Tobi Aminu

MTN has engaged the services of the KPMG to handle the demand for the payment of tax on the N330bn ($1.1bn) fine it paid to the government, investigation has shown. The company had confirmed having a technical disagreement with Federal Internal Revenue Service regarding tax deductions from the fine. Sources close to the company confirmed that the telco had to hire the KPMG because it needed a professional firm conversant with Nigerian tax matters to handle the dispute with the competence required. The Nigerian tax tribunal is looking into the disagreement between the telco and the FIRS on whether the fine paid by the company to the government should be subjected to tax. It was gathered that the tax in dispute was being held in an escrow account pending the ruling of the tribunal. It was also learnt that the tribunal had been on the case for about one year. MTN, which  is Nigeria’ largest network operator, was fined N1.04tn  by the Nigerian Communications Commission for not meeting the deadline for deactivation of more than five million unregistered SIM cards in 2015. It, however, negotiated a reduced fine on  condition that it would list on Nigerian Stock Exchange. After four years, the telco completed the payment of the fine in line with a structured payment plan on May 31 and also listed on the country’s bourse on May 16 in fulfilment of the agreement. The network operator had said it took the disagreement on tax payment to a tribunal set up by FIRS Chairman, Babatunde Fowler, and a former Minister of Finance. The telco in a statement issued last week said, “MTN remains fully compliant with Nigerian tax laws and will abide by the findings of the tribunal. The company is committed to meeting its fiscal responsibilities and contributing to the social and economic development of Nigeria.” The company added that it would abide by the ruling of the tribunal whose decision is being awaited by the concerned parties.   Source: punch

The Federal Inland Revenue Service (FIRS) in Ebonyi state, has decried the absence of manufacturing companies in Abakaliki, the state capital, a development it said was the challenge facing it. Kenneth Effiong, tax controller, Abakaliki, MTSO FIRS, who spoke to our correspondent in Abakaliki, also told this paper that majority of taxpayers in the state are civil servants. According to him, majority of people in the state are working class compared to other states where there are large concentration of businessmen and companies. “We go out to educate taxpayers on tax matters and possibly, bring them into tax payment.  A lot of businessmen out there are complaining that they are not educated, not being put through on what tax is all about.  So, with the backing of the management, we now decided to use three days to go out and educate taxpayers on tax matters, which is our routine job here as tax office.  “Compare to other states, Ebonyi state has been complying. Everyone knows about FIRS presently. The name FIRS is now a household name in the state. Every family that is into business knows about FIRS and they comply. I think I will give them 60% compliance. “Ebonyi tax payers are trying. I give them 60 percent, but we have challenges. Number one, Ebonyi state is not a business area; and another thing is that the people of Ebonyi are mostly government workers. We do not really have business men in Ebonyi. And the ones we have are contractors; their tax comes when they are able to carry out contracts (projects) unlike in other states, that have industries and major businesses   Source: Orient Daily News

The Federal Inland Revenue Service (FIRS) is the main agency of the government charged with responsibility of accessing, collecting and accounting for tax and other revenues accruing to the Federal Government. There is no doubt that in the last few years, there has been tremendous improvement and increase in tax collection due to some reforms being carried out by FIRS to boost tax administration in the country. The report obtained by the News Agency of Nigeria (NAN) showed that FIRS generated N12.62 trillion revenue from tax in the last three years. The breakdown of the amount indicated that N3.3 trillion was generated in 2016, N4.02 trillion in 2017 and N5.32 trillion was realised in 2018, making it the highest revenue generated so far. With this drive, the management of the service set a target of N8.2 trillion revenue for 2019, but some financial experts and insiders who spoke to NAN on this benchmark, doubted if such revenue could be achieved considering what the service had realised so far. The statistics given by the Executive Chairman of FIRS, Babatunde Fowler recently in New York during the sidelines of a high-level meeting on illicit financial flows hosted by the UN General Assembly, showed that about N1.5 trillion revenue had been collected from January to May 15, 2019. The amount realised between January and the middle of May represented only 18.7 per cent of the said target by FIRS. Effort by NAN correspondent to get an updated report that covers first and second quarter of the year failed. Acting Head of Communication and Servicom Department of the service who gave her name as Kubili said there has been an order from above not to release such document concerning the revenue generated by FIRS. She said if such would be given out, there must be an official request which has to pass through some processes before it may be considered for approval. Another official of the FIRS who pleaded for anonymity corroborated Kubili on the directive not to disclose to the@ public the figures of what had been realised by the service. The source said the reason was largely due to not so impressive figure of taxes collected so far in the year, considering the target of more than N8.2 trillion given by the service as benchmark for 2019 revenue. The source said: “from what I know, so far, we have not collected up to N3 trillion as taxes for half of the year and how do you then think we can achieve the N8.2 trillion target by the end of the year? “Whoever tells you that when you write requesting for such information, it will be given to you is not sincere. “The management does not want to make what has been generated known for now”. Reacting to the said target, a financial expert, Mr Akinsanya Niyi described the proposed collection of N8.2 trillion as ‘a tall order’ meant to spur performances by the personnel of the service, but not necessarily to be achieved. Niyi explained that law allows companies to pay for taxes of previous years up till the month of June of the successive years. He, however said that there was tendency of more taxes to be collected as companies prepared for the new national budget cycle. He explained that many organisations would want to ensure compliance with tax laws so as to position themselves for job bidding. According to him, there is the need for FIRS to ensure continuous sensitisation of the general public to the importance of tax payment as well as the need for strict implementation of some provisions of the laws to boost tax collection. The expert strongly advocated incentives for faithful taxpayers and the need to ensure that tax payment processes were more convenient. Mr Muhammad Sallau, another financial expert and a lecturer with the Federal University, Dutse, Jigawa, advised FIRS to be more proactive. He said the service should target more on collections in largest outstanding debts and also ensure regular updates of the taxpayers register to enhance tax collection. Sallau also called for closure of loopholes on tax laws, simplified tax system to encourage formalisation and compliance as well as enforcement through external checks to achieve expansion of taxpayers database. The expert also enjoined FIRS to reduce tax rates, minimise tax holidays and tax havens, adding that there must be inclusive growth strategies and rebalance tax deals to tackle tax evasion in the country.   Source: Pulse

When taking a fresh look at new technology capabilities and related operating models, chief financial officers (CFOs) may find that they can have it all – a high performing, efficient tax department that’s tightly integrated with finance and the rest of the organisation. By Mark Freer, digital leader for Deloitte Africa Tax & Legal. An unprecedented number of regulatory and tax policy changes are underway around the globe, presenting organisations with significant challenges–and opportunities–for tapping tax earlier and more often when key business decisions have to be made. Failure to modernise may not only leave a company lagging when it comes to compliance, it may also see the organisation outpaced by nimbler, tech-savvy competitors. Yet, many tax professionals tell us their companies are simply not set up for this new reality with finance leaders continuing to respond in predictable ways. They are hiring more people, sourcing temporary help, adding point technology solutions and outsourcing parts of the process. While this has worked in the past, the evolving digital economy is continuously unleashing new competition and innovative business models, both of which can create significant tax planning pressures, but also opportunities. With 50 percent fewer tax accounting graduates and a big chunk of the tax workforce nearing retirement, there aren’t nearly enough experienced tax experts in the market today. Deloitte’s Crunch Time 9: Tax in a Digital World guide shares insights on how new data modelling tools make it possible to deliver valuable tax insights on differing financial scenarios in real time. This essentially means that business leaders will receive the benefits of these insights before they have to make their decisions. Before this can happen however, tax needs to modernise along with the rest of the enterprise. Companies need cognitive tools, bots as well as other technologies (or service providers deploying those solutions) to assist with improving efficiencies in their work and that requires investment that will lead to new ways of working for future relevance. Modernised tax is a move from being mostly a compliance function to a high-value planning and reporting function. Digital tools and talent churn through scores, or even hundreds of scenario models, to determine their after-tax financial implications. This type of data modelling combines the organisation’s own real-time financial information with the latest tax laws and regulations to guide decision-makers through the best options for action. The guide suggests three things that will be visible in an organisation once the shift to a modernised tax department occurs. They are reimagined processes; redefined talent and technology enablers. We see reimagined processes when reconciliations are automated and managed on an exceptions basis. Tax analyses and evaluates the discrepancies while optimising the reconciliation of source data to the general ledger. Touchless automation removes manual reconciliation and accounts payable clerks no longer have to key in tax codes manually or make tax determinations on the fly. Redefined talent leads to tax staff being freed up to focus on tax planning and other high value-add activities. Tax managers generate targeted business insights rather than generic ones, while staff monitor data quality as a key performance indicator. Tax modernisation is also about risk management. In the face of growing complexity, technology enablers such as automation and advanced analytics assist tax teams to efficiently grind through the data and scenarios required for effective tax planning and reporting. Real-time layers of data proactively identify rule exceptions, improving reliability with machine learning. Visualisation and analytics from an integrated tax data warehouse enhance the indirect tax process. The business case for tax modernisation is easy to make for almost any global enterprise. Implemented correctly, it enables better management of the global effective tax rates and with automation, you may be able to effectively apply for tax rebates and reduce cash leakages, such as VAT overpayments. Yet even with a clear business case, your tax department may not push for needed investment as aggressively as other functions might. Tax departments are busier than ever, and many are falling behind, with little bandwidth to consider these improvements. If you’re the CFO, nudge tax along. Even when there’s a great tax leader in place, CFOs need to champion modernisation.   Source: IT Online

Romania announced Tuesday plans to levy a tax on sugary soft drinks to combat obesity, following the lead of other European countries such as France. “This tax is aimed at discouraging consumption (of sugary drinks) and increasing public revenues, which could be spent on health and education,” the finance ministry said in a document made public Tuesday. “The obesity epidemic in the European Union is an enormous burden on health systems,” the document said. The new levy should raise 66 million euros ($74 million) over the rest of 2019 and will come as part of a broader budget review which will also see tax rises on tobacco and budget cuts in certain areas of public spending. The left-wing government is trying to stick a public deficit target of 2.76 per cent this year, but the task has been made harder by increases in pensions and public sector wages brought in in 2018. The centre-right opposition mocked the new tax, pointing out that a similar proposal brought forward by the liberal USR party in April was rejected by the government at the time. Romania’s soft drinks manufacturers’ association condemned the tax as “discriminatory” and said it would damage the sector, which accounts for some 60,000 jobs. According to the KeysFin consultancy, the sweetened drinks market in Romania is worth some 1.2 billion euros.   Source: Punch

The tax exemption benefit given to industrial units inside the economic zones has created disparity between factories outside the industrial enclaves, raising fears of uneven competition among firms producing the same products. The National Board of Revenue in 2015 declared tax benefit on income of businesses inside the economic zones for 10 years based on recommendation from the Bangladesh Economic Zones Authority (Beza) to promote investment and  industrialisation in the country in an organised manner. Tax exemption would be applicable on incomes from all sorts of goods and services to be generated from investment inside the economic zones. Since then, the Beza approved 10 private economic zones apart from developing sites by itself. In the private economic zones, a number of factories churning out edible oil, cement, motorcycles and leather goods has been set up. In government-owned sites, entrepreneurs have shown interest to set up food and agro-processing factories, textile, leather, pharma-ceuticals, steel, ceramic, chemical and paint plants, according to Beza. As the factories inside the economic zones will enjoy tax breaks, especially waiver from paying advance income tax (AIT) and advance tax (AT) during raw material import, they will be at an advantageous position in terms of cost compared with firms outside the zones, said Md Shafiul Ather Taslim, director for finance and operations at TK Group. “Cost to make the same product will be different because of producing in two different premises. It will be tough for small firms to sustain in the competition,” he added. TK, one of the major commodity importers and processors, and some other firms shared their concerns with the NBR last month after two major commodity suppliers — Meghna Group of Industries and City Group of Industries — started processing edible oil by establishing plants in their respective economic zones. Later, the NBR sat in a meeting in the middle of last month.  At the meeting, NBR Chairman Md Mosharraf Hossain Bhuiyan said economic zones are required for industrialisation but because of tax incentives unequal competition has been created within the same industry, according to the meeting minutes. Industry insiders said the difference in tax benefits will not only create uneven competition among firms in the commodity market but also in other sectors. The meeting decided to send the proposal to Beza to change the rule regarding tax incentive to commodities. However, Beza said the tax benefit have been offered to encourage planned industrialisation, encourage compliant and environment-friendly production as well as discourage scattered development of factories. Beza Executive Chairman Paban Chowdhury acknowledged that there are some differences in income tax and without incentives investors will not feel encouraged to set up factories in the zones. “We want all large industries to come to one place. The government will not have to provide gas, electricity and water everywhere to facilitate industrialisation. It will be able to provide all services in a cost-effective, regulated manner.” There is also the issue of establishing effluent treatment plants. “There are some incentives in economic zones and those who will establish industries here, levels of their compliance will be high because of regulation. The issue of compliance is also equally important,” Chowdhury added. Beza said all factories will eventually have to relocate to EZs as per law. Mostafa Kamal, chairman of Meghna Group of Industries (MGI), said his group has cement factory outside the economic zone but it is not questioning the tax benefits enjoyed by Aman Cement Mills set up in the Aman Economic Zone, another private economic zone. The government offers tax benefits to promote industrialisation in regions that are lagging behind. “It is the global norm to give tax holiday when investment is made in underdeveloped areas. None will invest there unless incentives are given.” Kamal said the major steel makers are planning to set up steel mills inside the economic zones.  “What will happen then? Should those who have mills outside say that steel mills cannot be established in economic zones,” he said, adding that no one would go for huge investment unless there are incentives. Chowdhury said there are bound to be some impact with any change. “But ultimately all industries will be benefited,” he said.   Source: The daily