Tobi Aminu – Page 35 – Sunmola David & CO

CBI says digital tax will harm UK plc

The Confederation of British Industry (CBI) has called on chancellor Philip Hammond to drop the idea of a digital services tax because it could end up stifling the digitalisation of UK businesses beyond those that it is intended to target Commenting on the introduction of the tax in April 2020, chief economist Rain Newton-Smith said that there had not yet been a proper economic impact assessment of the tax. “It has the potential to mean companies are less likely to become more digital, when the whole industrial strategy is supposed to be predicated on getting people to start and grow digital businesses,” she warned. The tax is aimed at online marketplaces, social media platforms and search engines with a global turnover in excess of £500m. Digital giants like Amazon, Apple and Google will be charged at a rate of 2% on revenue they generate in the UK. It is intended to be narrowly scoped to ensure that it is the tech giants, not start-ups, which shoulder the burden of the new tax. Initially, Hammond had hoped that other leading economies would agree a joint way forward on digital taxes. But he ran out of patience last year and announced in the October Budget that the UK would be going it alone. “It is only right that these global giants, with profitable businesses in the UK, pay their fair share towards supporting our public services,” he said at the time. “In the meantime, we will continue to work at the OECD and G20 to seek a globally agreed solution and if one emerges, we will consider adopting it in place of the UK digital services tax.” That has not happened yet. Despite the presence of digital taxes on the agenda for discussion at the recent G20 meeting in Japan, the best the G20 finance ministers could do was to aim to agree new rules on cross-border corporate taxes by 2020. This is not surprising, given the obstacles that need to be overcome – including fierce resistance from the US where most of the digital giants are headquartered. Newton-Smith told the Telegraph that she was concerned the tax would catch more businesses in its net than originally intended. “The lines are blurred on what is a search engine or a social media platform and that is a challenge when you have a tax that is based on business models rather than on profit stream,” she explained. “A 2% tax doesn’t sound like a lot but in a high-volume, low-margin business, it could wipe out your profits. When it comes to small businesses, adding to their cost base is not welcome.” The CBI also told the government that its plans to become the world leader in internet regulation, set out in the recent White Paper, do not go far enough. The business organisation wants to see a new independent regulator established as part of OFCOM, great clarity on the definitions, legal responsibilities and scope, proportionate and feasible enforcement measures and joined up government initiatives on tech policy and regulation. It also wants digital literacy to be enhanced across business and the wider UK public. Source: Ecomonia

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LIRS shuts Debonairs Pizza, 13 other companies over unpaid taxes

Tax news / Tobi Aminu

The Lagos State Internal Revenue Service (LIRS), on Wednesday, shut down the premises of Debonairs Pizza and thirteen other companies (including several hospitality firms), over alleged failure to fulfill tax obligations. According to the Director of Legal Services for the Lagos State tax agency, Mr Seyi Alade, the exercise was initially suspended, but will now be pursued until full compliance is met. “Now, the service has resumed sealing of firms particularly the hospitality firms; it is committed to continuing the exercise until full compliance to tax payment and remittance are achieved.” What is capital allowance. Mr Alade also added, with dismay, that less than 65% of the corporate organisations in Lagos pay tax. The remaining percentage of companies in the state go about their various businesses without paying taxes to the Lagos State Government. Meantime, the other companies that were sealed off, according to theLIRS’ Head of Distrain Unit of the LIRS, Mrs Ajibike Oshodi-Sholola, include; Piccolomondo Restaurant, Virgin Rose Resorts, Precinct Comfort Services, Villa Angelia Hotel, Allied Management Ltd., Ocean Suites, Sabitex Hotel, LCCI Hall, Extended Stay Hotel, Monarch Gardens Ltd., La Maison Hospitality Ltd., and Villa Toscana Hotel. Furthermore, Mrs Oshodi-Sholola explained that the companies were audited for 2014 to 2016, after which it was discovered that they were yet to remit their taxes for the period. She said that letters of intent to distrain were sent to the management of the companies. While some of them paid up their taxes and an extra N250,000 as the cost of distraint, others did nothing about it; hence the move. “Before LIRS embarks on sealing, it must send two letters to the management of the affected firm, reminding it of tax liabilities. Both the demand notice and letter of intent to distrain were sent to the management of hospitality firms but they failed to act.” Source: Nairamatric

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Federal Government pays outstanding tax liabilities owed by MDAs

Tax news / Tobi Aminu

The Federal Government says, it has paid N135 billion of all outstanding PAYE tax liabilities owed by Federal Ministries, Departments and Agencies (MDAs) for 14 years to various states government. The Chairman of Joint Tax Board, Mr Tunde Fowler, said this at a programme tagged; “Go-Live’’ for the New National Tax Identification Number (TIN) Registration System in Abuja on Monday. The outstanding liabilities of the MDAs paid by the Federal Government covered 2002 to 2016. He urged the states government to emulate and promptly remit all withholding taxes, including Value Added Tax due to the federation account: “It is not only important that these records are available, it is equally necessary that the records are credible and reliable and that they are accessible under a secured environment, and online real-time. “The role data plays in today’s world cannot be overemphasized; and for the revenue potential of the country to be maximally harnessed, it is essential that credible and reliable data is available for use. “Such record is also important to facilitate the Ease of Doing Business and for the nation to achieve its economic objectives in line with the Economic Recovery and Growth Plan (ERGP).’’ Fowler expressed confidence that the new system would add value to tax-revenue administration in the country, not only in terms of processes and procedures, but in terms of efficiency and ensuring a co-ordinated and systematic approach. According to him, the new TIN system will limit the incidence of double taxation which is also a prerequisite for a number of transactions such as sale and purchase of immoveable property, registration of vehicles and application of plots of lands. The chairman commended its partners, especially some Federal Government agencies for their support in having the new TIN system in place. Source: VAN

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Tax Appeal Tribunal rules that withdrawal of voluntary pension may be taxable

TAX SERVICES / Tobi Aminu

The Lagos Internal Revenue Service (LIRS) following a tax audit for 2013 and 2014 years of assessment issued a Notice of Refusal to Amend (NORA) to Nexen Petroleum Nigeria Limited (“the company”). The LIRS assessed the company to additional liabilities on the grounds that the company had under remitted Pay As You Earn (PAYE) tax by taking statutory tax relief for Voluntary Pension Contributions (VPCs) made by its employees to pension fund administrators (PFA). Pension: The Tax Appeal Tribunal’s decision addressed the following key issues: That all pension contributions, including voluntary pension contributions without any limit, are tax deductible There is no requirement for the employer to ensure that VPC was not withdrawn by the employee within a period of time to qualify for tax deduction on the contribution. That the agency responsibility of an employer to deduct and remit PAYE does not extend to any tax that may become payable upon withdrawal of voluntary pension contributions by an employee from the PFA. This implies that where any withdrawal of voluntary pension is taxable, it is the employee who will be responsible for the tax. It does not however preclude the tax authority from appointing a valid agent (including the employer) for future deduction of any applicable tax on such withdrawal. Source: Mondaq

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TAX: FG Targets 75% Non-oil Sector Revenue

Tax news / Tobi Aminu

The Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, has projected that in the next three years, Nigeria’s non-oil revenue will be at about 75 per cent. He also anticipated that within same period, the number of tax payers in the country would have risen to over 60 million. Fowler, said this during an interview on Arise Television, that “If you look at where we are coming from and where we are right now, last year we did N5.3 trillion out of which the non-oil sector accounted for 53.6 per cent and that of course was the highest revenue generated in the history of Nigeria.” He also spoke on the recent inauguration of the Joint Tax Board identification number registration system, explaining that it was basically the same thing as the Tax Identification Number. “What we have now is a Consolidated Tax Data base. All tax payers within the country and corporate organisations have the tax information residing in one data base. “Prior to this, in line with the constitution, every state has a right to have a tax identification number for its residents. So if you have a transaction for example, in Lagos and you reside in Kano, the Kano Revenue Service will issue you a tax payer certificate which you would bring to Lagos. “Lagos will now manually confirm that the certificate is genuine and also access the tax based on the transaction you want to carry out in Lagos and at time, this takes a while. “Also, if they believe your taxes paid in Kano were not sufficient, they would ask you to pay additional tax but now at the touch of a button, your tax history can be seen by tax officials in Lagos and you can carry out your business seamlessly or if you want to do a government contract, and part of the requirements is that you show evidence of a tax clearing certificate, at the touch of a button, that official would see your tax status “This system also keeps accurate records of all payments to the government so if you want to check your payments from about three to five years ago, you would be able to access your tax information and adequate records of all your transactions. “It makes business much easier and also improves transparency and accountability and all these can be done 24/7 online, anywhere in the world.” Source: Investor King

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N50bn tax: Rivers asks court to jail NDDC officials

Tax news / Tobi Aminu

The Rivers State Board of Internal Revenue has urged the Rivers State High Court sitting in Omoku to jail the acting Managing Director of the Niger Delta Development Commission, Prof. Nelson Brambaifa, and three other officials of the commission for alleged disobedience to a court order. The RSBIR accused Brambaifa and the other alleged contemnors of acting contrary to an April 17, 2019 order of the court, which directed the commission to pay the state N50bn “being outstanding tax liabilities owed the Government of Rivers State by the respondent (NDDC).” According to the RSBIR, the court further ordered the NDDC to pay an additional N20bn “as cost incidental to the recovery of the amount owed.” The agency said in a bid to enforce the April 17 court order, it sealed off the premises of the NDDC on April 23. It, however, said officials of the NDDC, without any court order, went ahead to unseal the commission’s premises on May 6 “and repossessed same and it (NDDC) is in use of same.” The RSBIR admitted that the NDDC had appealed against the April 17 court order directing it to pay the state N50bn and another N20m. It, however, noted that the application for the stay of execution of the order which the NDDC filed came after the RSBIR had already executed the court order. As a result, the RSBIR is urging the court to commit Brambaifa and three others to prison for alleged contempt. Apart from Brambaifa, others whom the RSBIR urged the court to jail are Mr Chris Amadi, Mr Adjogbe Samuel and Mr Kaltungo Moljengo. Source: Punch

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Alleged tax evasion: Lagos seals 14 firms

Tax news / Tobi Aminu

The Lagos State Internal Revenue Service has resumed the sealing of companies and hospitality firms over unpaid consumption taxes. LIRS sealed 14 firms during its tax law enforcement exercise on Wednesday. The LIRS Director of Legal Services, Mr Seyi Alade, said that two enforcement teams had been mobilised by the service for the state-wide exercise. Now, the service has resumed sealing of firms particularly the hospitality firms. It (LIRS) is committed to continuing the exercise until full compliance to tax payment and remittance are achieved,” Alade said. Alade claimed that less than 65 per cent of the corporate organisations operating in the state pay taxes, saying that many of them operated without any tax remittance to the government. He called on firms to ensure up-to-date tax payment. The Head of Distrain Unit of the LIRS, Mrs Ajibike Oshodi-Sholola, said that the two enforcement teams had sealed 14 hospitality firms, including restaurants, hotels and guesthouses. According to her, the tax liabilities of the affected firms covered from 2014 to 2016, saying that they were audited for the two years but had yet to make payment. “Before LIRS embarks on sealing, it must send two letters to the management of the affected firm, reminding it of tax liabilities. “Both the demand notice and letter of intention to distrain were sent to the management of hospitality firms but they failed to act,” she said. Source: Punch

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CAC’s key reforms for business registration may stall soon

CAC SERVICES / Tobi Aminu

The Corporate Affairs Commission (CAC) has initiated several reforms aimed at easing business registration, encouraging informal enterprises to regularize and streamline all matters relating to company incorporation in the country. Some of these reforms have been captured in the Companies and Allied Matters (CAM) Bill 2019, which has been passed by the National Assembly and transmitted to the President for assent. ASome of the key reforms include abolishing the requirement for a company to have an authorised share capital, enabling a single person to form a private company, significantly updating the rules on insolvency, and introducing, for the first time, a business rescue process. Other innovations in the bill meant to repeal the Companies and Allied Matters Act (CAMA), include the introduction of close-out netting provisions; and the concept of limited liability partnerships. As the deadline for the presidential assent approaches, there are fears in the CAC and some concerned stakeholders that the reforms may not see the light of the day and this will set the country back on the progress recorded so far on ease of doing business. Yesterday, the Acting Registrar-General of the CAC, Lady Azuka Azinge, emphasised the imperatives of a presidential assent to the CAM Bill when she briefed the media on the dangers of allowing the bill to perish. Lady Azinge said the amendments were in line with President Muhammadu Buhari administration’s reform agenda to create an enabling environment for businesses to thrive. The CAC boss said the CAM Bill had been passed by the 8th Assembly and was awaiting presidential assent. She said when passed into law, the bill would open up the business space, enhance the development of Micro, Small and Medium Enterprises (MSMEs), create employment, and generate wealth for rapid economic growth consistent with the Economic Recovery and Growth Plan (ERGP) of the present administration. The Executive Director of Civil Society Legislative Advocacy Centre (CISLAC), Auwal Musa Rafsanjani, has also called on the president to assent to the bill. “This legislative framework will provide a legal foundation for the implementation of beneficial ownership disclosure. If signed into law by President Buhari, it will lead to the establishment of the electronic web-based open Beneficial Ownership register in Nigeria,” he said. Rafsanjani said the real goal is the establishment of comprehensive database of real workers behind the management of private companies operating within Nigerian jurisdiction. The bill seen and analysed by Daily Trust showed that it would ensure more appropriate regulation for MSMEs in the country. Some of the innovations targeted at SMEs include making it optional for smaller companies to have a company secretary; making it easier for smaller companies to comply with accounting requirements; and making it optional for one-man and small companies to hold an annual general meeting. The bill also made provision for the introduction of separate model articles of association for private companies that will contain the minimum key rules on the internal workings of the company. The bill, reviewed by stakeholders aimed to enhance transparency and shareholder engagement by increasing transparency and disclosures on beneficial ownership to determine persons with power to exert significant level of influence or control over the decisions and actions of a company. It aims to align regulatory framework with international best practice for competitiveness and thus enhance the efficiency of the regulatory process by introducing measures to make company law better fitted to modern business realities, improve the business environment and performance across the economy as well as reduce direct compliance costs for businesses. To attract Foreign Direct Investments (FDIs) into the country, the bill introduced orderly and more effective procedures for business rescue and resolving insolvency: Administration, Company Voluntary Arrangement and Netting. Further analysis of the bill showed it made provisions for the inclusion of representative of the MSMEs on the Board of CAC, pre-action notice to reduce litigation for the commission, right of one person to form a company, removal of consent of Attorney-General of the Federation for registration of (memorandum of) a company limited by guarantee. The amendments included the abolition of Authorised Share Capital and introduction of Minimum Issued Share Capital, removal of requirement of Statutory Declaration of Compliance by legal practitioner for registration of company, reduction in filing fees for registration of charges by 65 per cent, exemption of small companies dormant since incorporation from audit requirements and e-meetings for private companies. Source: Daily trust

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CITN backs FG’s plan to charge VAT on online transactions

Tax news / Tobi Aminu

The Chartered Institute of Taxation of Nigeria says it is supporting the proposed plan by the Federal Government to introduce Value Added Tax on online transactions. A statement quoted the newly elected 14th and third female President/Chairman of Council, CITN, Gladys Simplice, as saying this after her investiture recently in Lagos. Simplice was also inaugurated as the second female president of the West Africa Union of Tax Institutes. She said the plan should have been introduced to the economy long ago as the same practice was obtainable in other climes, because the nation was losing a significant amount of revenue due to that. She said, “The amount of money we are losing because we are not tracking these online transactions is huge. Even if we are not getting it fully right at the beginning, let’s talk about it, let’s bring it into our conversation and let’s put it into action. “In some climes, as you are transferring money, it is being taxed; even invisible trades are being tracked. So, when taxable incomes are earned, they must be taxed. I support it.” Her presidency came to fruition following the successful conduct of the 27th Annual General Meeting of the institute where Simplice was unanimously elected president of the CITN. Other elected officers of council include Mr Adesina Adedayo as vice- president; Samuel Agbeluyi as deputy vice- president, and Mr Innocent Ohagwa was elected as the honorary treasurer. She explained that the new executives, under her leadership, would strictly adhere to the CITN’s mission in taking ownership of taxation in the country, noting that they were going to address development needs of all tax practitioners in terms of capacity building. “We will embark on the education of taxpayers; we are going to partner with the government and international bodies. At the moment, we have received an international invitation for partnership talk,” Simplice added. While praising the leadership of the FIRS, she said, “The chairman of Federal Inland Revenue Service, Babatunde Fowler, has taken the right steps. You would have noticed that everybody is talking about taxation now. In this country, FIRS has brought taxation to the consciousness of Nigerians. No one can claim ignorance of taxation: we have been educated. No one has an authentic reason to evade tax.” Source: Punch

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Tax ID number now available online – FIRS Boss

Tax news / Tobi Aminu

The Joint Tax Board (JTB) has launched a new national registration system that would enable Nigerians to obtain their taxpayer identification number (TIN) online. The new system launched in Abuja is also targeted at tracking all eligible taxpayers in the country. Launching the new platform, Vice-President Yemi Osinbajo expressed hope it would go a long way in reforming Nigeria’s tax system while ensuring better service delivery for citizens. Tunde Fowler, JTB chairman, said the new system will provide a unique identity to the taxpayer and facilitate ease of compliance. He said its main objective is to leverage already captured data of eligible taxpayers by relevant government institutions to discover hidden trends and patterns that could lead to better visibility and revenue generation for the government. Source: Governance news

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