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Reps approve N30,000 new minimum wage

The House of Representatives has approved the sum of N30,000 as the new national minimum wage. The approval followed the adoption of the report by the ad hoc committee set up on the New Minimum Wage Bill presented to the National Assembly by President Muhammadu Buhari on Thursday. Passing the bill for the third reading on Tuesday, the lawmakers unanimously approved the N30,000 recommendation by the committee in consonance with the resolution by the tripartite committee set up by the President. Buhari had in the executive bill sought the approval of N27,000 as against the N30,000 agreed by the stakeholders. Dogara said, “Today, we passed the new national minimum wage Bill 2019 in keeping with our commitment to improve the welfare of the Nigerian workers. “The Bill was given speedy and accelerated passage in just two legislative days as a House of the Nigerian people.” The ad hoc committee had recommended and adopted N30,000 minimum wage. According to the bill, any employer who fails to comply shall be liable to a fine not exceeding five per cent of the offenders’ monthly wage. The House resolved in the Committee of the Whole to consider the report. It resumed with the synopsis of the bill. According to the chairman of the Committee, Mr. Yussuff Lasun, the bill did not cover employers whose staff strength is below 25. Raising a point of order, the House Majority Leader, Mr. Femi Gbajabiamila, was of the opinion that the bill should take effect from six months after assent. On the contrary, the lawmakers moved that the bill should take immediate effect as soon as the President signs it into law. But the Speaker held a different opinion, noting that with the absence of appropriation, the bill could not be implemented. To save the House from further debate, the Chairman House Committee on Rules and Business, Edward Pwajok, moved for an amendment to include that the bill becomes effective from the date it is assented to. The bill, therefore, passed third reading on the floor of the House. The House is to harmonise with its counterparts in the Senate for onward transmission to the President for his assent. Source: Punch

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Federal High Court Rules Against Income Tax Assessment Based on the Value of a Property

Tax news / Tobi Aminu

The Federal High Court (FHC) sitting in Abuja recently gave a judgement in favour of Theodak Nigeria Limited (TNL or “the Company” or “the plaintiff”) in its lawsuit against the Federal Inland Revenue Service (FIRS or “the defendant”). The issue for determination was whether the FIRS had statutory power to deem the value of the Company’s property to be its turnover for any year of assessment (and impose income tax thereon) based on the provision of Section 30 of the Companies Income Tax (CIT) Act, Cap. C21, Laws of the Federation of Nigeria (LFN), 2004. Background The Federal High Court (FHC) sitting in Abuja recently gave a judgement in favour of Theodak Nigeria Limited (TNL or “the Company” or “the plaintiff”) in its lawsuit against the Federal Inland Revenue Service (FIRS or “the defendant”). The issue for determination was whether the FIRS had statutory power to deem the value of the Company’s property to be its turnover for any year of assessment (and impose income tax thereon) based on the provision of Section 30 of the Companies Income Tax (CIT) Act, Cap. C21, Laws of the Federation of Nigeria (LFN), 2004. Background Generally, CIT is payable on the profits of a company “accruing in, derived from, brought into or received in Nigeria1” in respect of any trade or business that may have been carried on. The CIT Act requires every company to file its tax returns for every year on a self-assessment basis, containing the amounts of profits from every source, with the FIRS. Section 30 of CIT Act empowers the FIRS to assess a company on a fair and reasonable percentage of the turnover from its trade or business where either the business produces no assessable profits; where the assessable profits are less than might be expected to be, or where the true assessable profits cannot be ascertained. Facts of the case and issues for determination The FIRS alleged that the Company did not file its income tax returns for 2015 and thereby failed to pay its income tax liability for that year. Hence, the FIRS invoked the provisions of Section 30(1)(a) of the CIT Act by deeming 20% of the ascertained value of a property admitted to be owned by the Company to be the CIT payable, and issued its assessment notice for the amount. Dissatisfied with the FIRS’ action, TNL filed an appeal at the FHC arguing that: Section 30(1)(a) of the CIT Act does not empower the FIRS to assess the value of its property to CIT the foregoing CIT Act provision provides for assessments to be based on a fair percentage of the turnover of a trade or business and the value of a company’s property is not listed as taxable income in Section 9 of the CIT Act. Thus, the Company urged the FHC to declare that the value of its building was not the same as its turnover, and that the FIRS’ action was ultra vires its statutory powers under the CIT Act. Thus, the Company urged the FHC to declare that the value of its building was not the same as its turnover, and that the FIRS’ action was ultra vires its statutory powers under the CIT Act. The plaintiff also prayed the FHC to set aside the FIRS’ assessment and restrain the defendant from enforcing the recovery of the alleged tax liability. The FIRS, on its part, argued that Section 30(1)(a) of the CIT Act gave it a wide range of power to assess delinquent taxpayers to tax, and therefore had the statutory power to impose its best of judgment assessment on TNL based on the value of the Company’s property. This was on the ground that TNL had failed to file its tax returns despite several notices issued by the FIRS. The defendant also argued that the assessment was final and conclusive because the plaintiff failed to object within 30 days as provided by the CIT Act. The plaintiff also prayed the FHC to set aside the FIRS’ assessment and restrain the defendant from enforcing the recovery of the alleged tax liability. The FIRS, on its part, argued that Section 30(1)(a) of the CIT Act gave it a wide range of power to assess delinquent taxpayers to tax, and therefore had the statutory power to impose its best of judgment assessment on TNL based on the value of the Company’s property. This was on the ground that TNL had failed to file its tax returns despite several notices issued by the FIRS. The defendant also argued that the assessment was final and conclusive because the plaintiff failed to object within 30 days as provided by the CIT Act. Decision After considering the arguments of both parties, the FHC held that: The FIRS did not act within the boundaries of Section 30(1) of the CITA in assessing the Company to tax on the basis of the value of its property. Section 30 only empowers the FIRS to assess a company to tax on a fair and reasonable percentage of its turnover, and that turnover refers to the aggregate income that a business receives from its normal business activities for a given period, usually from the sale of goods and services. Hence, the value of the Company’s property is not the same as its turnover or income. It would be unfair to deem the value of the Company’s property as its turnover for the year of assessment, and the FIRS’ act of unilaterally assessing the value of the Company’s property was oppressive and ultra vires. The Company was not under any obligation to object to the FIRS before it could challenge the assessment in court. The use of the word “may” in Section 69(1) of the CIT Act makes it discretionary for the plaintiff to object to the FIRS’ assessment, and failing which the Company could not be denied the right of access to court as conferred by the 1999 Constitution of the Federal Republic of

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NGO Sues Federal Internal Revenue Service Over Sponsorship of Entertainment Concerts

Leave a Comment / CAC SERVICES / Tobi Aminu

The Laws and Rights Awareness Initiative has, through its trustees, brought an action against the Federal Inland Revenue Service (FIRS) at the Abuja Division of the Federal High Court. In the suit, the Laws and Rights Awareness Initiative is challenging the power of the FIRS to provide commercial sponsorship or support to entertainment concerts and shows. In the originating summons filed by their counsel, Olumide Babalola and Mofesomo Tayo-Oyetibo. The Initiative alleges that the FIRS has been sponsoring and supporting entertainment events and concerts such as the Festival of Lights, Davido Live in Concert and King Coal in Concert when it has no power to do so under the Federal Inland Revenue Service Act, as a result of which it has acted beyond the scope of its powers under the Act. The reliefs sought in the Originating Summons include a declaration of the Federal High Court that it is ultra vires the FIRS and unlawful for it to defray any money towards the sponsorship or any other form of support howsoever called, of concerts, entertainment shows or any other event howsoever called, which are not stipulated as part of the statutory expenditure of the FIRS under section 16 of the Federal Inland Revenue Service Act. The Initiative also seeks an Order of injunction restraining the FIRS from defraying any amount towards any event not mentioned in section 16 of the Act or any other Act of the National Assembly. The FIRS is yet to file a defence to the action. Source: Guardian

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CAC Approves Name for Edubox International Foundation

Leave a Comment / CAC SERVICES / Tobi Aminu

The Corporate Affairs Commission (CAC) has approved the name for non-governmental organisation called Edubox International Foundation. Founder of the foundation, Tosin Sanusi said the aim of the NGO is to help position Nigerian students and youths to become relevant to the country and the entire world by supporting their academics and empowering them with the requisite skills needed for national growth. “We hope the NGO will ensure students further their education without financial constraints and also serve as a centre for skills acquisition for youth,” Sanusi said. Sanusi further noted that the foundation would provide a platform of sponsorship for destitute students who are intelligent and can’t afford education. According to him, the proposed trustees for the foundation shall be Mr. Kelvin David; Mr. Sanusi Tosin Moses; Igwe Hephzibah Adaeze; Nwaigwe Marilyn Chinwe; Joshua Christian Amuzie and Mr. Hassan Ahmed Adekunle. Meanwhile, the CAC said technology has played a pivotal role in streamlining the inter agency partnerships between them and other government agencies. The Acting Registrar-General of the commission, Azuka Azinge, told stakeholders in Abuja at the Technology As A Catalyst: Ease of Doing Business 2018 Conference. Azuka Azinge, Acting Registrar General, Corporate Affairs Commission (CAC), extol the benefits of using technology in running the commission. According to her, technology has made it possible for applicants to do their company registration online without coming to CAC office. “Technology has made it possible for the commission to run 24 hours registration, which they were not doing before and online payment is now available at the commission because of technology. Technology has changed the face of how we do business now,” Azinge noted. Source: Pulse

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FIRS will surpass N5.3tn 2018 revenue

Leave a Comment / Tax news / Tobi Aminu

The Executive Chairman, Federal Inland Revenue Service, Mr Babatunde Fowler, has said that the service will this year surpass the N5.3tn revenue generated in the 2018 period. He said this during a chat with finance journalists on Thursday in Abuja. Fowler said that the service had embarked on a series of reforms aimed at making it easier for taxpayers to pay their taxes. He said the reforms had started yielding results as the service was able to generate its highest ever tax revenue of N5.3tn in 2018. The FIRS boss explained that while huge revenue could be generated from oil, such revenue was unsustainable due to the volatile nature of the crude oil prices. Fowler said the government recognised the importance of non-oil revenue to economic development, adding that this was why the service was being positioned to generate adequate revenue for the distribution by the three tiers of government. He said, “We recorded some improvements last year as well made the sum of N5.3tn which is the highest in the history of the service. “But it’s not about that but on what it can do. Many people believed that if we are generating so much money, then the Federal Government budget has no problem being funded. “But they tend to forget that what we generated is shared between the three tiers of government. “We generated N5.3tn and the highest before then for the country was N5.07tn. But the difference here is that in 2012, the oil revenue tax accounted for 64 per cent while in 2018 oil revenue accounted for 46 per cent.” He said as a result of the dwindling oil revenue, the FIRS was working hard in ensuring taxes were collected and remitted for the benefits of the nation and all the three tiers of the government by targeting non-oil revenue. In carrying out its mandate within the dynamic economic environment, the FIRS boss said the service had adopted initiatives to ensure a robust tax administration that was beneficial for all stakeholders. Source: Punch

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ANN Flays Planned Increase In VAT

Leave a Comment / Tax news / Tobi Aminu

The Alliance for New Nigeria (ANN) has condemned the plan by the Federal Government to increase Value Added Tax (VAT) from the current 5 to 7.5 percent, adding that the proposed increase smacked insensitivity on the part of government to the suffering of Nigerians. Lanre Oyegbola, Director General, ANN 2019 Presidential Campaign, in a press statement, said, “An additional 2.5 percent of VAT would automatically increase the shelf price of most items from the moment it is implemented and this would create a ripple effect across both the formal and informal sectors of the economy.” The campaign director general noted that the All Progressives Alliance (APC) government is one that gives with one hand and takes it away with the other given the timing of the increase in the VAT. He said one could not explain the fact that while the President Muhammad Buhari-led government was yet to agree to the minimum wage deal with labour, the same government was at the same time increasing the VAT, adding that it was a show of deception and insensitivity to the plight of Nigerians. Oyegbola called on Nigerians to reject every form of deceit the government might bring to the table. He also called on the people of Nigeria to vote against the APC and the Peoples Democratic Party (PDP) in the February 16 2019 presidential election. Source: Independent

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FEDERAL INLAND REVENUE SERVICE COUNTRY-BY-COUNTRY REPORTING REGULATIONS

Leave a Comment / Tax news / Tobi Aminu

a. Introduction The Federal Inland Revenue Service (FIRS) has published the Income Tax (Country-by-Country Reporting) Regulations, 2018 (CbCR Regulations). The CbCR Regulations was made public on 19 June 2018 and have an effective date of 1 January 2018. The Country-by-Country reporting is a response to evidence-based research on the direct consequence of harmful tax practices that result in profits being moved away from where they were made to the ultimate benefit of the taxpayer. b. Implications of CbCR The CbCR is one of the three-tiered transfer pricing documentation approach recommended by the Organisation for Economic Cooperation and Development (OECD) in the Action 13 report of the Base Erosion and Profit Shifting (BEPS) project unveiled in October; 2015. The CbCR contain information on the location of revenue, profits, taxes, employees and economic activity within large MNE Groups, based on a standard template. The objective of the CbCR is to allow tax administrations to perform high-level transfer pricing risk assessments and to evaluate other BEPS related risks. In Nigeria, the ultimate parent entity (UPE) of an MNE Group that is resident for tax purposes in Nigeria would be obliged to file the CbCR, where the consolidated revenue of the Group is N160 billion or above. As provided in the Regulations, the CbCR must be filed within 12 months following the MNE Group’s accounting year end. An MNE Group member (Constituent Entity) whose UPE is not tax resident in Nigeria, is required to notify the FIRS of the identity and tax jurisdiction of the entity responsible for filing the CbCR. This notification must be made no later than the last day of the reporting accounting year of the MNE Group. c. Notification and Consequence for Non-Compliance To show commitment to driving compliance with the Regulation, the FIRS has subsequently released guidelines for completing the CbCR template and more recently, a Public Notice reminding MNE Groups operating in Nigeria of their obligation to make the above notification to the FIRS. The public Notice serves as a wake-up call for MNE Groups to comply and avoid stiff administrative penalty imposed by the Regulations for non-compliance. Penalty for late filing of CbCR has been determined at N10,000,000 for the first month of default and N1,000,000 for every month the default continues while penalty for incorrect/false report is N10,000,000. Penalty for failure to notify FIRS of the MNE Group’s UPE, Surrogate Parent Entity or identity & residence of the Group’s reporting entity has been determined at N5,000,000 for the first month of default and N10,000 for every day the default continues.

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N1.2bn Tax Assessment: Complainant’s absence stalls proceeding

Leave a Comment / Tax news / Tobi Aminu

The absence of Mr Joseph Daudu (SAN) on Wednesday stalled proceeding over the tax assessment of his firm by the Federal Inland Revenue Service (FIRS) at the Tax Appeal Tribunal, sitting in Abuja. The appellant, Daudu, said he was dissatisfied with the FIRS assessments of his Withholding Tax (WHT), Personal Income Tax and Value Added Tax (VAT) for the period from 2010 to 2017. Specifically, he expressed dissatisfaction with the decision to assess him with respect to WHT and VAT in the sum of N 1, 226, 115, 562.33. He, therefore, prayed the tribunal to restrain FIRS. At the resumed sitting, Mr Abedayo Adedeji, counsel for Dauda, told the Tribunal that the SAN had a major surgery and that was why he could not come. Adedeji also reiterated that Dauda, who is his principal, would like to handle the matter himself. In her response, Ms C. Offoregbunem, holding brief for Prof. Taiwo Osipitan (SAN), told the tribunal that they were only served on Monday and needed time to reply. The tribunal, which was presided over by Mrs Alice Iriogbe, adjourned sitting until March 19 for parties to be served. Earlier, Daudu had claimed that it was a misnomer for the appellant, who operates a law firm as a legal practitioner and does not deal in primary goods, to be assessed on Withholding Tax (WHT). “It is unheard of for a legal practitioner to pay Withholding Tax, the respondent acted in error when it assessed the appellant on individual Income Tax from 2010 to 2017 in the sum of N977, 561, 982.08,” he said. Responding, FIRS noted that its assessments were not in error and that it was discovered that the appellant did not deduct and remit WHT on some of the expenses and payment made under the period in review. FIRS, therefore, prayed the Tribunal to declare that the notices of assessments issued on the appellant for 2010- 2017 assessment was right. It also urged the tribunal for an order mandating the appellant to pay the total sum of N1.2 billion being the appellant’s liability for WHT, Personal income tax and VAT for 2010 – 2017 years of assessment. FIRS stated that it rightly assessed the appellant; acting in accordance with the law and by collaborating with the Economic and Financial Crimes (EFCC) on non-declaration of income as well as tax evasion. Source: PMNewsNigeria

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CAC Registered 327,676 Business Names in Three Years

Leave a Comment / CAC SERVICES / Tobi Aminu

The Acting Registrar-General, Corporate Affairs Commission (CAC), Mrs. Azuka Azinge, has said a total of 327,676 business names were registered while 41,719 Incorporated Trustees were registered in the last three years. According to her, the breakdown of the filings showed that registered companies recorded 145,329 fillings, business names recorded 26,593 filings, while 18,156 incorporated trustee filings were returned in the period under review. Speaking in Kano at the weekend, during a customers/stakeholders forum, Azinge said the incentive was extended from 1st January to 31st March 2019, to enable more micro small and medium scale enterprises (MSMEs) formalise their businesses. Azinge, disclosed that the Commission recently dispensed with proficiency requirement for the registration of all forms of businesses. She also put the total number of entities that had been registered by the commission since inception to date at 2,853,692. The breakdown of the figure showed that 1,671,079 businesses were registered as limited liability companies, 1,115,429 entities were registered under business names while the remaining 67,185 were registered as incorporated trustees. The CAC added that it registered 85,635 new companies in 2018. It said the number of newly registered companies dropped by 2.57 per cent in 2018, compared to the 87,891 companies that were registered in 2017. The commission had under its Business Incentive Strategy (BIS) reduced the cost of business name registration from N10,000 to N5,000, for a period of three months covering October 1 to December 31, 2018. The BIS is aimed at creating a window for MSMEs to formalise their businesses so that they can own corporate accounts with banks, have access to loans, grants and other government interventions. Azinge said upon the expiration of the initial three months window, the commission received several requests from states and other agencies seeking an extension of the 50 per cent fee reduction promo. She said in view of the benefits of the BIS, coupled with the demand for extension by stakeholders, it became imperative to further extend the period to March 31 of this year to enable more MSMEs to formalise their businesses. “Only recently, the commission extended the BIS to encourage small businesses to formalise their businesses by registering same with the commission. “During the initial three months of the BIS registration, activities increased tremendously. For the months of October and November 2018, a total of 39,074 business names were registered.” She added that in the third quarter (July to September) 32,504 were registered and from October to December a total of 66,687 companies were captured. The acting registrar general said the commissioned had embarked on some reforms with a view to improving on its services being rendered to the teeming business men and women across the country. Azinge said, “CAC was able to make provide a platform for direct registration by first directors/subscribers, digitalisation of its legacy records, full decentralisation of its operations, development of company registration portal and provision of 24 hours online registration of businesses. “The commission also co-located its ICT infrastructure to guarantee uninterrupted availability of service 24/7, provided a robust website and removal of requirement for proficiency certificate for business registration.” Speaking earlier, during a panel discussion, Professor Murtala Sabo Sagagi, the Dean, Dangote School of Business, Bayero University Kano, urged the commission to intensify action on its sensitisation campaign to enable people know more about the importance of registering their businesses. Sagagi, said a survey conducted recently had shown that out of the 400 SME sampled in Tarauni local government, only three registered with CAC, seven registered with state government, nine with local government and 388 had never registered the names of their businesses. “This has indicated that the commission has a lot to do to sensitise the general public on the importance of registering their businesses with the CAC,” he said. Other dignitaries that attended the forum included board member of the CAC, Mr Rabiu Madugu; Chairman of the Nigerian Bar Association (NBA) Kano chapter, Barrister M.A Lawan among others. Source: Punch

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FIRS withheld N300bn in 3yrs as cost of collecting taxes

Leave a Comment / Tax news / Tobi Aminu

The Federal Inland Revenue Service, FIRS, made a whooping N300.4 billion in three years, between 2016 and 2018 as the cost of collecting taxes. According to the law setting up the revenue collection agency, FIRS is allowed to deduct four percent as cost of revenue collection from non oil taxes before remitting the remaining to the Federation Account. According to data from the FIRS, a breakdown of the N300.4 billion cost of revenue collection by the FIRS showed that N85.99 billionwas received in 2016, which is about 2.6 per cent of the total actual taxes of N3.30 billion collected in 2016. In 2017, the FIRS received N100.3 billion as the cost of revenue collection out of the N4.02 trillion it generated, while in 2018 fiscal year, the service got N114.1 billion as the cost of revenue collection out of the N5.32 trillion revenue it generated for that year. Source: Vanguard www.innerkonsult.com

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