A Federal High Court in Lagos on Thursday, fixed March 26 to hear a preliminary objection to a suit by MTN Nigeria Communication Ltd, against the Attorney General of the Federation, over alleged N242 billion and 1.3 billion dollars import duties and withholding tax assessments. The News Agency of Nigeria reports that MTN instituted the suit by a writ, dated September 10, 2018, challenging the legality of the AGF’s assessment of its import duties, withholding tax and value-added tax in the sums of N242 billion and 1.3 billion dollars. The plaintiff is seeking among other reliefs, a declaration that the AGF’s demand of the sums of N242 billion and 1.3 billion dollars from MTN, is premised on a process which is malicious, unreasonable and made on an incorrect legal basis. When the case was called on Thursday, Mr Damian Dodo (SAN), appeared for MTN, leading Messrs Tunde Fagbonhulu (SAN), Prof. Fabian Ajogwu (SAN) and Olabode Olanipekun (SAN). Mr Terhemba Agbe, a Senior State Counsel from the Federal Ministry of Justice, announced appearances for the AGF. Plaintiff’s counsel then informed the court that the matter was adjourned for mention, adding that plaintiff had filed all necessary papers and pleadings and is prepared to open its case. In response, Agbe informed the court of a preliminary objection to the suit dated November 5, 2018, and filed on November 7, 2018, which he said had been served on the plaintiff. He told the court that he was informed that the plaintiff had filed a reply to the objection, but that he was yet to receive same. Justice Aneke consequently fixed March 26, for hearing of the defendant’s preliminary objection. In its writ of summons, MTN is seeking declaratory reliefs on the following grounds: That the purported “Revenue assets investigation” allegedly carried out by the Federal Government on MTN, for the period of 2007 – 2017, and its decision conveyed through the office of the AGF by a letter dated Aug. 20, violates the provisions of section 36 of the constitution. A declaration that the AGF acted in excess of its powers, by purporting to direct through its letter of May 10, a “self-assessment exercise” which usurps the powers of the Nigerian Customs Service to demand payment of import duties on importation of physical goods. A declaration that the AGF acted illegally, by usurping the powers of the Federal Inland Revenue Service, to audit and demand remittance of withholding tax and value-added tax. A declaration that the purported “self-assessment” exercise instituted by the AGF via its letter of May 10, is unknown to law, null and void and of no effect whatsoever. In addition, the plaintiff wants a court order, vacating the AGF’s demand letter dated Aug. 20, for the sums of N242 billion and 1.3 billion dollars from MTN Nigeria Communications Ltd. Besides, MTN is claiming a total sum of N3 billion in damages, against the defendant, which covers General damages, exemplary damages, and Legal costs. Meanwhile, in its preliminary objection, the AGF argues that the plaintiff in seeking redress to the subject matter, has just three months from the date of the cause of action arose, to institute the action.   It argues that the plaintiff commenced the suit in clear disregard to section 2 of the Public Officers Protection Act, which provides that any action commenced against a public officer, must be made within three months from commencement of cause of action.   AGF argues further that plaintiff’s failure to commence the suit within three months as stipulated by law, robs the court of jurisdiction to entertain same.   Source: Punch

The Nigeria Labour Congress has called for an amendment to the present Income Tax Law so that the new National Minimum Wage of N30,000 will not be taxed. NLC’s General Secretary, Dr. Peter Ozo-Eson, made the call in Abuja in an interview with the News Agency of Nigeria on Wednesday. Ozo-Eson was reacting to a motion submitted by the National Union of Textile Garment and Tailoring Workers of Nigeria at the plenary session of the 12th National Delegates Conference of the NLC. NAN reports that the union had noted that there was a twin assault on the real income of Nigerian workers caused by unrestrained devaluation of naira and high rate of inflation. The union had also expressed concern that the process for the new minimum wage was taking too long, calling on the NLC to discuss strategies and plans for effective implementation of the new minimum wage, particularly at the state level. According to Ozo-Eson, the call has become necessary as the income tax law needs to be amended to protect workers’ purchasing power. Ozo-Eson, while appealing for protection of the new minimum wage, said that the N30,000 as agreed was a compromised minimum wage that was ‘so low.’ ‘‘Ideally, it should not be taxed; but I believe that the correct way to do it is to amend the Income Tax Law in order to raise the exemption bar if the N30,000 will fall within. ‘‘The law should be amended to ensure that the minimum wage level is below the taxable income. Under the present law, if you earn N18,000 a month, your tax is zero. ‘‘There is a tax table, but with N30,000, under the existing exemption guideline, there will be some little tax because it will be slightly above the exemption tax. ‘‘What needs to be done is to have an adjustment to the schedule so that the exemption is placed above the minimum wage,’’ he said. General Secretary, National Union of Textile, Garment and Tailor Workers of Nigeria, Mr. Issa Aremu, stressed the need to put pressure on the Federal Inland Revenue Service to raise the tax bar. Aremu said this should be done in such a way that the N30,000 minimum wage would fall below taxable income. He advocated tax holidays for some categories of Nigerian workers. According to him, ‘‘Now that we have raised the minimum wage to N30,000, we must impress it on the FIRS to raise tax bar so that the new minimum wage will be protected. ‘‘If you tax minimum wage of N30,000, we may as well go back to N25,000 or N27,000 by default. ‘‘The Deputy Speaker of the House of Representatives, Yusuf Lasun, raised the point and I think Labour must push the agenda to protect the new minimum wage. “The N30,000 is actually a compromised amount from N56,000 earlier proposed; so, it must be protected. ‘‘If the Federal Government can give 10 years’ tax holiday to companies, why not give the same to workers? ‘‘Given the collapse of income today, Nigerian workers deserve tax holidays. We are not asking for this because we consider our job as charitable, what workers have in their pockets is what will turn the economy around. ‘‘That is what we will use to purchase goods in the market and pay rent. ‘‘For economic recovery, it is good for workers to have a sustainable purchasing power or disposable income that is off the tax hook,’’ he added.   Source: Punch

LAGOS – To ensure the industry overcome its current challenges, the Association of Bureaux de Change Operators of Nigeria (ABCON),yesterday emphasized the need for the Central Bank of Nigeria(CBN) to exempt bureau de change operators from payment of Value Added Tax (VAT). The association’s president, Alhaji Aminu Gwadabe, stated this in his speech at the launch of the ABCON live run automation project in Lagos. He said the association should also be exempted from Commission on Turnover (COT), reduce BDCs annual license renewal fee and also expand their scope of transactions,lamented that the BDC sector has been confronted with many challenges that have continued to defy solutions. According to him,some of the challenges include multiple exchange rate, abnormal bank charges, Value Added Tax (VAT) and Commission on Turnover (COT), parallel market operators and illegal International Money Transfer Operators (IMTOs), porous international borders, complex documentation requirements and poor capacity/ skills of operators. He said these hitches have negative impact on BDCs’ efforts toward compliance to statutory and regulatory requirements, adding that six units within the CBN are involved with BDC regulations, supervision, licensing, monitoring. He, however, stated that the association currently has an understanding the Federal Inland Revenue Service (IFRS) where members now pay five per cent of commission made from their transactions. Speaking on the launch of the automation project, Gwadabe said the portal will sustain transparent transactions in the BDC corridor, boost the morale of operators and ensure continuous operations in ABCON. “The ABCON has fully upgraded its Information Communication and Technology (ICT) platforms, to achieve full digitization of BDCs operations in line with its goal of sustaining transparent operation and prompt rendition of weekly returns to regulatory agencies. “Of special note is also the integration of our platform to immigration platform for the verifications of international passport. Already, we are in advance engagement with the Irish technology experts for the achievement of this idea”, he said. On deepening capacity and skills of industry operators, Gwadabe said the association is appealing to the CBN to issue Letter of Consent for its proposed training institute. “This is going to boost the current ABCON Management commitment in building capacity for its members and to stimulate competency in the sector”, he said.   Source: independent

Summary On 11 December 2018, the Court of Appeal (COA or the Court), in the case between Best Children International Schools Limited (BCIS Limited or the Company) vs Federal Inland Revenue Service (FIRS), held that the Company is liable to Companies Income Tax (CIT), regardless of its claim to be an educational institution.  The Court reached this decision on the grounds that BCIS Limited failed to prove that it qualified as an educational institution entitled to the tax exemption granted under Section 23(1)(c) of the CIT Act.   Details BCIS Limited is an educational institution registered as a private company limited by shares under the Companies and Allied Matters Act (CAMA).  On 1 September 2014, the FIRS issued an assessment of over N30 million to BCIS Limited consisting of CIT, Education Tax (EDT), Withholding Tax, and PAYE tax for 2008 to 2012. BCIS Limited instituted an action at the Federal High Court (FHC) challenging the said assessments on the grounds that it is exempted from paying corporate tax under the CIT Act because it is an educational institution.  However, the FHC ruled in favour of the FIRS holding that BCIS Limited, is a company limited by shares, was liable to the tax as assessed by the FIRS because only companies limited by guarantee qualify for tax exemption under Section 23(1)(c) of the CIT Act. Dissatisfied with the decision of the FHC, BCIS Limited appealed to the COA.   The crux of the issues before the COA was whether BCIS Limited qualified for corporate tax exemption under Section 23(1)(c) of the CIT Act. The COA ruled in favour of the FIRS, affirming the decision of the FHC. Specifically, the Court held that BCIS Limited is a profit-making company limited by shares and is therefore liable to tax. In delivering the Judgment, the Court held that BCIS Limited has to prove that it is a company engaged in ecclesiastical or charitable or educational activities of a public character to qualify for tax exemption under Section 23(1)(c) of the CIT Act.  In addition, the Court held that BCIS Limited has to prove that its profits are not derived from any trade or business it carries on. Furthermore, while the FHC had ruled that only companies limited by guarantee, which are prohibited from distributing profits by CAMA, are entitled to the tax exemption, the COA simply affirmed the decision of the FHC. According to the COA, the Company failed to adduce evidence to demonstrate that it is a company limited by guarantee and failed to prove that it is an academic institution or an institution of public character qualified for tax exemption under the CIT Act.   Implication The Judgment, in this case, implies that only companies limited by guarantee can be exempted from CIT under Section 23(1)(c) of the CIT Act.  Thus, educational institutions, charitable organization and ecclesiastical bodies that are registered as companies limited by shares or other forms of companies other than companies limited by guarantee may not enjoy tax-exempt status under Section 23(1)(c) of the CIT Act. This Judgment is a departure from established practice that a company solely engaged in educational activities should be exempt from CIT.  In a similar case between American International School of Lagos (AIS) v FIRS, the Tax Appeal Tribunal held that AIS, being an educational institution of a public character, was not liable to pay corporate tax.  Although AIS is a company limited by guarantee, the crux of the issues, in that case, was whether AIS was an educational institution of public character and not the form in which AIS was registered under the CAMA. While Section 26 of the CAMA provides that a company, which is to be formed for the purpose of promoting education should be registered as a company limited by guarantee where it does not intend to distribute its profits to its members, the clear words of the Section 23(1)(c) of the CIT Act makes no reference to the form of the company in granting tax exemption.  Thus, one would have expected that Section 23(1)(c) should ordinarily apply to all forms of companies given that tax laws are to be construed narrowly and strictly and the ordinary meaning of words used in tax laws should be applied. Nevertheless, this Judgment stands as a Judicial Precedent until it is overturned by the Supreme Court, even though it is open to debate from taxpayers and practitioners.  It is important for affected taxpayers to engage their tax and legal advisers to review their peculiar situation and provide relevant advice to them on how to mitigate tax liabilities that may arise from the enforcement of this judgment on taxpayers with similar structures.   Source: Brand Spur

Apple said on Tuesday it had reached an agreement with French authorities to settle 10 years of back taxes, becoming the latest US company to reach a deal with France which has led a European push for higher taxes on tech giants. French news weekly reported that Apple had paid nearly 500 million euros ($570 million) to resolve the case in a confidential settlement reached in December. Apple declined to disclose the amount paid, but a source familiar with the case confirmed the figure to AFP. “The French tax administration recently concluded a multi-year audit on the company’s French accounts and an adjustment will be published in our public accounts,” Apple said in a statement. “We know the important role taxes play in society and we pay our taxes in all the countries where we operate, in complete conformity with laws and practices in force at the local level,” added the company. French authorities declined to comment further, citing the confidentiality of tax matters.   – French tech tax looms – Apple is one of several American technology giants in the line of fire in Europe over their tax strategies, which see them route their income through low-tax nations such as Ireland or Luxembourg. In 2016, it was ordered by the European Commission to pay 13 billion euros in back taxes to Ireland. The European Commission said Apple paid an effective corporate tax rate of just 0.005 per cent on its European profits in 2014 — equivalent to just 50 euros for every million. The deal in France comes as the government prepares to push ahead with its own unilateral “GAFA tax” — named after Google, Apple, Facebook and Amazon — faced with the failure of EU members to agree on how to get technology companies to pay more tax on their European operations. The tax, to be put to parliament in a bill later this month, would affect companies with global sales of more than 750 million euros and 25 million euros in France, according to the government. It would be retroactive to January 1 and is expected to raise 500 million euros this year. French Economy Minister Bruno Le Maire has called the question of how and where global companies pay their taxes “a major issue in the 21st century”. But an agreement among EU members has proved elusive. Ireland, Denmark and Sweden have all blocked plans for a levy for fear of dissuading investment and Germany has proved lukewarm on the issue, fearing US retaliation against its car industry. The issue has been referred to the OECD, which aims to come up with an international tax by 2020.   – Scramble to settle – Apple is the second major technology company to reach a tax deal with French authorities within the past year, reflecting the growing pressure from voters on governments to bring foreign companies to book. In February 2018, Amazon said it had settled a French claim for nearly 200 million euros and would start declaring all its earnings in the country, ending a dispute that had dragged on for years. In 2017, however, France’s tax collection drive suffered a setback with a local court ruling that Google was not liable to pay 1.1 billion euros in taxes claimed on revenues transferred from France to Ireland. According to L’Express, the deal between France and Apple was clinched after several months of talks, and concerned the small amount of revenue the firm booked in France while the sales it reported in Europe ballooned. The report said Apple’s European revenues exploded seven-fold, from 6.6 billion euros in 2008 to 47.7 billion in 2017, most of which was booked in Ireland where it has its European headquarters.     Source: Punch

The Federal Inland Revenue Service (FIRS) on Saturday urged Small and Medium Enterprises (SMEs) to pay taxes to attract investors. FIRS Deputy Director, Mrs Angel Fadahunsi, made the appeal at the Techpoint Build expo held in Lagos. The News Agency of Nigeria (NAN) reports that Techpoint Build is a conference and exhibition that connects startups and SME community with industries, bringing together people from across Nigeria and neighbouring countries. According to her, taxes are collected from business owners to sustain the nation and to provide amenities that will enhance both lives and businesses. “SMEs need to pay taxes, firstly because it is the law, needed for the development of the nation, provision of social amenities like road, hospital, taxes are needed to sustain these things. “Lots of SMEs are looking for investors that will invest in their business but an investor will only invest in businesses that pays tax to avoid being shut down,” she said. Fadahunsi also adviced the SMEs that in planning for their business, they needed to factor paying of bills like taxes into it.    She said that complaining that taxes paid were too much was not the case as tax payment whether with the federal, state or local government was essential to avoid business closure. She listed some basic steps that would guide the SMEs as to first register the business immediately to get the Tax Identification Number (TIN) which she added was free. She urged them to keep proper records of their business expenses as much as possible , so that when they start making profit, they would be able to make the right tax payment. She pointed out that the Value Added Tax goes with goods and services and grace period was not attached to it, adding that once profit was made, tax was required. “Tax is laid on profit between 20 to 30 per cent and that is why proper business records is required. “If the business did not make any profit in a year, it behoves the owner to file the returns so that the FIRS will know,” she said. Also Mrs Kemi Balogun, Team Lead, Tech and Service Partnership, AXA Mansard Insurance PLC., said that insuring businesses was to protect it from unforseen events. According to her, an SME is not expected to have so much money to put, so when one sets up their business, the first insurance policy to do has to do with the persons and employees health. “Insurance is affordable for an SME and is key to making the business stand against all odds. “Having good health is paramount and you cannot run your business well if you are sick, so the need to insure against accident and others. “The next is insuring the equipment and structure, the assets that so much money was put in to start the business against theft, flood, fire and others,” she said.   Source: Guardian