Tobi Aminu

The Federal Inland Revenue Service has said that it will soon begin the collection of Value Added Tax on online transactions. The Chairman of the agency, Mr Babatunde Fowler, made the disclosure in an interview with the News Agency of Nigeria in New York on Saturday. Fowler said, “Soon, we will ask banks to impose VAT on online transactions for purchases of goods and services. “Not that it is something new; it actually should be in existence. “We will certainly follow up to make sure that every VAT that is due to be collected is collected.” He explained that the move was part of measures by FIRS to meet its N8 trillion revenue target for 2019. Fowler said the agency had started taking action against companies and businesses that refused to embrace the Federal Government’s tax amnesty programme. According to him, FIRS hopes to generate between N750 billion and N1 trillion from the clampdown, which includes closure of defaulters’ bank accounts. “We are going after everybody. I am sure you have heard that we have placed lien on some accounts of defaulters that have a billion naira turnover annually. “So certainly, we are not leaving anyone out of the tax net,” he said. Officially known as the Voluntary Asset and Income Declaration Scheme, the tax amnesty programme was launched in 2017. It gave tax defaulters a one-year period of grace to declare and settle their unpaid taxes.   Source: Punch

The European Union on Friday removed the British overseas territory of Bermuda, the Dutch Caribbean Island of Aruba and Barbados from the bloc’s blacklist of tax havens. The three islands were added to the list in March as they had failed for months to change their tax rules, which the EU deemed at risk of facilitating tax evasion in other countries. But now Aruba has been removed because it has changed its legislation to make it compliant with EU requirements, an EU statement said in Brussels. The statement said Bermuda and Barbados had committed to addressing EU concerns and have therefore been moved to a so-called grey list of countries still under EU scrutiny for their tax practices. The removal means no EU territory is on the list. The blacklist has now shrunk to 12 jurisdictions, among which are the United Arab Emirates, Oman and the three US territories of American Samoa, Guam, and the US Virgin Islands. Other jurisdictions on the list are Belize, Fiji, the Marshall Islands, Vanuatu, Dominica, Samoa and Trinidad and Tobago. Blacklisted states face reputational damage and stricter controls on transactions with the EU. The EU set up the blacklist in December 2017 after revelations of widespread tax avoidance schemes used by corporations and wealthy individuals to lower their tax bills. The list initially comprised 17 jurisdictions, but it is subject to regular reviews. Countries with legal shortfalls are added if they do not amend their rules by set deadlines.   Source: Punch

Nigerian airlines have called on the federal government to review its tax policy for the sector as well as the cost of aviation fuel, in order to reduce cost of flight operations and ensure they remain in business. The operators said many airlines that went under in the last few years were due to high cost of operation, including high taxes and high cost of aviation fuel. The airlines said cost of flight tickets would also reduce if they pay less taxes and spend less on aviation fuel, which is known as Jet A1, so that more Nigerians can travel by air, especially now road travel is fraught with insecurity. In addition, the operators said they spend huge resources on aviation fuel because of its arbitrary costs, which according to them does not reflect the cost of crude oil, but negatively affect long-term planning by the airlines. Speaking on behalf of the airlines, the CEO of Aero Contractors, Captain Ado Sanusi, said there was need for government to review its policy on aviation fuel, noting that although supply was deregulated, the government could take actions to ensure that supply is regular and prices lower than what obtains currently. “The first government intervention to reduce cost of operation should be in the supply of fuel, which over the years government has been striving to bring the prices down. “This is critical because about 40 per cent of the cost of operation is almost on fuel, Jet A1. So we can look at it and ensure that the fluctuation in the prices is not much. “Look at the situation now. The prices go from N198 to 220 per litre. So if we can have a constant supply of Jet A1 at constant price, airlines will know how to plan their budget and how they can bring down the cost of ticket based on the lower cost of aviation fuel,” Sanusi said. He noted that in most countries the price of Jet A1 is, “very dependent on the price of crude oil but in Nigeria it is dependent on the landing cost of imported product.” The Aero CEO said crude oil price could be steady for the next six months, but Jet A1 price would be fluctuating, stressing the need to streamline prices. He said although Jet A1 had been deregulated, the government could persuade the importers to ensure constant supply of the product or government could be importing the product and selling to marketers. Another factor that has influenced the high price of tickets, the airlines said, was the high taxes operators pay, so they urged government to tackle the problem of multiple taxation. “Government has done very well in the area of taxes by reducing some and looking at removing VAT. I hope it has done that already. But the most important thing government should tackle is multiple taxation. “The federal government should look at it. The last time they reviewed taxes in aviation was a very long time ago and I think they should look at it and reflect the reality on ground. “This is because if they continue to heavily tax the airlines it will continue to impact on their finances and you see that some of them are dying. There is something definitely wrong somewhere. “High taxation is one of the root causes of the reason our airlines are dying; so government can help to save the airlines by reviewing downwards the taxation levied on them.” Another factor he said that has effect on the cost of flight operation was bird strike and non-clearing of runways, which gives rise to incidents that lead to high maintenance cost. He pointed out that frequent bird strikes destroy aircraft engine and when the runway is not swept regularly objects destroy aircraft tyres. According to him, replacing these engines and tyres cost a lot of money to the airlines, which means they have to increase price of tickets in order to generate money to pay for spares replacement and general maintenance. “If, for example, the runway is not swept regularly and the birds are not controlled and the aircraft suffer from bird strike and objects on the runway destroy the aircraft wheels, these will increase maintenance cost and eventually affect the price of the tickets “This is because the moment I have increased my cost I have to increase my revenue. Otherwise, the airline’s finances will be affected. So the airport management company has to sweep the tarmac and the runway, chase the birds away so that the aircraft wheels do not suffer damage and the engine does not pick birds. “These are the things that will lower the airline’s cost. When the cost of operation is lowered, the airline will definitely lower the cost of its tickets,” Sanusi added.   Source: This days

The Executive Chairman, Federal Inland Revenue Services, FIRS, Mr Babatunde Fowler, has blamed ignorance of taxation rules for the incessant controversies between taxpayers and government. Fowler, expressed this view at the KPMG Tax Breakfast Seminar in Lagos, with theme, ‘Tax Controversy and Dispute Resolution’. He counselled taxpayers to consult experts in tax issues to avoid over-payment, noting, however, that FIRS does tax refund when necessary. Fowler stated: “The cause of incessant tax controversies between the government and taxpayers are majorly as a result of ignorance of tax administration on the side of taxpayers. Corporate bodies need to take advantage of tax education which FIRS is embarking on across the country using different communications media. “Taxpayers need to query the source and any observed errors or omissions in tax letters/statements from tax authority. No one has the right to bully any taxpayers in any circumstance. “We have our Joint Tax Board, JTB, across states whose rectification with any organization is binding by other JTB across the federation. So to avoid multiplicity of tax charges, you must know the law permitting such tax; you are even free to decline an invitation for Joint Tax Audit. Still, it is better you even go to Tax Appeal Tribunal (TAT) where necessary.” In his remark, KPMG Partner and Head, Tax, Regulatory and People Service, Mr. Wole Abayomi, said: “The constantly changing economic landscape requires governments at all levels to develop frameworks that will provide a competitive tax landscape for business, effectively accelerate tax revenues, proactively curb tax evasion and create opportunities for the country’s teeming population. “A situation where the last time Companies Income Tax Act (CITA) and Value Added Tax (VAT) Act were reviewed was 12 years ago leaves much to be desired, thus, there is an urgent need for government to reform our outdated tax laws to reflect current economic realities. “An efficient way of doing this is to return to the practice of enacting a Finance Act soon after the passage of the annual federal budget through which our tax laws can be constantly reviewed in accordance with global best practices.”   Source: Vanguard

The Nigeria Economic Summit Group has said that about 70 per cent of Nigerians believe that it is not wrong to pay tax. The NESG disclosed this during its Fiscal Policy Roundtable event in Lagos, while launching its Citizen Perception Report, a research advocating better tax system in the country. The Fiscal Policy Roundtable co-chair, NESG, Dr Doyin Salami, said the government had been unable to meet recurrent and capital expenditures following a budget deficit of N3.8bn and debt profile of N22.7bn. While mentioning some findings in the Citizens Perceptions Report, he said that, “Over 70 per cent of Nigerians believed that it is not wrong to pay taxes. This sentiment is fuelled by the issues around the social contract between the government and the citizenry.” Salami, who was represented by the PWC West Africa Tax Leader and Research Director, NESG Fiscal Policy Roundtable, Mr Taiwo Oyedele said, “Low tax compliance results from tax complexity, crisis of trust in the government and inadequate social contract deliverables; while tax officials were constrained by inconsistent tax policies, limited resources, unrealistic targets, and inability to influence service delivery, among others.” The NESG noted that its project called, ‘Better Tax’ sought to close knowledge gaps in fiscal policy and create a sustainable framework to actualize the Federal Government’s inclusive economic agenda. It noted that the report was the product of a nationwide perception survey across households and small businesses in the tax value chain. In the report, it tasked the government to establish an office of tax simplification among other recommendations targeted at demystifying complex provisions in the nation’s tax laws and boosting dwindling revenues from the non-oil sector of the economy. The Chairman, NESG Fiscal Policy Roundtable, Dr Sarah Alade, said the core concept of the roundtable was to reflect the needs and objectives that formed the basis of a robust fiscal reform platform, focused on mobilising and growing the country’s tax revenue. She mentioned that the International Monetary Fund estimated that revenue collected in 2016 across all tiers of government was only about six per cent of the Gross Domestic Product. Alade added that historically, more than 70 per cent of the revenue had come from the oil sector while the non-oil sectors, which accounted for more than 90 per cent of GDP, had historically contributed about 30 per cent to revenue. She said, “This limits Nigeria’s ability to credibly execute its development plan and fund critical social sector programmes. It also leaves Nigeria very vulnerable to macro-economic shocks from low oil prices. The most recent fall in oil prices threw Nigeria into a fiscal crisis with spill-over effects on the economy resulting in a recession in 2016. “Building a strong revenue base that is balanced between the oil and non-oil sector is therefore critical to sustainably financing Nigeria’s development programme and long-term macro-economic stability.”   Source: Punch

The Tax Appeal Tribunal on Tuesday adjourned until July 17, hearing in the suit filed by Joseph Daudu, SAN, challenging alleged N1.2 billion error in taxation. Mr Daudu (appellant) said he was dissatisfied with Federal Inland revenue Service (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. 2 billion. He prayed the tribunal to restrain FIRS. The tribunal, presided over by Alice Iriogbe, adjourned after applications by parties were taken. Mrs Iriogbe had advised the appellant counsel to look for an alternative way to solve the problem of the appellant not coming to testify for himself to avoid waste of time. She then adjourned until July 17 for hearing. Earlier, Abedayo Adedeji, counsel for Mr Daudu, told the tribunal that they were served with some documents by FIRS and they needed to respond. He notified the tribunal that the appellant would like to be at the tribunal by himself but he was still not fit he also presented the medical report to attest for that. Mr Adedeji further informed the tribunal that the appellant needed to be in the tribunal because some of the issues are personal which he needed to clear. His application was for additional witnesses on oath and time to enable the appellant to be in the tribunal and testify for himself. In his response, Taiwo Osipitan, SAN, counsel for FIRS, told the tribunal that the ill health of the appellant was touchy having been served with the medical report and so they are not objecting. He also applied for extension of time to regularize the documents. He said the motion was filed on May 14, but they could not bring some of the documents. Mr Osipitan said in that case, those documents that were not brought would be abandoned. Mr Adedeji earlier, claimed that it was a misnomer for the appellant, who operated a law firm as a legal practitioner and did 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,” 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 payments made under the period in review. The service, therefore, prayed the tribunal to declare that the notices of assessments issued on the appellant for 2010 to 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 to 2017 years of assessment. FIRS stated that it rightly assessed the appellant; acting in accordance with the law and by collaborating with EFCC on non-declaration of income as well as tax evasion.   Source: Premium time

Nigerian citizens are ready to pay their taxes given proper education and expenditure transparency on the allocation and application of resources by the government, according to a new survey by the Nigeria Economic Summit Group. The survey, Citizen Perception Report is the first of several research pieces to be published by the NESG Fiscal Policy Roundtable in support of its tax reform and advocacy vehicle “Better Tax” supported by Bill and Melinda Gates Foundation. During the launching on Wednesday, Dr Sarah Alade, Chairman, NESG Fiscal Policy Roundtable, said, the core concept of the roundtable was to reflect the needs and objectives that form the basis of a robust fiscal reform platform focused on mobilizing and growing the country’s tax revenue. According to Dr Alade, data from the Citizen Perception Survey reinforces the appalling level of fiscal responsibility in taxpayer education, which fuels apathy and low morale among taxpayers. She said, “beyond the general clamor for increasing revenues and the correlation with higher tax rates, there are other issues around taxpaying in Nigeria. There is the presumption that the Nigerian citizenry is apathetic to the payment of taxes, which makes the findings of the Citizen Perception Survey crucial.” The findings show that Nigerians are not averse to taxpaying given proper education and expenditure transparency on the allocation and application of resources by the Government. Fiscal Policy Roundtable Co-Chair Dr Doyin Salami, who was represented by Taiwo Oyedele – PWC West Africa Tax Leader and Research Director NESG Fiscal Policy Roundtable said the government had been unable to meet recurrent and capital expenditures following a budget deficit of N3.8 billion and debt profile of N22.7 billion. Oyedele, who shared evidence-based data from the Citizen Report during his technical presentation at the event, disclosed that “low tax compliance results from tax complexity, crisis of trust in the government and inadequate social contract deliverables; while tax officials were constrained by inconsistent tax policies, limited resources, unrealistic targets, and inability to influence service delivery, among others”. Citing the data from the Citizens Perceptions Reports, he said that over 70% of Nigerians believe that “it is not wrong to pay taxes”. This sentiment is fuelled by the issues around the social contract between the government and the citizenry.   Source: Pulse