Tax news

The Federal Government has directed the Central Bank of Nigeria, Nigeria Interbank Settlement System, the National Identity Management Commission to cooperate with the Joint Tax Board in the release of relevant individual records. Vice President Yemi Osinbajo stated this while inaugurating the new National Tax Identification Number Registration System on Monday in Abuja. The News Agency of Nigeria reports that new tax administration was built around data, adding that without credible and comprehensive data, an efficient tax system would be impossible. Osinbajo said that TIN gave the managers of the national tax administration systems the capacity to conveniently and efficiently access and connect information from multiple sources. He said, “(What) we seek to achieve is really to attract business and more importantly, local business; and it is local business investment that develops the economy the most. “If it is easy for the local person to do business, it becomes more attractive to the international business to come into the country. “All of these reforms attract the levels of investment and inflows the Nigerian economy requires for sustainable economic growth. “In the light of the foregoing, all agencies critical to the optimal success of this initiative, the CBN and NIBBS, National Identity Management Commission are hereby directed by the President to provide the fullest co-operation to the JTB especially in the release of the relevant individual records. “The JTB, led by its chairman, Mr Babatunde Fowler, all the partners and stakeholders who have made this possible, deserve our commendation for this giant leap. “The Nigerian business and economic environment are the better for your hard work and continuous innovation,” Osinbajo said.   Source: Investor King

A former Minister of Finance, Mrs. Zainab Ahmed, yesterday said the federal government was planning to increase the rate of value-added tax (VAT) to 7.5 per cent from the current five per cent by 2020. This is as the government seeks to shore up falling revenue, according to Bloomberg. Speaking at the Bloomberg Emerging & Frontier Forum in London, the former minister, whose tenure ended with President Muhammadu Buhari’s first term on May 29, said that her main preoccupation while in office was how to raise government’s revenue with only 55 per cent of targets being met. Buhari, who was re-elected for a second four-year term, is yet to constitute a new cabinet. She said: “We have developed a strategic revenue growth initiative, which we have started to implement. “Our target is to increase revenue to 65 per cent minimum in 2019 so that in the next three years we are able to attain 80-85 per cent of our revenue target.” However, earlier plans by government to increase VAT had been vehemently opposed by Nigerians. In April, following a public backlash, Executive Chairman, Federal Inland Revenue Service ((FIRS), Mr. Babatunde Fowler, refuted reports it had proposed a 50 per cent increase in VAT when he appeared before the National Assembly to defend the agency’s 2019 budget. But Fowler maintained that his position was misrepresented as he actually recommended an increase in the number of Nigerians and companies paying VAT and not the other way around. A statement issued by his media department to debunk the claim stated: “Though he indicated that there should be an increase in the VAT rate by the end of the year, he never for once suggested a 50 per cent hike or any percentage increase at all. “Rather, he promised improved collection in CIT, Petroleum Profits Tax, PPT and VAT in 2019 relative to the collection performance of the service in 2018. “In 2018, FIRS collected the sum of N1.1 trillion in VAT; N1.42 trillion in Companies Income Tax (CIT); and N2.4 trillion in Petroleum Profits Tax (PPT).” Also, Ebonyi State Governor, Chief David Umahi, had further opposed the proposed plan by the federal government to lift Value Added Tax (VAT) from five per cent to 35 per cent, stressing that it would put the country in difficult situations. The governor had said that the plan, which was proposed by the federal government in order to pay workers’ salary with the implementation of the N30,000 minimum wage, was like digging a hole to fill a hole. According to the National Bureau of Statistics (NBS), the federal government generated N1.10 trillion as VAT in 2018, representing a growth of 13.96 per cent (year-on-year) when compared to the N972.34 billion collected in 2017.   Source: Investor King

The Tax Appeal Tribunal, South East Zone, has said that gratuities are tax exempted under the Personal Income Tax Act. The tribunal made the declaration while delivering judgement in the appeal Nigerian Breweries Plc brought against Abia State Board of Internal Revenue, challenging the decision of the Board to tax gratuities paid to its employees. The Appellant in appeal No. TAT/SEZ/002/17 set out three grounds of appeal, among which are “that Respondent (ASBIR), erred in law when it assessed the Appellant’s employees to tax on gratuities paid by the Appellant.” The Appellant, through its counsel, Moshood Olajide, contended that under the finance (Miscellaneous Taxation Provision) No. 2 Decree 1996 amended section 3(1)(b) of PITA 1993 by deleting gratuities as income chargeable to tax. That by the clear wording of the 1996 Decree, gratuities are no longer taxable, and, therefore, remained the extant position in the PITA 2011 (as amended). He, therefore urged the Tribunal to discharge the assessment notice issued by the Respondent and a declaration that by the virtue of Decree 1996 all gratuities are tax exempt. But the Respondent, through its counsel, Obike Onyemeru, urged the tribunal to dismiss the appeal and sustain the demand notice. While he argued that there was no law expressly exempting gratuity in excess of N100,000 from tax, he contended that item 18(b) of the 3rd schedule to the PITA, CAP P. 8 LFN, 2011 (as amended) “has not been repealed and remains the extant law.”   Source: Investor King

The Lagos State Internal Revenue Service (LIRS) on 30 May 2019 issued a Notice informing the public of the new Tax Identification Number (TIN) which will be issued to every individual, registered business and incorporated companies. The issuance of the new TIN follows the deployment of a new tax administration system by the LIRS called the Lagos State Government Electronic Banking System (LASG-EBS) and the integration of the LASG-EBS Taxpayers Identification Digit (PID) with the Joint Tax Board (JTB) nationwide TIN. The new TIN which will provide individuals and companies access to the LASG-EBS will be biometric based and will also be linked to the Bank Verification Number (BVN) of the individuals or companies. Benefits The integration of the LASG-EBS PID with the JTB nationwide TIN and the subsequent issuance of a new TIN is expected to: Facilitate seamless sharing of taxpayer’s data with the JTB, State Internal Revenue Services and other stakeholders; Eliminate multiple payer IDs; Simplify registration of taxpayers; Encourage ease of doing business; and Reduce the cost of compliance borne by the taxpayer and the tax authorities etc. Requirements For Obtaining New TIN BVN validation is required for access to the LASG-EBS platform for all transactions including issuance of new TIN, payment of taxes, registration etc. All employers are therefore required to include the BVN of employees on their electronic tax clearance certificate (e-TCC) application forms before submission to the LIRS for processing. All self employed individuals are also required to provide their BVN to the LIRS. This would assist the LIRS in creation of the new TIN. Legal Basis For BVN Request Section 47 of the Personal Income Tax Act (PITA) 2011 gives the LIRS the authority to request for any information from any person for the purposes of obtaining full information in respect of his or her income or gain. The LIRS has assured taxpayers of the security of the BVNs in their custody in accordance with Section 48 of PITA 2011 which does not allow the LIRS to disclose such information except: In any legal proceeding arising from PITA; or To any tax authority ; or In accordance with any provision of an arrangement, with respect to taxes, made with any other country. Effective Date The LIRS is yet to announce the start date for the issuance of the new TIN as the merging of the LASG-EBS PID with the JTB’s TIN is still ongoing. However, taxpayers are required to start submitting BVNs immediately to the LIRS. Takeaway The move towards an integrated TIN is reflective of the government’s desire to ease doing business and also encourage federal and state authorities to collaborate more in order to ensure a more efficient and effective tax administration system in the country. The deployment of the LASG-EBS and the integrated TIN should provide a platform for proper and easy tax administration for the LIRS if properly implemented and will provide both the LIRS and taxpayers’ access to tax records and payments.   Source: Proshare

In line with its commitment to deepen the capacity and growth of businesses in Nigeria, particularly the Small and Medium Scale Enterprises (SMEs), First City Monument Bank (FCMB) will on June 26, 2019 host a seminar on tax matters in Lagos. The seminar, tagged, ‘’Tax Enforcement and Implications on Businesses in Nigeria’’, is aimed at equipping entrepreneurs with requisite knowledge on taxation by promoting the exchange of ideas between tax regulators and businesses on existing and emerging tax matters to ensure compliance and avoid sanctions. The one-day seminar would have in attendance SMEs operating in various sectors, including, trading, manufacturing, agribusiness, renewable energy, creative industry, digital technology, healthcare, schools and individuals running businesses in their personal names or accounts. The director of enforcement, Federal Inland Revenue Service (FIRS), Emeka Obiagwu would be the guest speaker at the event, the lender said. In a statement, FCMB said topical issues relating to the country’s tax system and laws as well as other fiscal policies that impact on the profitability and overall success of businesses would be discussed at the seminar by the guest speaker and other professionals. It would also provide an opportunity for entrepreneurs to understand their rights and responsibilities, especially as regards taxes, such as withholding tax and value added tax, among others. There will also be a session by FCMB Pensions Limited to enlighten participants on new pension initiatives in the country, the implications for SMEs and the attendant benefits. Responding to inquiries about the seminar, the Executive Director, Business Development of FCMB, Bukola Smith, reiterated that the commitment of the Bank is to go the extra mile in empowering businesses with relevant technical and financial know-how that would boost their performance and contribution to national development. ‘’As the dynamics of taxation continues to change in Nigeria, we recognise that many businesses, especially SMEs, in the country are not equipped with the requisite information and knowledge to discharge their responsibilities in this area appropriately. It is based on this reality that we decided to organise a seminar on tax matters, which will go a long way towards helping SMEs to understand taxation and the processes involved better’’. Smith added: ‘’As an inclusive lender that places a lot of importance on best practices, FCMB considers it imperative to ensure that our customers in the SME space conduct their businesses in a responsible, transparent manner and under full compliance within all applicable laws, rules, regulations and policies’’. First City Monument Bank (FCMB) Limited is a member of FCMB Group Plc, which is one of the leading financial services institutions in Nigeria with subsidiaries that are market leaders in their respective segments. Having successfully transformed to a retail banking and wealth management led group, FCMB expects to continue to distinguish itself through innovation and the delivery of exceptional services.   Source: Punch

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has stated that it has so far recovered the sum of N57.7 billion from Deposit Money Banks (DMBs) in its ongoing monitoring and verification exercise on tax collections by the financial institutions. The banks had been contracted by both the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) to collect revenues on their behalf. This is as the commission further has insisted that its current verification exercise on tax collections by banks was within its mandate as contained in Section 6(1) of the RMAFC Act, 2004. This section, according to the agency, provides that the commission shall have powers to among others, monitor the accruals to and disbursement of revenue from the Federation Account. The commission had come under criticism from a section of the public over the legality of the exercise. Nevertheless, the commission, in a statement issued by its Head, Public Relations, Ibrahim Mohammed, further explained that the sum of N48.7 billion had already been recovered and remitted into the Federation Account, while the balance of N9.07 billion, which related to withholding tax on dividend had been duly released to the benefitting states Boards of Internal Revenue (SBIR). In its previous exercise covering January 2008 to June 2012, RMAFC had announced the recovery of the sum of N4.2 billion from the banks, and had promised more recoveries. Following the subsequent approval by the National Economic Council (NEC), which launched the second phase of the exercise covering the period July 2012 to December 2015, the sum of N57.7 billion was reportedly recovered from the exercise. According to the statement, “It is worth clarifying that RMAFC does not deal with individual tax payers directly but monitors collections by collaborating with sister agencies like the Central Bank of Nigeria (CBN), Nigerian National Petroleum Corporation (NNPC), Department of Petroleum Resources (DPR), Nigeria Customs, and FIRS to ascertain how much was actually collected and remitted into the Federation Account so as to minimise revenue leakages. “It was not a tax authority but a revenue watchdog that monitors revenue collections by revenue generating entities like the FIRS, Customs, DPR, NNPC and others that remit directly into the Federation Account. The revenue streams that accrue into the federation account under the watch of RMAFC include tax (Withholding Tax and Vat), Royalties, Signature Bonuses, custom duties, tariff.” “In order to ensure transparency and accountability in revenue generation and remittance with a view to reducing revenue leakages, the commission seeks further collaboration and cooperation of revenue generating and regulatory agencies, anti-corruption agencies as well as the civil society and the media,” the agency explained.   Source: This days

The Nigeria Employers Consultative Association (NECA) has called on state governments to engage in an aggressive taxpayer enlightenment as well as expansion of their tax net to increase their Internally Generated Revenue (IGR). The call was made following President Muhammadu Buhari’s advice to State Governments to increase Value Added Tax (VAT) in an attempt to increase their IGR. NECA said that increasing VAT this time to increase IGR is not only misplaced but will further impoverished citizens that he promised to take out of poverty as well as do more harm to the already burdened private sector. Director-General, NECA, Timothy Olawale, who stated that the President meant well by urging state governments to be innovative in increasing their IGR, and at the same time prudent in their expenditures, also argued that state governments cannot unilaterally increase VAT without the amendment of the VAT Act at the National Assembly. According to him, it is the common man that will definitely be at the receiving end of any increase in VAT. Even if businesses are taxed more through likely illegal levies and rates outside the provisions of the law, they will naturally pass the cost to the customers whose purchasing power is already at the lowest ebb. Proposing a way out, Olawale said both the federal and state government must engage in an aggressive taxpayer enlightenment and expansion of the tax net to capture more citizens, stating that less than 40% of Nigerians are tax compliant.He suggested that the States should put mechanisms in place to eliminate leakages as a large chunk of the IGR realised does not find their way into government coffers. Olawale advised governors on reduction on cost of governance, while several unnecessary retinues of aides kept by them at prohibitive cost to the State are needless. “Besides, ingenious idea of corrupt practices in the name of security votes and frivolous foreign travels by State government functionaries are veritable examples of cuttings in avoidable expenses draining state government purses.”   Source: Guardians

President Muhammadu Buhari has given the 36 state governments a mandate to increase revenues in their respective States. Buhari also urged the governors to raise the Value Added Tax (VAT) without necessarily disrupting economic activities. Buhari, who spoke at the Presidential Villa in Abuja when he inaugurated the National Economic Council (NEC) for its 2019-2023 session on Thursday, also encouraged the governors to focus on providing infrastructure with a keen attention on education, agriculture and health. The NEC chaired by Vice-President Yemi Osinbajo, on behalf of the President, Buhari also advised the governors to work with federal agencies to achieve their targets. He said, “Going forward, states must in the next four years find ways to increase internally generated revenues, improve Value Added Tax collection and increase agricultural output without disrupting business activities. “I also want you to work with the federal agencies and the service providers in ensuring that broadband infrastructure is made available all over the country. Information and Communications Technology is the future of work and we must not allow ourselves to be left behind. “Let me restate the high expectations on NEC as a veritable source of articulating policies and programmes that are expected to drive growth and development, secure our environment and take the country to the next level. Your Excellencies, the challenges that confront us in the next few years, especially in the areas of security, human capital development and employment for our youths are monumental and historic. But we are more than equal to the task.” On security, be noted, “While the Federal Government has primary responsibility for security and will not shy away from it, the states also have a critical role to play; in particular Your Excellencies, as state governors. You can definitely make a difference, not just by assisting the security agencies in your respective states, but also by keenly pursuing policies and programmes that forestall communal, tribal, religious and societal conflicts; policies and programmes that promote education, information, dispute resolution, vocational training and youth employment. “I have no doubt that if these four areas – security, education, health and agriculture – are actively implemented and closely monitored by NEC and the Nigeria Governors’ Forum, we shall in the near future see a more peaceful and prosperous Nigeria.” He encouraged the governors to run an inclusive government which, according to him, would help achieve their goals.   Source: Ripples Nigeria

As part of efforts to strategically sanitize and coordinate the tax system of the third tier of Government in Uyo, the Chairman of Uyo Local Government Council, Elder Imoh Okon, on Wednesday, June 18, took to Akpan Andem Market to interact with Market Women. The Chairman, Uyo Local Government Council, Elder Imoh Okon, with traders. The council boss who was in the company of the Chairman of Akwa Ibom State Environmental Protection and Waste Management Agency, Mr Prince Ukim, and Council Supervisors: Hon Mfon Asuquo, Hon Linus Effiong among others, said that the interaction became necessary as a result of the feedback that have trickled in lately from a cross section of the occupants of the market about irregularities in toll payments. He further added that his administration is still committed to the placement of maximum premium on sanitation as it was when he took over office in December 2017, and advised the shop owners to make provision for waste bins and to ensure proper disposal of their baggage. In a related development, Elder Okon pledged to make a roster of every toll payable to the council coffers as a reference in the event of discrepancy. “I have spoken with a number of traders in this market in the last two hours of touring this market, and what is common in your speech is the sea of inconsistent figures as toll payment of which some have not shown evidence in form of receipts. I have taken note of the different categories of payment including security, sanitation and electric power tariff, and I will ensure that they are well gazetted and hung at every entrance of this market in a bid to completely tame the tide of conflicting figures in this tax system.” Speaking earlier, traders in the market took turns to eulogize Elder Okon’s developmental blueprint, describing it as a square peg in a square hole. The Local Government Chairman also gave out cash gifts to men, women and youths in the market.   Source: platinum