oil revenue mobilisation and rationalises current expenditure to reduce the ratio of interest payments to revenue to a more sustainable level and create space for priority social and infrastructure spending. The board said: “In addition to ongoing efforts to improve tax administration, directors underlined the need for more ambitious tax policy measures, including reforming the value added tax (VAT), increasing excises, and rationalising tax incentives. Speaking on tax reforms at the Fiscal Monitor Session of the event, IMF Assistant Director, Fiscal Affairs Department, Cathy Pattillo, said tax reform in Nigeria was important. She said IMF’s main recommendation for Nigeria is the need for a comprehensive tax reform that would sustainably increase non-oil revenue. Pattillo added: “The reason why that is needed is that Nigeria has one of the lowest ratios of non-oil revenue to Gross Domestic Product (GDP) at around 3.4 per cent in the world. And the total tax revenue to GDP at six per cent is also very low compared to peers”. She said that the interest to tax ratio is low, adding that the funds realised should be spent on important developmental projects, including infrastructure and human capital. She also advised Nigeria increase excise taxes, and begin aggressive streamlining of tax incentives and exemptions. MAN said although, government should generate more revenue to fund its developmental initiatives, owing to declining revenue from oil, the timing was inappropriate because the minimum wage of N30, 000 has just been agreed upon. MAN Director-General Segun Ajayi-Kadir said in a statement that the increase could send a wrong signal that the government was not sensitive to the plight of the low- and middle-income earners, who are in the majority. He also said it was a case of government taking back what was given with the right hand through the National Minimum Wage with the left hand through the increase in VAT. Ajayi-Kadir said the economy had just recently exited recession, with the fragile growth rate of less than two per cent recorded in 2018, which should be delicately managed. He said Nigeria’s precarious macro-economic condition required palliatives that would improve investment and not higher tax burden. Ajayi-Kadir said: “The prevailing high lending rate, double digit inflation, low per capita income, high unemployment rate and a low 1.91 per cent growth rate amidst 2.6 per cent population growth rate that are already cumulatively limiting competitiveness could be further worsened.” The DG also said the burden of the VAT increase will be shifted to consumers that are already struggling, adding that the economy will experience demand crunch, while inventory of unsold items would soar. He said the profitability of manufacturing concerns will be negatively impacted, while many factories will witness serious downturn or wind down operations. Ajayi-Kadir added: “This will also worsen the already high unemployment position of the country, which is above 23 per cent, as Nigerians currently employed by manufacturing concerns and other businesses may join the reserved army of unemployed and further bloat the unemployment rate in the country.” He advised the government to widen the tax net rather than increase the rate to meet the growing need for more revenue to address the development objective of the country. Ajayi-Kadir added: “There is also the need to harmonize taxes/levies/fees payable by businesses in the country so as to attract more investment that would translate to higher productivity and more tax revenue for the government in the medium and long term,” it counseled. Rejecting the new rate, the People’s Democratic Party (PDP) in a statement by its spokesman Kola Ologbondiyan, said Nigerians cannot bear the burden of the increase, given the prevailing agonising economic situation.   Source: Within Nigeria

Nollywood actress, Iyabo Ojo is almost at the verge of shutting down her shop over excessive Taxation by Sanwo Olu’s goverment in Lagos State. The movie star took to her Instagram account late on Thursday night, September 12, 2019, to lament the tax debt levied on her by the Lagos state tax agency. In a long post on Instagram – which has now been deleted – with a picture of the tax papers, Ojo says she’s currently contemplating shutting down her Fespris chain of businesses. The ‘Arinzo’ star says after struggling to make little or no profit from her businesses, she’s been slammed with the outrageous tax papers. The single mother tagged the Lagos State governor, Babajide Sanwo-Olu in the post where she wondered how the tax officials arrived at the sum for her Personal Income Tax. Iyabo Ojo also revealed that the remuneration from acting is unbelievably poor saying, ‘…or is it from my acting that we are poorly paid.’ She said: “ Well! it’s so sad that I may have to finally close down my business soon ….. because I don’t even know how or where to start this negotiation with Lagos State from, I’m still struggling with making profit, after paying rent, salaries, maintenance, electricity, local & state govt taxes in different categories & levy, I hardly make little or no profit …. My fellow Nigerians I have been asked to pay almost 38m for my Income tax to Lagos state. ALMOST 38M NAIRA ……… Personal income bawo? #Lagosstate how? 2014 – 2017 I was still struggling with my small business in Ikeja like I’m still even doing now or is it from my acting that we are poorly paid or from where now? pls can someone help me explain how they arrive @ this calculations, almost 38m naira, please you people should kuku sell me, my self & I i dont even know where you want me to get this kind of money from ……. E ma gba mi ke @jidesanwoolu ni bo ni mo ti fe ri iru owo to po to yii? seriously I’m not understanding @ all o, I be single mother with plenty bukata oooo, I’m confused ……….. retiring looks like the next option, bcos doing business is very frustrating in Nigeria.” Iyabo launched her business line in 2016 with the name Fespris. The business line had a spa, salon, facials in its kitty. In 2019, a restaurant and lounge were added to the business line.   Source: Pulse

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: Daily post