Tax news

The Federal Inland Revenue Service (FIRS) in Ebonyi State has scored taxpayers in the state high on compliance. The revenue agency said although majority of taxpayers in the state are civil servants, they have been remitting their tax into government coffers accordingly. Speaking in an interview in Abakaliki, Kenneth Effiong, tax controller, Abakaliki MTSO FIRS, also decried the absence of manufacturing companies in the state, which he said was a major challenge facing the agency in the state. He said most residents of the state are working-class, unlike in other states where there is a high concentration of businessmen and companies. “Ebonyi taxpayers are trying. I give them 60 percent, but we have challenges. Number one, Ebonyi State is not a business area and another thing, the people of Ebonyi, most of them are government workers,” Effiong said. “We do not really have businessmen 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 we have industries and major businesses,” he said. Effiong disclosed that from time to time the FIRS goes to educate taxpayers in the state, adding that the current enlightenment programme going on in the state would last for five days. “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, are 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 a routine job here as tax office,” he said. Effiong maintained that tax awareness, which is a routine exercise, helps the taxpayers to pay their value added tax on or before 21st of every month. He said within the week during the awareness exercise in Abakaliki, some shops had been closed down by the enforcement team for failure to pay their tax. The tax controller urged the taxpayers to try to pay their tax in time and avoid paying money to individuals to avoid falling into the hands of touts. Rather, he said, they should pay to banks that IFRS deals with directly. He said his office is open for enquiries and further directive as may arise.   Source: Business day

Group Managing Director of Dangote Cement, Joseph Makoju, has revealed why many investors will not put large amount of money into the manufacturing industry. Apart from the long gestation period before invested funds could be recouped, he said non-availability of low-interest loans was discouraging many investors from injecting huge capital into the manufacturing industry. He also identified harsh business environment and multiple taxes as other hindrances against the growth of the sector. Speaking in Osogbo, Osun State capital, shortly after he presented a car prize to the winner of Dangote Bag of Goodies Promo, Alhaja Limota Adetoro, a petty trader from Ikirun, Makoju however called on government and stakeholders to address the challenges for steady growth of the sector.  He said, “There are many challenges facing the manufacturing sector in the country. The environment recently has been quite difficult. The issue of low-interest funding for the manufacturing sector is still a big challenge. You will find out that the gestation period to recover investments is long. “With that, you cannot put large capital into starting such industry. Banks in Nigeria today are still not in a position to give special low-interest loans. To me, that is one of the biggest challenges.” “In terms of the operating environment, it is getting a bit harsher; my concern is for the small-scale industries facing the issue of multiple taxes.” He also said, “There is proliferation of taxes, ranging from local government to state government taxes. I quite agree that we need to improve tax collection but not to the point of destroying the sectors of the economy that would create the wealth you will tax. If you overtax, these industries would not grow and our economy would be underdeveloped.” Commenting on the promo, Makoju said it was in line with the philanthropic gesture of Alhaji Aliko Dangote, meant essentially to motivate consumers at the grass roots. Reacting, the winner of the star prize, Alhaja Adetoro, commended the transparency of the management of Dangote Group in handling the promo.   Source: Punch

The Australian Taxation Office has hit the British-Dutch oil giant Shell with a bill estimated at $755m as it continues to pursue multinational resources giants over claims they have avoided paying tax on offshore gas projects. Court documents reveal Shell’s main Australian company, Shell Energy Holdings Australia, has been fighting the ATO for six years over tax on the company’s stake in the $30bn Browse gas project off the coast of north-west Western Australia. The ATO’s pursuit of Shell is part of a broader effort to shake money out of big oil and gas projects that one of the authority’s most senior officials says has brought forward tax revenue by a decade. Second commissioner Jeremy Hirschhorn declined to comment on the Shell dispute but said he was “very confident” big oil and gas projects would start to pay significant tax by 2021. In an interview with the Guardian, Hirschhorn also revealed that every year the ATO received an average of two leaked sets of data about the clients of accountants, law firms and other service providers around the world, and expressed relief at victory over mining group Glencore this month in a high court fight over the ATO’s use of Paradise Papers documents. The previously secret Shell stoush is revealed in documents the company filed in the federal court this month after the ATO threw out its objections in June and July. Shell has asked the court to set aside the ATO’s decision to disallow $2.2bn in deductions the company has claimed for buying shares of gas tenements from another partner in the Browse project, Chevron, in 2012 and 2014. Browse, Australia’s largest untapped conventional gas resource, has been in development for 15 years but has never entered production because of falls in oil and gas prices. Tax law requires an asset to be used for exploration or mining before a deduction can be made. However, Shell told the federal court it “used each asset by having it ‘held in reserve’ or otherwise held ready for use in its business”. A Shell spokeswoman said the company was “engaging with the Australian Taxation Office with a view to confirming the correct tax outcome of Shell’s 2012 acquisition of interests in the Browse project”. “Shell complies with all its legal and taxation obligations and is committed to paying the right amount of tax under the letter and the spirit of the law in all countries in which we operate,” she said. Hirschhorn said the ATO acted early to squash the efforts of multinationals to send profits reaped from Australia’s oil and gas boom offshore without paying any tax in the country. Two years ago, ATO officials were alarmed at the prospect that the big oil companies would avoid paying up to $10bn in tax over 10 years by pumping up the interest rate they paid on loans their local arms took out with offshore affiliates to finance the mega-projects. However, a legal victory over Chevron, the lead partner on the country’s biggest project, Gorgon, emboldened the ATO to take on the rest of the industry. Last year, Chevron paid the ATO $866m to settle the lawsuit, which alleged the 9% interest rate charged on a US$2.5bn inter-company loan was far too high. In December last year, Hirschhorn was promoted from deputy commissioner in charge of large companies to second commissioner for client engagement – a euphemistic title that puts him in charge of tax enforcement and about half the ATO’s 18,000 employees. He declined to comment on the Shell case but said the ATO continued to take action over related party debt and other tax issues in the resources sector. “Not all those disputes have washed through,” he said. He said it was natural that the big projects would pay little or no tax in their early years, due to the billions of dollars poured into building them that needed to be recouped before profits could be made. “Our success will be as a tax office if they start paying tax, very significant tax, in 2021, 2022, which we’re very confident will happen, rather than not paying tax up until the 2030s,” he said   Source: Guardian

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