Tax news

The power to levy tax in Nigeria, being a federation, is shared between the Federal, State and Local governments. To avoid double taxation, the tax system spells out which government unit (federal, state or local) has the power to levy tax on specific persons and matters. The Federal Inland Revenue Service Establishment Act 2007 provides in Section 25 that the Federal Inland Revenue Service (FIRS – primary tax agency of the federal government) shall have power to administer the following taxes: Companies Income Tax Act (CITA). Petroleum Profits Tax Act. Personal Income Tax Act (PITA). Capital Gains Tax Act. Value Added Tax Act. Stamp Duty Act. Taxes and Levies (Approved List for Collection). In Nigeria, CITA is applicable to companies registered under Part A of the Companies and Allied Matters Act 1990 while PITA is applicable to individuals and Business Names. For this discourse, our focus will be on PITA. PITA is the tax payable by all individuals, registered businesses and partnerships which are not companies. Part II of the Taxes and Levies (Approved list for collection) Decree No. 21 of 1998, LFN which is incorporated into the 2007 Act, provides that it shall be the sole responsibility of the states to collect all personal income tax in respect of ‘Pay As You Earn’ (PAYE) and Direct Assessment. The PAYE model is applicable to those in paid employment, while those in businesses carry out Direct Assessment and remit their taxes to the state. In effect, reading both legislations together ({Approved List of Collection} Decree No. 21 of 1998 and Federal Inland Revenue (FIRS) Establishment Act 2007), the FIRS have no authority to collect taxes from individuals, registered businesses and partnerships which are not registered companies, these falls under the remit of the state tax authorities.   Source: The Nigeria Lawyers

Farmers in the North-West geopolitical zone have recounted their ordeals following the increasing rate of banditry and kidnapping, saying bandits have resorted to taxing them before they can have access to their farms. They said apart from this, most of them have been forced to abandon their farms, adding that except something urgent was done to end banditry; food insecurity would be triggered in the country. For instance, in Zamfara State, farmers’ associations said bandits had resorted to taxing their members before allowing them to go to their farms.  The groups stated that in Kebbi State, the hub of rice farming, that 350 farmers, mostly rice cultivators, had abandoned their farms. They, therefore, warned that the increasing rate of banditry and kidnappings in the North-West geopolitical zone could affect food production in the area by over 50 per cent. Officials of the All Farmers Association of Nigeria and the Rice Farmers Association of Nigeria in separate interviews with the News Agency of Nigeria explained problems its members were facing. NAN also reported that 10,000 households, mostly peasant farmers, had been displaced in Zamfara State. 350 farmers abandon farms in six LGAs in Kebbi Also, the Secretary of AFAN in Kebbi State, Muhammad Idris, in an interview with  NAN in Birnin Kebbi, said, “Over 350 farmers have been affected as a result of banditry in Danko/Wasagu, Argungu, Yauri, Ngaski, Zuru and Birnin Kebbi local government areas. “Our members, especially rice farmers, have stopped going to their farmlands in those areas for fear of being kidnapped or killed. Rice farming is not like any other farming as it requires constant and close monitoring; you have to be closer and observant of how it grows and the level of water and all that, hence you have to be going to the farm everyday if not, it will not yield positive result,” he said. A farmer,  Garba Isah, in Gwadangwaji area of Birinin Kebbi, said due to rampant kidnappings he was unable to go to the farm for sometime out of fear, warning that the situation could trigger food insecurity. Many people in N’West have lost interest in farming – Kaduna AFAN chair Also, AFAN chairman in Kaduna State, Alhaji Nuhu Aminu, said many farmers had lost hope in their farming business due to security concerns in the North-West. “As I am talking to you now, those that are willing to go and cultivate their farmlands are not up to 30 per cent because of fear of kidnapping,” he said. Aminu added that in the last farming season, some farmers were unable to harvest their crops due to security problems. Some villagers in Giwa Local Government Area of the state said because of insecurity, farmers were no longer safe and free to cultivate their farms. A resident of Karau-Karau village in the local government, Mallam Ibrahim Musa, said, “Many of us cannot go to our farms for fear of bandits and this is our main business as villagers; kidnapping has become a common phenomenon in this area.” According to  NAN, villages affected by the activities of bandits in Giwa Local Government Area are Fatika, Sabon Sara, Kidandan, Galimawa, Gangara and Iyatawa. Bandits tax Zamfara farmers before allowing them to farm —RIFAN secretary It was a different case in Zamfara State. Farmers in the state chapter of RIFAN said they envisaged 50 per cent reduction in rice and other farm produce in the forthcoming farming season because of the activities of criminals.  The RIFAN Secretary in the state, Sanusi Muhammad, said there had been continued decline in agricultural production in the state over the years, which had worsened the poverty level of the people. He stated, “Most of our farmers cannot go to farms due to fear of bandits’ attacks and kidnapping. Bandits send messages of attack to communities or tax farmers large amounts of money before they allow them to go to farms. “Bandits are now the ones who decide whether we go to farms or not,  in some areas even if farmers plant crops they cannot cultivate due to insecurity. The situation is unfortunate; most of our members are victims of this ugly situation. “Most of the areas affected by insecurity are areas where we have large numbers of farmers. Some of our farmers producing thousands of bags of grains, not only rice, almost all the crops grow in this state now cannot produce even a quarter of the quantity of food they used to produce.”   Source: Punch

Chairman of the Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler, has dismissed reports suggesting that money paid as taxes was missing from the agency’s coffers. Fowler made the clarification in his office in Abuja yesterday. The clarification came in the wake of media reports alleging that taxpayers’ money in the custody of the agency was missing. The FIRS chairman explained that taxes collected by the FIRS were not paid into the coffers of the Service, but directly into the Federation Account, electronically, through the Central Bank of Nigeria (CBN). The FIRS, he further explained, does not have access to taxpayers’ money, adding that its operations are funded by appropriation of the national assembly through monthly remittances by the Federation Accounts Allocation Committee (FAAC). Over the last few weeks, there have been media reports around alleged exploitation of the Service’s accounting system on Duty Tour Allowance (DTA) by some staff to collect claims that they were not due for. This alleged infraction is said to be under investigation by the Economic and Financial Crimes Commission (EFCC), with some media outlets suggesting that the probe was into missing taxpayers’ money. Fowler explained that the issue at stake in this inquiry was related to operational/travel funds within the FIRS’ expenditure budget. “On the DTA (Duty Tour Allowance), it is claimed that some staff applied for and were granted allowances to travel on official trips. Some are alleged not to have travelled for the number of days for which they were slated. The EFCC is looking into that. Sometimes, it is good to have a third party investigate matters like this instead of having a staff investigate another staff. “Investigation by a third party is more objective. FIRS has since taken steps to remediate this. The EFCC will soon complete its investigation. Anybody found guilty will be dealt with through our administrative process,” said the FIRS boss. Fowler also stated that the agency has a relationship with the EFCC through which it combats tax evasion. “We have a relationship with the Economic and Financial Crimes Commission (EFCC). We have a partnership through which we combat evasion of taxes. People don’t want to get into trouble with EFCC. So, they pay on time,” he explained. Fowler added that FIRS acknowledges the statutory rights and responsibilities of anti-corruption agencies and other government agencies such as the EFCC, the Independent Corrupt Practices and Other Related Offences Commission (ICPC), State Security Services (SSS) to inquire into the operations of the Service. He promised that the FIRS would continue to give access to agencies with statutory rights and all those who seek information on its operations. He added that invitation of FIRS officials by the EFCC, Police, SSS and ICPC to shed light on financial transactions and operations of the Service were not uncommon and were continuous. Fowler noted that the FIRS is a public trust operated on behalf of Nigerians and affirmed that no officer of the Service was at large. The FIRS boss thanked all stakeholders, including the media, for their interest in the operations of the Service. However, he enjoined the media to always go the extra mile to ascertain the truth, particularly on sensitive financial issues where taxpayers and public trust  were at stake. He reassured the general public of FIRS’ commitment to public accountability and transparency in the sacred mandate of tax collection.   Source: Leadership

The Federal Inland Revenue Service (FIRS), on 30 April 2019, notified the public that it has introduced new measures to simplify and ease tax audit experience for all taxpayers. The new measures are intended to: Reduce tax audit cycle to 63 days Eliminate multiple tax audits by various tax authorities Facilitate a single tax audit exercise window for a taxpayer that operates in more than one tax jurisdiction within Nigeria In order to ensure that the above objectives are achieved, FIRS, various States Internal Revenue Service (SIRS) and Joint Tax Board (JTB) signed a Memorandum of Understanding (MoU). Understandably, the achievement of the 63-day cycle for completion of a tax audit exercise will depend largely on human factors such as; ease of provision of relevant documents by taxpayers, level of efficiency of the tax authorities during the review process and availability of the parties for reconciliation meetings to resolve the tax audit issues identified. Thus, it may be challenging or difficult to conclude some tax audit exercises within the recommended timeline above. Nonetheless, the recommended timeline sets a benchmark that tax authorities and taxpayers can work towards to ensure the speedy conclusion of tax audits. To ensure the objectives of the new measures are achieved, tax authorities may also consider simplifying tax audit selection procedures and adopting a risk-based approach to tax audit exercises. Further, while there are no indications on the required steps to reduce the audit completion cycle, elimination of multiple tax audits would go a long way in reducing the time spent by taxpayers. With respect to elimination of multiple tax audits, the FIRS Notice requires a taxpayer that operates in more than one tax jurisdiction within Nigeria, to apply for a joint tax audit through JTB, or the Office of FIRS’ Executive Chairman, or the Office of the Chairman of the relevant SIRS where the taxpayer’s head office is domiciled. This initiative is a welcome development and a step in the right direction in addressing taxpayers’ clamour for elimination of multiple tax reviews and audits to ensure efficient use of resources of both the tax administrators and the taxpayers. It remains to be seen, how the MoU would play out. It would be recalled that FIRS signed MoU with SIRSs during the Voluntary Assets and Income Declaration Scheme (VAIDS). However, the aftermath of VAIDS was greeted by conflicting tax audits/reviews by SIRSs, which included years already covered under VAIDS, for which a taxpayer had already made a voluntary declaration. It is hoped that the MoU would be upheld to ensure that the above objectives are met.   Source: Deloitte

The Economic and Financial Crimes Commission (EFCC) has launched a probe into the activities of some staff of the Federal Inland Revenue Service (FIRS). Babatunde Fowler, FIRS chairman, confirmed the development to TheCable on Wednesday saying the probe borders on alleged cases of irregularities concerning duty tour allowance (DTA). “On the DTA (Duty Tour Allowance), it was claimed that some staff applied for and were granted, allowances to travel for official trips. Some are alleged not to have travelled for the number of days, for which they were slated. The EFCC is looking into that,” he said. “Sometimes, it is good to have a third party investigate matters like this instead of having a staff investigate another staff. An investigation by a third party is more objective. FIRS has since taken steps to remediate this. “The EFCC will soon complete its investigation. Anybody found guilty will be dealt with through our administrative process.” Fowler also dismissed claims that taxpayers’ money has gone missing. He explained that all taxes are paid directly into the account of federation account through the Central Bank of Nigeria. “The FIRS does not have access to taxpayers money. Its operations are funded by an appropriation of the national assembly through monthly remittances by the federation accounts allocation committee (FAAC),” he said. Fowler added that FIRS acknowledges the statutory rights and responsibilities of anti-corruption agencies and other government agencies such as the EFCC, the Independent Corrupt Practices and Other Related Offences Commission (ICPC), State Security Services, SSS to inquire into the operations of the Service. The FIRS chairman promised that FIRS would continue to give access to agencies with statutory rights adding that invitations of officials of the service by EFCC, the Police, SSS and ICPC to shed light financial transactions are not uncommon.   Source: The Cable

The Chairman of the Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler, has dismissed reports suggesting that money paid as taxes is missing from the agency’s coffers. Fowler made the clarification in an interview in his office in Abuja, yesterday. The clarification came in the wake of media reports alleging that taxpayers’ money in the custody of the agency is missing. The FIRS chairman explained that taxes collected by the FIRS are not paid into the coffers of the agency, but directly into the Federation Account, electronically, through the Central Bank of Nigeria (CBN). The FIRS, he further explained, does not have access to taxpayers’ money, adding that its operations are funded by appropriation of the National Assembly through monthly remittances by the Federation Accounts Allocation Committee (FAAC). There were reports of alleged exploitation of the agency’s accounting system on Duty Tour Allowance (DTA) by some staff who collect claims that they are not due for. This alleged infraction is said to be under investigation by the Economic and Financial Crimes Commission (EFCC). However, some media outlets have reported that the probe was into missing taxpayers’ money. But Fowler explained that the issue at stake in this inquiry is related to operational/travel funds within the FIRS’ expenditure budget. “On the DTA (Duty Tour Allowance), it is claimed that some staff applied for and were granted allowances to travel on official trips. Some are alleged not to have travelled for the number of days for which they were slated. The EFCC is looking into that. Sometimes, it is good to have a third party investigate matters like this instead of having a staff investigate another staff. Investigation by a third party is more objective. FIRS has since taken steps to remediate this. The EFCC will soon complete its investigation. Anybody found guilty will be dealt with through our administrative process,” said the FIRS boss. Fowler also stated that the agency has a relationship with the EFCC through which it combats tax evasion. “We have a relationship with the Economic and Financial Crimes Commission (EFCC). We have a partnership through which we combat evasion of taxes. People don’t want to get into trouble with EFCC. So, they pay on time,” he explained. Fowler added that FIRS acknowledged the statutory rights and responsibilities of anti-corruption agencies and other government agencies such as the EFCC, the Independent Corrupt Practices and Other Related Offences Commission (ICPC), and the Department of State Services (DSS) to inquire into the operations of the agency. He promised that the FIRS will continue to give access to agencies with statutory rights and all those who seek information on its operations. He added that invitations of FIRS officials by the EFCC, Police, DSS and ICPC to shed light on financial transactions and operations of the agency are common and are continuous. Fowler noted that the FIRS is a public trust operated on behalf of Nigerians and affirmed that no officer of the Service is at large. The FIRS boss thanked all stakeholders, including the media, for their interest in the operations of the agency. However, he enjoined the media to always go the extra mile to ascertain the truth, particularly on sensitive financial issues where taxpayers and public trust are at stake. He re-assured the general public of FIRS’ commitment to public accountability and transparency in the sacred mandate of tax collection.   Source: This Days