October 14, 2019 – Sunmola David & CO

The FIRS Has Published Regulations On Common Reporting Standard

The Federal Inland Revenue Service (FIRS) has issued the Income Tax (Common Reporting Standard) Regulations, 2019 (CRS Regulations). This follows Nigeria’s signing of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC) and the Multilateral Competent Authority Agreement (MCAA) on the Automatic Exchange of Financial Account Information, signed by Nigeria on 17 August 2017. Fundamentally, the CRS Regulations and the various agreements signed by the FIRS will allow it to receive specified information on the bank accounts held by Nigerian tax residents in up to 105 countries. In exchange, the FIRS will be obligated to provide similar information to these other countries. The CRS Regulations have an effective date of 1 July 2019 and require qualifying Nigerian Financial Institutions to submit an electronic information return (i.e. a return that reports specified financial account information of certain persons) to the FIRS on an annual basis. The information is to be provided in respect of “reportable accounts”, which subject to certain exemptions, are the Nigerian accounts of persons who are resident for tax purposes in a foreign country with which Nigeria has signed the relevant exchange of information agreement. Other relevant provisions include: First reporting year: starting from 2019 calendar year Filing deadline for information return: 31 May of the year following the calendar year to which the returns relate Penalties for non-compliance: Failure to comply with duty or obligation imposed by the CRS Regulations: ₦10 million in the first instance in addition to ₦1 million/month Failure by Financial Institution to file information return: ₦10 million in the first instance in addition to ₦1 million/month Furnishing false or incorrect information: ₦5 million Failure by Financial Institution or any person to comply with the FIRS’ requirement in the exercise of its powers: ₦1 million in the first instance in addition to ₦100,000/month Failure by Financial Institution to keep records in accordance with the Regulations: ₦1 million in the first instance in addition to ₦100,000/month Source: Mondaq

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Stop crying wolf on VAT, BMO attacks PDP

Tax news / Tobi Aminu

The Buhari Media Organisation (BMO) has cautioned the Peoples Democratic Party (PDP) to stop crying wolf or seeing ghosts where none exist, especially over federal government’s plan to increase the Value Added Tax (VAT) from 5 per cent to 7.5 per cent. Reacting to the PDP’s rejection of VAT, the group warned the opposition party to stare clear of matters that it does not have a full understanding of. It also urged the party not to undermine a patriotic and genuine effort of President Muhammadu Buhari’s administration to raise the needed resources to address some of the major infrastructural needs of Nigerians. The PDP had earlier called on the federal government to reverse its decision to increase VAT, warning that such planned increase would put more pressure on families and businesses and result in an increase in costs of goods and services. In a statement signed by its Chairman, Niyi Akinsiju and Secretary, Cassidy Madueke, BMO said if the PDP is genuinely worried that Nigerians could not bear the burden of the 2.2 per cent marginal increase in VAT “under the prevailing economic situation in the country,” the party should have first demonstrated its patriotism and genuine concern for Nigerians by directing its Governors, who were part and parcel of the decision to effect increase in the country’s tax regime, to reject the idea rather than calling on the Federal Government to reverse its decision on the new policy. “In any case, States and Local Governments stand to benefit more from the increase in VAT; the states get 50 per cent of the VAT collection, Local Governments get 35 per cent, leaving the federal government with a paltry 15 per cent. “So, it stands to reason that this particular increase in VAT is another bail-out mechanism designed by President Muhammadu Buhari to assuage the woes of those perennially broke tiers of government.” The group added that even with the new marginal increase, Nigeria has one of the lowest VAT rates in the world, “and considering the huge infrastructural deficit the country is facing today, the current government has to think outside the box and look for how best to raise resources to meet some of the major needs of its people and also ensure that the impact does not put much burden on the citizenry. “And this is what the government is trying to do with this marginal increase in VAT.” BMO reminded PDP and Nigerians that VAT is not paid on domestic foodstuffs and local transportation. Other items excluded from VAT are drugs, medical equipment, educational materials and other items that generally affect the purse of the man on the street. “Essentially, VAT is payable on luxury goods, cigarette, wine, air travel and other luxury items that are the exclusive preserve of the rich and the opulent. “Also in the light of global trend, it has become imperative for our government to harmonise Nigeria’s VAT rate with what obtains within the ECOWAS region. Even with the marginal increase of 2.2%, Nigeria is still far below all the African countries in the VAT rate regime. “So what is PDP’s beef about; can it be that those who have grown rich from robbing our commonwealth, most of whom are in the PDP, are now going to pay more for their flamboyant lifestyle? “It is highly unfortunate that a party that presided over the highest figure of oil receipts in the nation’s history now constitutes itself as a stumbling block to frustrate all genuine efforts of the current administration, which has shown much interest and has demonstrated strong capacity to address the poor infrastructure problems PDP fostered on the nation.” BMO then called on all Nigerians to ignore the nay-sayers, and rally round President Muhammadu Buhari who has committed himself to good governance, and life more abundant to the Nigerian masses. Source: The Sun

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Transparency In Tax Revenues

Tax news / Tobi Aminu

Experts have called on the federal government to restructure the finances of the country such that the share of the nation’s revenue that it earns from taxation is judiciously utilised calling for more transparency. The federal government last week proposed an increase in Value Added Tax (VAT) by 44 per cent to 7.2 per cent from five per cent and the introduced the Police Trust Fund levy. This it said was to increase the country’s revenue base. The Nigerian Police Trust Fund Act which was passed by the National Assembly in April 2019, and signed into law by the President on 2 July 2019, imposes a levy of 0.005 per cent of the net profit of companies operating business in the country. According to the president of the Chartered Institute of Taxation of Nigeria (CITN), Dame Olajumoke Simplice, this is important because of the need for government to invest in infrastructure. “Let us see improvements in infrastructure especially power, roads, education good health. When all these are put in place, you will see that Nigerians are good people and good citizens. We only need good leadership, we need to see that government means well for us, we will pay our taxes. “We Nigerians should now start to hold the government responsible, let us see what the money is used for. Let us make sure that money is used to provide the goods and services that the masses of this country needs. Let us ensure that the tax money is working for the stakeholders, the taxpayers.” Commenting on the taxes, Head of Tax and Corporate Advisory Services at PwC Nigeria, Taiwo Oyedele stated the need for government to block leakages as a way of growing its usable revenue noting that imposing more taxes on businesses is counter-productive. He noted that the police trust fund levy which takes N5 from every N100,000 of net profits is a bad move and it is not in the interest of Nigerians. “You say police needs funds, that is a fact and you say let’s levy businesses so that we can fund the police, that is a very wrong move. On his part, partner & chief economist at PwC Nigeria, Andrew Nevin said there is need for government to focus on the top echelon of the Nigerian society and make sure they pay taxes first, instead of imposing new taxes on middle class citizens and creating administrative bottlenecks for businesses. Source: Leadership

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Folorunso Alakija reacts to VAT increment

Tax news / Tobi Aminu

Executive vice Chairman of Famfa oil has described the planned increased of the Value Added Tax (VAT) from its current 5 per cent to 7.5 per cent by the federal government as a threat to entrepreneurs in the country. The Federal Executive Council (FEC) had approved the increment of the VAT to 7.5 per cent from 5 per cent. The Minister of Finance, Budget and National Planning, Zainab Ahmed disclosed this to state house correspondents at the end of the cabinet meeting on Wednesday, September 11, 2019. Alakija, who is the richest woman in Africa disclosed this in an interview, noting that if the proposed VAT increment should be fully implemented, it will be difficult for entrepreneurs that operate within the shores of the country to make money. “Increasing VAT will make it more difficult for entrepreneurs to be able to make as much money as they would have liked to. But it is also what the government need for nation-building, because it is tax that the government earns as income. Without tax, no government can really stand on its legs. So long that it is being ploughed back into the areas where they are needed, and they are not growing wings.” If approved by the federal lawmakers, the new VAT rate will take effect in 2020. In Nigeria, VAT replaced the sales tax in 1994 and was pegged at 5 per cent by the military government of Sani Abacha. In 2007, former President Olusegun Obasanjo increased VAT to 10 per cent on the eve of his departure from office but it was reversed by his successor, Umaru Musa Yar’Adua, following opposition from the Labour Unions. Meanwhile, it is important to note that despite wide criticisms that have greeted both the VAT increment, the Federal Government considers the move as the most potent channels to meet the new minimum wage implementation. Source: Blueprint

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You can’t bribe us – Tax Tribunal warns appellants

TAX SERVICES / Tobi Aminu

The Tax Appeal Tribunal, TAT, has warned petitioners that it was not susceptible to inducements and would only continue to treat appeals before it on their merits. Work on VAT implementation, not increase,Ex-ANAN president urges FG The Tribunal also said that it does not use technicalities to adjudicate matters before it, but dispense them meritoriously; noting that matters before it do not last beyond three months before judgments are delivered on them. Chairman of TAT South East zone, Mr. Chukwuemeka Eze made the disclosures in a stakeholder’s interactive forum on challenges and solutions of tax administration held in Enugu, Wednesday. Eze also clarified that the tribunal was not an extension of Federal Inland Revenue Service, FIRS, even though it was established by the ministry of Finance to deal on matters arising from taxation. He particularly said that the tribunal was established to resolve disputes among tax payers and their administrators. “There are instances that even the government and their agencies have lost petitions brought to us. We don’t take bribes, yes you can’t settle us. We have sworn to serve our father land,” Eze stated. Adeyeye’s sack by tribunal a travesty of justice – APC(Opens in a new browser tab) He said that Nigerians had lived in the past glory of not paying taxes due to the sharing of federal allocation, but emphasised that any serious society desirous of development needs to be tax conscious. In his contribution, the Chairman of Enugu State Board of Internal Revenue Service, Mr. Emeka Odo said “the poor hardly pay taxes. It is the rich that have business enterprises, properties and concerns that pay taxes. “We are looking for how to increase tax net in Enugu state so that more people can pay taxes. If you must enjoy social services in the state, you would have to pay tax and obtain your Enugu State Benefit Number, ESBN. If you don’t have income, we won’t tax you, but if you have, we will tax you.” Former President of Enugu Chamber of Commerce Mines and Agriculture, ECCIMA, Pastor Olisemeka Jideonwo called for closer collaboration between tax administrators and the business community, so that taxation would not rob off on employment opportunities. Source: Vanguard

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