Tax news

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

The Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) on Thursday commended the Federal Government for the removal of Value-Added Tax (VAT) on locally sourced Liquefied Petroleum Gas (LPG). The NALPGAM President, Mr Nosa Ogieva-Okunbor, said on Thursday in Lagos that the Federal Government had approved the removal of VAT on LPG and gazette the same. According to him, the clamor for VAT removal from domestically produced LPG, otherwise known as cooking gas, has been of perennial concern to members of the association. “We express our profound gratitude to the Federal Government and all relevant government agencies for listening to our plea to remove VAT from LPG products sourced locally. “We also want to use this opportunity to thank and appreciate the Department of Petroleum Resources (DPR) for its timely directive stopping the inappropriate and indiscriminate installation of skid plants in petrol stations,’’ Ogieva-Okunbor said in a statement. He said the directive that all skid plants in filling stations be dismantled and removed was apt, considering the huge danger they constitute to the public in the operations. He appealed for a proper and thorough implementation of the directive across the country. The NALPGAM boss urged government to create a more conducive and enabling environment for investors in the industry, particularly now that deepening the consumption of LPG in the country had become one of its major interests. He said marketers were also geared toward ensuring the success of the programme by complementing government’s efforts. “We appeal for a reduction on the import duty on LPG equipment and accessories. “The increased awareness of LPG usage has seen consumption in Nigeria growing from 50,000MT in 2007 to over 600,000MT in 2018 with more indigenous investments in LPG bottling plants. “This will further ensure that majority of Nigerians enjoyed the convenience of the proximity of LPG refill or exchange points. “We implore the federal and state governments to initiate a well-funded social welfare programme to expand the usage of LPG,’’ the NALPGAM boss said.   Source: Leadership

Indigenous airlines have been told to take the prompt payment of their charges to respective aviation agencies as a top priority in order for the industry to witness the expected growth. Grp. Capt. John Ojikutu (rtd), the Chief Executive Officer (CEO) of Centurion Aviation Securities in an interview with our correspondent in Lagos, said that aeronautic charges and payment of Value Added Tax (VAT) were not the challenges hindering growth of the airlines as claimed in some quarters. Rather, he said that most of the airline operators did not prepare sufficiently for the financial commitment of their business and responsibility before venturing into the sector. Onjikutu posited that the manner of their entries, exits and lifespan showed that many of them did not include in their business plan, the aeronautical charges and taxes as contained in the economic regulation of the Nigerian Civil Aviation Regulations (NCARs). He explained that none of the airlines in the sector airlifts passengers on credit and wonder why they could not remit to the appropriate authorities sums collected from passengers on behalf of the agencies. “Generally, they sell cash and carry tickets not on credits, but owe recurring debts to the services providers and staff salaries in multiple arrears. There were records of some of the airlines collapsing within five years of their entry into operation.  “Some others had to appeal for government intervention funds to bail them out of debts from bank loans and recurring, debts from the various aviation services providers. “Many did not plan their flight operations beyond five airports, but were operating to 10 airports or even more without including the costs into their expected earnings. Others expanded their operations to airports that are not sufficiently equipped to support flight operations beyond daylight or sunset.” He insisted that the issue of multiple taxes as claimed by the airlines were spurious as they were not taxes only, but charges, which were not imposed on the airlines alone, but also on other operators, services providers, allied businesses and the passengers. He explained that there were about 38 taxes and charges, but only 11 of these were charges on the airlines. He emphasised that for the airlines, only VAT was a tax; four were statutory charges, two were non-statutory charges, while four others were operational support or services charges. He added that two out of these were optional, while the remaining 27 were charges on other operators not the airlines.   Source: Independent

The Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, has restated the agency’s commitment to eliminating multiple taxation in the country. Fowler said this at a tax breakfast seminar with the theme: “Tax Controversy and Dispute Resolution,’ organised by KPMG Nigeria in Lagos, recently. According to him, one thing the FIRS did when it initiated the ongoing tax reform was to sign a memorandum of understanding (MoU) with the State Internal Revenue Agencies to streamline tax payments. He explained: “We see things changing this year and I hope that the corporate body would take advantage of this opportunity. “This simply says that if you have businesses operating in more than one state, instead of having five State Internal Revenue Services and FIRS coming to check your books, you can do it at one stop. “You inform the committee, they look at your books and each state would get what is due them and of course the FIRS. He listed some of the issues that cause dispute in terms of tax payment to include income tax, Value Added Tax holding tax in the country. According to him, defaulting in tax payment is one of the reasons for controversies and dispute. He said the decision by the agency to place a lien on defaulting taxpayers with bank accounts with turnover of N100 million and above annually, for over three years was in order. “I don’t really think there should be much concern when you are talking about disputes in this respect. That is because 99 per cent of all these accounts do not even have a tax identity. Without a tax ID at the FIRS level, you can’t make tax payments. “These businesses had collected VAT, they had deducted withholding tax and didn’t file any returns nor did they make any tax payment. So, when we are talking about a dispute here, I think it is an open and closed case,” he added. Continuing, Fowler said: “Some of the reasons for these controversies basically might be wrong computation of taxes, misinterpretation of some section of tax laws and audits and the issue of double taxation. “On the issue of double taxation, politically, the states believe that they have the right to impose sales tax, whereas some people feel VAT should be a federal tax, which the states do share from that revenue. And i think that was the only area in Nigeria where we had an issue of double taxation.” Fowler further noted that one of the reasons for low tax collections, not just in Nigeria, but the entire Africa, was the over-reliance on income from natural resources over the years. “If you look at Nigeria as a country, nobody has been sent to jail for criminal charges when it comes to taxation, because when you file the return which is four times it becomes a criminal case at the same time at the state level the same applies.   Source: This Days