Tax news

CASH-STRAPPED councils should consider clobbering Brits with a local income tax to plug their multi-billion pound funding black hole, a respected think-tank today says. The Institute for Fiscal Studies said English town halls have had their funding slashed by a fifth in the past decade. The Institute for Fiscal Studies says local councils will face a funding gap of £2billion a year for social adult care by 2025. Council bosses have lopped 50 per cent of their housing and culture budgets as they scramble to slash costs. But they face a fresh crisis and a funding gap of £2billion a year for adult social care alone by 2025, the IFS said. The think-tank said ministers must consider handing councils new powers to levy their own, local income tax to stave off the crisis. IFS researcher David Phillips told The Sun: “Ministers can give councils a slice of the income tax they raise, then the central government would have to find new ways of raising revenue to make up the difference, like increasing National Insurance Contributions. “Or they can give councils the power to levy their own income tax.” He said different councils could set the tax at different rates, and offer different services. Some town halls could decide to set it low and offer no-thrills basic services to their residents like the airline easy jet. He said: “You could get so-called easy councils, which could set the tax rate low and offer only basic services.  “And you could get some councils that decide to set higher taxes so they can deliver more services.” But this could create a postcode lottery for services, he warned. The IFS said ministers face a big choice. Either they must give the green light to hiking taxes so councils get the cash they need. Or Brits must accept their councils will massively scale back what they do.   Source: The Sun

The Niger Delta Budget Monitoring Group and Oxfam International have urged the federal and state governments to intensify efforts in the collection of taxes from citizens. During a multi-stakeholder dialogue in Lagos, the Program me Officer, Public-Private Sector Transparency and Accountability Officer, Oxfam International, Henry Ushie, said that the government, both at the federal and state levels, had been soft on wealthy people in the society. In a statement, he said, “In retrieving taxes, I think the government has been soft on the rich but that is not the same with the poor. These rich people, including the multinationals, always find a way within the law to evade tax. “Our system also allows these big companies to operate for some years without paying a dime. It will not be wrong to say the government has not been proactive on tax collection.” While noting that the government had yet to explore all the avenues to retrieve taxes, he stated, “We have only explored 20 per cent of those who are taxable, which means 80 per cent is still untaxed. We should be able to bring these people into the tax net.” Ushie argued that if a person spoke with the Lagos State Internal Revenue Service or Federal Internal Revenue Service, it might say it did not have the manpower to go after people who evaded taxes. “But if we can harmonize our scattered database systems, we can track everyone who is taxable through their Bank Verification Number or other means,” he added. The Chief Executive Officer, NDEBUMOG, George Anthony, stated that it was the civic responsibility of every citizen to pay tax, regardless of how terrible a government could be. He explained, “Paying tax is the responsibility of every responsible citizen but people don’t have an interest in it due to the poor social amenities and the state of the economy. However, when you pay your tax, you have the moral right to demand effective service and accountability from the government.”   Source: Punch

The Managing Director of Bet9ja, Ayo Ojuroye, has argued that lottery business can boost Nigeria’s revenue. In a statement made available to newsmen, Ojuroye stated that the Nigerian State is already benefiting from lottery companies through the taxes and other levies paid to the government. To exemplify, he explained that Bet9ja pays all its taxes and levies because of its organizational belief in prompt compliance with every federal and state laws, as well as its adherence to international best practices when it comes to best corporate governance practice. Ojuroye maintained that for any country to grow, it must be able to generate income internally. This is important because it enables the government to meet its civic obligation of providing infrastructure such as roads, electricity, and water, among others, as well as meeting recurrent expenditure. Apparently, not only does the lottery business contribute to the Government’s revenue generation objective, it also “invariably contributes to curbing unemployment as opportunities exist in gaming such as odds makers, analysts, security, and cashiers, among others,” Ojuroye added. Government’s Taxation of Lottery Business: Recently, the Federal Inland Revenue Service disclosed plans to charge VAT on gaming activities, as well as automate VAT collection from lottery operators in Nigeria. According to FIRS’ Chairman, Mr Babatunde Fowler, the plan will see customers of betting customers pay five percent VAT on every transaction they make. This, therefore, suggests that not only would the Government be charging betting companies alone, it would also be charging its customer; thereby getting more revenue from the industry. Based on the foregoing, it may not be erroneous to conclude that the Government could be aiming to drive the country’s revenue generation through lottery.   Source: Naira metric

As the world business organization, the International Chamber of Commerce (ICC) promotes international trade, responsible business conduct, and a global approach to regulation. In today’s interconnected global economy, value added tax (VAT) has become an increasingly important source of revenue for countries worldwide. With more and more countries implementing or reforming existing VAT regimes, ICC has published the ICC International Best Practices and Guidance on Value Added Tax Implementation to provide a common roadmap for tax administrations and business before, during, and after VAT implementation. Above all, the ICC guidance stipulates that an efficient VAT regime ensures certainty, neutrality, simplicity, and cost effectiveness for both business and tax administrations. The consistency of national VAT laws with regional and global VAT regimes can help facilitate cross-border transactions and foster economic growth. By adhering to consistent standards, countries will safeguard VAT revenues for tax administrations and ensure a level playing field for business operating within their borders. The first part of the ICC guidance outlines general recommendations for government representatives involved in the design and implementation of VAT regimes. In particular, ICC calls upon government representatives to establish a collaborative partnership between tax administrations and business. This collaborative partnership involves establishing an ongoing dialogue between stakeholders working together throughout the whole design and implementation phase. ICC recommends strong communication measures, such as public consultations, as well as question and answer sections related to VAT regimes on tax administration websites. The ICC guidance also outlines key features associated with efficient VAT regimes, such as VAT refunds, VAT exemptions, registration for non-established entities, and free trade zones. With regard to importers and exporters, the ICC guidance provides specific recommendations for effective VAT processing. In particular, “the import of goods should be subject to postponed accounting with payment on the VAT return, rather than at the point of entry,” according to the ICC guidance. Other key features of an efficient VAT regime include registration for non-established entities and specific considerations for digital services. After considering the role of government, the ICC guidance also offers a VAT implementation roadmap for business representatives. From the perspective of business, the ICC guidance stresses that project planning, especially budgetary considerations, must be given early attention in order to secure the appropriate resources for VAT implementation. ICC emphasizes that proactive business engagement and involvement from the outset is essential. Based upon the nature of a transaction-based tax, VAT regime has a significant effect on organizations – all business functions are impacted. As part of the preparation process, the ICC guidance recommends that business conducts a detailed review of incoming and outgoing business flows, considers the legal implications of long-term contracts, and reviews employee benefits. By considering these aspects, business can adequately prepare for the implementation of VAT regime and institute a project plan. Given the wide organizational impact of VAT, the ICC guidance recommends that business create a well-defined step-by-step project plan to ensure adherence and avoid disruption. ICC considers VAT implementation to be a journey. There are many unknowns when the journey first begins, therefore preparations must start early in time to overcome later challenges and complexities. As more countries continue to consider VAT regimes, ICC will continue to review and update this guidance to provide government and business representatives with helpful recommendations for before, during, and after implementation.   Source: ICCWBO

A former Deputy Governor of the Central Bank of Nigeria, Obadiah Mailafia, has said that the Lagos State Government is using corrupt consultants to collect tax from the people. Mailafia, who described the act as daylight robbery, called on the people of Lagos to rise against such extortion and corruption. The former CBN deputy governor said this during an interview on Channels Television’s Sunrise Daily on Tuesday. Mailafa, who praised Lagos for being able to increase its Internally Generated Revenue, said there was room for doing things in a better, transparent and more effective manner. He lamented that tax consultants in Lagos receive as high as 20 per cent commission in some instances which was against the norm in other advanced climes. Mailafia said when the people see that their taxes are being put to good use, they would be willing to pay more hence the spike in IGR during the administration of former Governor Babatunde Fashola. The former CBN deputy governor said, “Lagos which was the poster child for success in internally generated revenue, still has a lot of issues there. I love Lagos but of course, Lagosians were very reluctant to pay more tax but when they realised Fashola was doing a lot of work, they were more than happy to pay. “But there is a problem. The cost of extracting this taxation is one of the highest in the world. They have invited very dubious consultants who keep between 15 to 20 per cent of this tax. I think it is a form of iniquity and I don’t know why for the life of me, Lagosians tolerate that nonsense. “It is their money and it is daylight robbery. Employ people, train them; let the government collect the tax, not private consultants. In France, there are schools dedicated to training people in public finance and tax administration. These are the people you should set about to collect your taxes, not some iniquitous and corrupt private consultants.” Several petitions have been submitted to the Economic and Financial Crimes Commission in the past detailing alleged fraud by some tax consultants in Lagos State. However, the EFCC has failed to invite anyone including the petitioners.   Source: Punch

A national consensus seems to have emerged that increasing the Value Added Tax (VAT) rate at this point will deepen the economic misery of the average Nigerian already overburdened by the yoke of broken social infrastructure. For the hard-pressed workers, such proposition will only mean that the government is desirous of retrieving with the left hand what it just gave out, albeit grudgingly, with the right hand by way of the recently approved minimum wage which many states may not even be able to pay.  Besides, government, at all levels, has failed to discharge their obligation in the social contract as can easily be seen in collapsed social infrastructure and worsening insecurity across the land. Given the foregoing, the only reasonable idea on the table is to widen the tax net. The idea becomes more plausible against the background of the latest reports by the Federal Inland Revenue Service (FIRS) that it has captured the identities of 45 million individual and corporate entities. The milestone was made possible by the resolve of the federal tax authorities to shift focus this year by putting more energy into the enumeration of taxpayers through TIN (Tax Identification Number) registration exercise. To achieve this feat, the FIRS had to synergies with other government agencies like the Corporate Affairs Commission (CAC), Nigeria Inter-Bank Settlement System (NIBSS), Nigeria Identity Management Commission (NIMC), Federal Road Safety Commission (FRSC), among others. This is partly a fulfillment of the original promise of the idea of having an integrated national database. Indeed, the imperative of having to explore other revenue sources cannot be overstated considering the perennial volatility of the oil price in the international market and the necessity to wean the nation of overdependence on oil revenue for sustenance. The urgency of this need will surely become even more manifest in the times ahead as the already financially stressed federal authorities grapple with the challenge of seeking funds to deliver on the approved N8.9 trillion budget for 2019 and the state governments having to shoulder additional financial burden arising from the new minimum wage of N30,000. It is commendable that the FIRS has been able to improve on its performance by automating its processes to not only cut operational costs but also curtail abuses, leakages and wastes in line with international best practices. We see this as one of the reasons for the steady growth in the national tax revenue in the past few years: from N3.3 trillion in 2016 to N4 trillion in 2017 and N5.3 trillion in 2018. What makes the rising graph quite significant is that it happened when the national economy was supposed to be contracting on account of the deleterious effects of the recession that hit the nation, from which it only began to show signs of slight recovery in the last quarter of 2017 after two years. With a unified database, we can only hope that the FIRS will address widespread complaints from the public against multiple taxation and arbitrariness of some of its officials. Added to this is an ethical issue. There have been complaints also by high net worth individuals of being slapped with arbitrary tax demands based on information obtained clandestinely from their bankers. Such complaints are quite legitimate. It is important that FIRS is mindful of such ethical issues while seeking to mobilize revenue for government to fund growth and development. According to the Manufacturers Association of Nigeria (MAN), widening the tax net will reduce the huge burden placed on the narrow tax compliant segments of the populace and corporate entities, many of whom are manufacturers.   Source: This days

When the ongoing integration of different biometric databases in Nigeria is completed, it is anticipated that the figure on the taxpayer database will grow to 45 million individuals, inclusive of corporate payers. In essence, the taxpayer database has expanded from 10 million that was inherited by President Buhari in 2015 to 35 million as at the end of 2018. Disclosing this at the quarterly world press conference held in Abuja, Mrs. Zainab S. Ahmed, Honorable Minister of Finance, said that through reforms at the Federal Inland Revenue Services (FIRS) and the Joint Tax Board (JTB), government have been able to harmonize the Tax Identity Number (TIN) database to cover Federal, States and LGs to establish a unified identity number system for uniquely identifying tax payers. Considering that revenue growth is a strategic priority for the Ministry of Finance, Ahmed further said that the Strategic Revenue Growth Initiative (SRGI), which was launched in Abuja Wednesday, January 23, 2019, is a key aspect of government strategy to improve Non-oil revenue through fiscal buffers, and ultimately improve the Revenue to Debt Service Ratio and to improve the ratio of Non-oil revenue to Non-oil GDP. “A set of initiatives have been itemized in the SRGI to increase the country’s revenues across all revenue types. This is to ensure that the whole of government is focused on revenue generation,” she stated. Among the initiatives in the SRGI is the National Single Window (NSW) which is expected to significantly improve the revenue performance of the Nigeria Customs Service (NCS) when implemented. Speaking further in an interactive session, the Honorable Minister said: “Four to five years after implementation we expect NCS revenue to double. This will come from the blocking of the leakages, improvement in the efficiencies in our ports and borders, the rehabilitation of scanners as well as the infusion of new scanners in the ports trading ecosystem, and it would also be due to increased rate of physical examination, reducing the physical examination to fasten the business of the ports.” The single window, according to her, would also help to bring to the barest minimum the issues of trade mis-invoicing, which is not only a drain on customs revenue but also a drain on tax revenues.  In the light of the above, the Federal Executive Council (FEC) approved Project Lighthouse, an initiative of the Ministry of Finance that uses Big Data Analytics and other advanced data mining technologies to better profile individual and corporate taxpayers. In her explanation, it was clear the data would be mined from various sources including lead registries, banks, the Corporate Affairs Commission (CAC), the Central Bank of Nigeria (CBN), the Federal Road Safety Corps (FRSC), among others. Ahmed also disclosed that all of these would be aimed at better identifying defaulting tax payers to optimize tax collections. Stating further she said: “Going forward, we plan to launch Project Lighthouse that seeks to use of big data analytics to provide intelligence to the tax authority on eligible tax payers and their real taxable incomes and assets. As we plan to roll out the IPPIS to all other MDAs in 2019 and optimize Government Integrated Financial Management Information System (GIFMIS), we are set for an improved PFM system that ensures an efficient and cost effective public service delivery for our citizens.” In addition to the mapped out initiatives, the Value Added tax (VAT) expansion programme is also ongoing and “this programme is designed to ensure that we improve collection efficiency whilst ensuring there is automation of VAT collection at source in some key sectors. FIRS has already begun VAT automation programme for Banks and other large industries. The target at improving the VAT collection, which was N148.92 billion as against the budgeted figure of N207.51 billion in 2018, also considers seriously the digitalization and transformation initiatives which are an integral part of the whole revenue collection efforts.” The entire effort is based on the fact that independent revenues are a critical part of the revenue mix of Nigeria. Though there is not yet optimal performance of independent revenue, but the Honorable believes there has been some improvements. The independent revenue that was generated in 2018 was N454.34 billion, this is against a budgeted figure of N847.95 billion, representing 54% performance. In 2017, actual independent revenue performance was 25% of the target.   Source: independent

The European Union (EU) Support to Federal Government Reform Programme (EU-SUFEGOR) spent a whooping €20m on varieties of reforms to deepen good governance in Nigeria. The Team Leader of the EU-SUFEGOR, Prof. Olaseni Akintola-Bello, said this in Abuja at the formal winding off of the five-year project. According to him, the Treasury Single Account (TSA), Integrated Personnel and Payroll Information System (IPPIS) and Bank Verification Numbers (BVN) among other policies are positive developments the country must strengthen and consolidate with others policies and strategies. He said the project was mostly implemented with the Bureau of Public Service Reforms (BPSR), Ministry of Budget and National Planning (MBNP), Office of the Head of Civil Service of the Federation (OHoCSF), Federal Inland Revenue Service (FIRS) and National Bureau of Statistics (NBS) under varieties of sub-projects. On her part, the Head of Section -Economic Cooperation and Energy, EU, Ms. Nadia Cannata, said the project has achieved high-level policy meeting on effective policy monitoring and evaluation for the development of a policy framework checklist. “There is the development of the medium term sector strategy (MTSS) through the provision of trainers, analysis of sector wide approaches in Africa and production of a citizen’s guide to the budget,” Cannata said. She said there was also the training of over 300 public servants in ICT capacity building. On his part the Acting Director-General, Bureau of Public Service Reforms (BPSR), Mr. Dasuki Arabi, represented by Head, Internal Audit of the bureau, Mr. Fola Ibn Aliu, said part of the achievement of the project was the production of up to date Compendium of Public Service Reforms for easy references for policy makers, apart from trainings and capacity building for over 600 public service officials. “It has also financed the production of an on-line self-assessment tool which has been found useful for assessing the management and organizational performance of public agencies,” Arabi said.   Source: Daily trust

Chartered Institute of Taxation of Nigeria (CITN), and the Association of Chartered Certified Accountants (ACCA), have signed a Memorandum of Understanding (MoU), on professional curriculum exchange and membership recognition between the two institutions. The pact will define how CITN and ACCA would collaborate to develop ACCA’s tax and law variants for Nigeria, and the basis of membership exchange between the two bodies. Speaking at a brief ceremony recently in Lagos, President and Chairman of Council, CITN, Cyril Ede, said the partnership would help the Institute and ACCA to understand the intricacies in taxation and accounting professions. Ede noted that the collaboration would look at areas of common interest, and would place CITN on an international sphere whereby knowledge of international tax and associated issues would be gained. “ACCA is a worldwide recognized body, not only in accounting but also in business matters. Our relationship with ACCA would be very beneficial to our members and also beneficial to ACCA.“We have pursued this matter vigorously since 2017 because this relationship would help us to widen the knowledge of taxation for more people to be involved in tax payment. Our main focus is to widen the people’s knowledge on taxation to know that it’s a compulsory responsibility,” he said. In his remarks, the Head, ACCA Nigeria, Thomas Isibor, noted that the collaboration between the two bodies was a milestone, as it shows the importance attached to partnership development. He said the partnership would aid the development of capacity in Nigeria’s the finance sector, as CITN and ACCA will bring together resources and help in building the sector. He said: “The benefit of this is on three layers: first is national, which is country wide, in terms of how we can support in developing the economy and wellbeing of Nigerians and also developing the professionals in the taxation and accountancy profession and also for members value. Meanwhile, the CITN has called on the government to put the right policies in place that will enhance investments in Nigeria’s economy, and promote voluntary tax compliance. Speaking at the 40th induction ceremony, Ede, said an inclusive economic growth of about five per cent yearly can be achieved by providing five million new jobs against the current unemployment trajectory. He maintained that the nation’s budget should detail a plan of action beyond the statement of incomes and expenditures, and fund infrastructural gap to boost Public Private Partnerships (PPPs), and concession arrangements for the proper operation and maintenance of public infrastructure. He charged the 560 inductees to uphold professionalism in their practice of taxation to avoid sanctions by CITN, and comply with the provisions of the charter, bear true allegiance, and promote the image of the institute. In his remarks, Chief Executive Officer, Gabe Fasoto and Co, Gabriel Fasoto, said taxation has always been a distinct profession from accountancy, and charged the inductees to maintain excellence in taxation practice and administration. “Taxation is not settlement; you need to equip yourself technically. Know the tax laws, jurisprudence, and global tax practice, and expand the frontier of tax knowledge rather than only the pecuniary interest,” he admonished.   Source: Guardian