Tax news

The Rivers State Internal Revenue Service said on Monday that it would soon begin to collect taxes from roadside traders and others from the informal sector in the state. Chairman of RIRS, Adoage Norteh, who disclosed this to newsmen in Port Harcourt, explained that the agency was planning to meet with various trade groups, including transporters and petty traders, to sensitise them on the decision. Norteh pointed out that the agency would collaborate with the Ministry of Transport, Ministry of Environment, State Waste Management Agency and other relevant agencies, in order to actualise the new tax plan. He insisted that collecting tax from roadside traders and others in the informal sector would not amount to double taxation and added that no trader would be harassed as hoodlums would not be allowed to be part of those on tax drive. He said, “The idea of this meeting this morning is to unveil the new tax plan that we intend to carry out. It is not like we are not continuing with what we are doing, but we are going to face the informal sector. “The informal sector is where most of these people that do not have organised businesses belong. The challenge we have had in our system is that not a lot of persons understand what tax is. “People think that tax is for some people, especially those who are working. For those who work in the media, your tax is deducted when your salary is being paid. But for the person who is in the informal sector and makes more money than those working; he thinks he should not pay tax. “The other part is that there is a lot of confusion over what is a tax and a levy. If you have to pay something for putting your store somewhere, that is not a tax; that is a levy. If you like, call it dues for putting your store there. Describing multiple taxations as a thing of the past in Rivers, Norteh noted that the state would never engage in multiple taxations. “There is a lot of noise about multiple taxations. In the Rivers State Revenue Service, we don’t engage in multiple taxations. “Multiple taxations have become a thing of the past since we came on board. We insist that people should not be harassed provided they do the right thing,” the RIRS chairman added.   Source: Investor

The Federal Government on Monday said the new Tax Identification Number Registration system would boost the total number of taxpayers in the country to about 45 million. Mr Oseni Elamah, the Executive Secretary, Joint Tax Board, disclosed this during the presentation of the new TIN registration system report to the Executive Chairman of the Federal Inland Revenue Service, who also doubles as JTB Chairman, Mr Tunde Fowler. Elamah attributed the improvement to the collaborative efforts between the JTB and the State Internal Revenue Services. He said the integration of the databases across government organisations in the country would raise the number of individual and corporate taxpayers to around 45 million. The total number of taxpayers in the country was put at 19 million as at the end of December 2018. He further revealed that the JTB new TIN Registration System, which is an integration of TIN numbers of various organisations would help enhance the organisation. He said, “The registration and recording of taxpayer information is one of the fundamental functions of tax administration and to a great extent, this will drive how other core administrative functions operate. “The timely and accurate collection and recording of basic identifying information of the taxpayer will permit the tax administrator to understand its taxpayer base, the staff itself accordingly and to effectively plan other core administration functions. “The existence of an accurate taxpayer database will inevitably lead to effective compliance programmes observation.” According to the board, the new TIN system leveraged on existing database of taxpayers from organisations such as banks through the Bank Verification Number, National Identity Card Management Commission, Corporate Affairs Commission and others. Speaking on the new TIN system, Tunde Fowler, said the new system would ease the process of payment for taxpayers. He said, “When the integration of the new TIN Registration System is launched, it will afford prospective taxpayers the opportunity to register for tax from the comfort of their homes and print their registration certificate. “We now have a consolidated database for all taxpayers in Nigeria. If a taxpayer goes to any other country or visit another state in Nigeria and they want to check your tax status, what this means is that they can check your tax status by a touch of a button. “We want to assure all taxpayers that we are ready to serve them more with technology, convenience and accountability.”   Source: Investor

Maybe, you know the poem, “For want of a nail, the shoe was lost; for want of a shoe, the horse was lost; for want of a horse, the rider was lost; for want of a rider, the battle was lost; for want of a battle, the freedom was lost; and all for the loss of a horse shoe nail.” If so, you might appreciate the disincentive that may be inflicted on the Federal Government’s export promotion drives if delays in the processing of the Export Expansion Grant available to a certain category of exporters continue. Qualified beneficiaries get a Debt Management Office promissory note of a maximum of 15 per cent of the value of their exports, which they can use “to pay all taxes, (including company tax, and value added tax, but excluding personal income tax), (and) offset government loans (from government agencies like Bank of Industry, Central Bank of Nigeria, and the Nigeria Export-Import Bank).” The EEG promissory note can also be applied “to buy government bonds; (and settle indebtedness to the Federal Government’s) Assets Management Company of Nigeria.” A beneficiary can take 100 per cent of the grant at a go. To qualify for this rebate, beneficiaries must have “registered with (both) the Corporate Affairs Commission and the Nigeria Export Promotion Council; exported Nigeria-originated products or services; and carried out formal exports with repatriation of proceeds into (a) Nigerian bank account with confirmation by the CBN.” The intention of this scheme is to cushion the effect of infrastructure deficits which tend to increase overall unit costs of manufactures in Nigeria. It is a non-cash scheme that is operated via the Negotiable Duty Credit Certificate, or promissory note. The advantage of non-cash promissory note that is acceptable to government agencies is that, whereas government will not have to pay cash, the promissory note can be used to offset payments, like tax, due to government. The note is negotiable because it is transferable to third parties. So, beneficiaries can assign the instrument to their creditors, who can also use it to offset statutory payments to government agencies. When used to offset tax, it becomes a fiscal policy. It is truly a win-win for government, the beneficiaries, and the economy. Another advantage of the scheme is increased foreign exchange earnings, which translate to conservation of Nigeria’s foreign reserves. The EEG was introduced in 1986, via the Export Incentives and Miscellaneous Act, to diversify Nigeria’s export base from crude oil, to non-oil products, especially in the agricultural and allied sub-sector of the economy. Maybe, as a result of abuse, the scheme was suspended by the President Goodluck Jonathan government in 2014. But the President Muhammadu Buhari Administration reinstated it to diversify the export base of Nigeria. There are allegations that there are challenges in granting rebates that the National Assembly has approved for qualified exporters and beneficiaries of the statutory EEG that is domiciled in the Nigeria Export Promotion Council. In the manner of a man finding the easiest way to take a bull round a china shop without breaking the wares, Segun Awolowo, Executive Director of NEPC, noted that the National Assembly approved the first batch of promissory notes for the export grant in January 2019. He then tippy-toed to find a nice, non-threatening, way to appeal to the DMO “to ensure the completion of the programme within the shortest possible time,” before the next batch of authorizations is processed for approval by the National Assembly. He revealed that the claims cover “backlogs of 10 years (2007 to 2016) for 270 companies, with a total value of… N195,089,234,808.64, (which he believes), will bring succor to the export sector in particular, and the economy in general.” The estimated amount outstanding is N1.3trn. Awolowo added that Pre-Shipment Inspection Agency and Nigerian Bureau of Statistics figures indicate that “there was a growth of 48.43% from $1.204billion in 2016 to $1.787billion in 2017, (in Nigeria’s export business, and) it further went up by 27.22% equivalent to $2.274billion in 2018.” He is hoping “that exports for 2019 will grow by about 40 per cent,” if promissory note settlements are done early enough. But it looks as if something or somebody is holding up the process. The DMO is allegedly shifting the goalpost of the EEG by introducing what it calls Reverse Auction, which simply means that the beneficiaries have to yield a discount on their accumulated promissory note rebates. Traditionally, Reverse Auction occurs when several sellers submit increasingly lower bids to one buyer, instead of the other way round, where several buyers submit increasingly higher bids to one seller. This was not originally on the cards, and the beneficiaries claim that the Reversed Auction will affect their cash flows, and compromise their capacity to service debts incurred in the export transactions. Some tax experts regard this as an indirect tax, and added to the multiple taxation suffered by Nigerian businesses. The beneficiaries had worked with the figures that the DMO now wants to fiddle with, and lament that it may discourage the export promotion drive of the Federal Government. The DMO doesn’t seem to have said much to clarify its position. As you already know, the EEG is the NEPC’s way of supporting “active exporters (in) expanding their international business… through exports of existing products in new and current markets. It is essentially a post-shipment incentive designed to expand the volume of export goods and commodities, other than crude oil, and improve global competitiveness of Nigerian products.” Even though the scheme is a programme of the Federal Government of Nigeria, it is also supported and co-funded by the European Union and the United Nations Industrial Development Organization. The scheme resonates with the Economic Growth and Recovery Plan of the President Buhari government, which is to “accelerate non-oil revenue generation (for the government and people of Nigeria).” The ERGP’s broad objective is “to tackle the obstacles hindering the competitiveness of Nigerian businesses, notably poor or non-existent infrastructural facilities and the difficult business environment. It

A Rivers State High Court has ruled that the Niger Delta Development Commission (NDDC) is indebted to the Rivers State Board of Internal Revenue to the tune of N50billion for refusing legal taxes between 2012 and 2017. Ruling on SUIT NO. OHC/23/2019, Justice Sobere Biambo of Rivers State High Court, Omoku approved the sealing of the NDDC Office and other legal actions that will lead to the recovery of the N50billion debt. The Court ruled: “The respondent is indebted to the applicant to the tune of N50,000,000,0000 (Fifty Billion Naira) only being outstanding tax liability owed the Government of Rivers State by the Respondent with respect to PAYE, Withholding Tax (WHT) and other taxes unpaid for the period, 2012 – 2017. ” A warrant be and is hereby issued authorizing the applicant to levy distress and distrain any land and or any other property howsoever described belonging to the respondent and to execute same in order to recover the said some of N50,000,000,000 (Fifty Billion Naira) only owed Government of Rivers State by the respondent”. In an interview on the ruling and sealing up of NDDC, Chairman of the Rivers State Board of Internal Revenue Service, Mr Adoage Norte explained that the Revenue Agency is following due process to recover the said funds. He argued that there is no political undertone in the move to recover the debts as all necessary actions were taken, while the NDDC has refused to respond. Norte said: “That tax we are talking about here is not profit tax, it is not that they made profit and they should pay tax, it is not that they are given allocation and they should pay tax,this is tax they already deducted from their own staff who are working and residing in Rivers State as well as tax they deducted from contractors and vendors. “These taxes they have collected on behalf of the Rivers state government is what we are asking for. NDDC has never opened their books, anytime you come there, they will tell you their auditor general of the federation is doing records, is doing book and all of that. Out of this frustration, we decided to send them a BOJ assessment, BOJ assessment means that since we are not able to get the assessment, I am now as a tax administrator saying I assume they are owing so much. If you know it is too much, open your record let us examine it . “And if you are also going to object to that N50b which the law also allows you to, your objection must meet a threshold. For example, we are not owing N50b , we owe only so much and here is how we arrived at that so much. You must back it up with evidence”.   Source: Puoreports

THE Tax Appeal Tribunal sitting in Abuja, on Wednesday, fixed May 14 for definite hearing in a suit filed by a company, “M FIFTEEN” Consultants against the Federal Inland Revenue Service (FIRS). The company also dragged the FIRS, before the Tax Appeal Tribunal sitting in Abuja over alleged double taxation. Also joined in the suit are the Independent Electoral Commission ( INEC) and the Nigeria Police. The company, said it was dissatisfied with the FIRS assessments of it’s Tax Liability. The tribunal presided over by Mrs Alice Iriogbe, adjourned after the appellant counsel, Mr Chike Adaka informed the tribunal that his witness took ill and could not be in court. The counsel to FIRS Mr Ade Ogunmola told the tribunal that while the respondent sympathises with the appellant’s witness but objected to what he called ‘sheer display of unseriousness of the appellant. Ogunmola, the counsel ought to have notified both the court and the respondent and there was no medical report against that before the tribunal. He further told the tribunal that in view of that he would ask for a cost of N50, 000 which the tribunal rejected saying that it does not award costs for now. NAN reports that the company specifically said that it was dissatisfied with an intent letter by the FIRS imposing a tax liability of N14.662 million on it without due consideration of all the material and available facts. The company further stated that the N7. 9 million captured as part of the tax liability have already been deducted at source by the FIRS and the police from the contract sum of the appellant. The company argued that it would amount to double taxation if FIRS expected the appellant to pay same again. It therefore sought the order of the tribunal to declare as null and void, the intent letter by FIRS dated April 7, 2014. The company also sought an order of the tribunal directing INEC and the Police to show evidence of remittances to FIRS of the sums deducted from the payments made by the appellant in respect of contract executed. The appellant also asked the tribunal to direct that ,credit should be given to the appellant in respect of the tax deductions made on payments due to it from the INEC and the Police totaling N7. 9 million. The company further sought an order directing FIRS to issue it a tax clearance certificate which was withheld for the 2006 to 2011 year of assessment. (NAN)   Source: Real news

The owner of Italian fashion giant Gucci is set to pay a record fine of nearly 1.5 billion euros ($1.7 billion) in a tax evasion case, according to media reports Friday. “Lawyers are still negotiating with the tax authorities over a few hundred million euros, but the fine that the (French luxury) Kering group is about to pay is the highest (in Italy),” the La Stampa newspaper said. “It’s a cheque for nearly 1.5 billion euros,” it added. It follows a probe by Milan’s public prosecutor into the fashion house on suspicion of declaring several years worth of Italian sales in Switzerland, thereby saving around 1.3 billion euros in domestic tax. Kering is expected to sign an agreement on the amount due on May 2, according to the financial newspaper Il Sole 24 Ore. “At this stage, no agreement has been reached on any specific amount,” the French group told AFP.   Source: Punch

The Chairman and founder of Heirs Holdings, Tony Elumelu, has said that an average business concern in Nigeria pays 48 taxes. He noted that with this trend Nigeria would be unable to keep its investors and entrepreneurs if the issue of multiple taxation was not abolished. He said this in Abuja on Thursday while delivering the keynote address at the 21st annual tax conference of the Chartered Institute of Taxation of Nigeria. While he called for a far-reaching tax reforms and an urgent need to pass the executive tax bill, he decried the plight of the average Nigerian entrepreneur, saying that an average business was a local government authority providing his own electricity, water and waste disposal method. According to The Cable, he said the government should make life easier for Small and Medium Enterprises by creating favourable tax policies that will support them. He called on the government to eliminate the regime of multiple taxation. He said, “Until there is a reduction in what SMEs pay as tax, elimination of multiple taxation, the abolition of minimum income tax and excess dividend tax, it will be difficult for us to attract investors into this country, and it will be difficult for us to retain the ones already in the country. It will be difficult for us to mobilise our SMEs to help create employment that we need so much in this country.” “The average number of taxes businesses pay in Nigeria is 48, compared to 33 in other sub-Saharan countries. In Hong Kong, it’s just three. Multiple taxation remains a significant burden for SMEs and corporates operating in the country. “With a population of close to 200 million people in Nigeria, we have only 75,000 registered SMEs in the country. No one needs to tell us that people are avoiding tax or refusing to be a part of the system.” According to the Heirs Holdings chairman, to increase the tax to GDP ratio from its current six per cent to 16 per cent will amount to an additional $40bn in government revenue, which is similar to the size of the nation’s foreign reserves. He said, “Government should drive mass mobilisation of citizens – let citizens know why they need to pay taxes and give them the assurance that their tax will be properly utilised.” “Government should employ the use of smart tax incentives to attract and incentivise local and foreign investors. “Nigeria has 14 taxation treaties while a country like South Africa has 79 double taxation treaties, and we are the largest economy in Africa. Our embassies should adopt a target in the next two years to sign tax treaties with our top 100 trading partners in the world.” Also, the Chartered Institute of Taxation of Nigeria said there was the need for an amendment of the country’s tax laws in order to address some of the loopholes in the tax system. It said while the dynamic nature of the economy had made it imperative for the nation’s tax laws to be amended annually, it was almost eight years now since Nigeria last amended its tax laws. The last time the country’s tax laws were amended was in 2011. The Vice- President of the Institute, Mrs Olajumoke Simplice, urged the National Assembly to pass the tax amendment bill into law without further delay. The conference which is the single largest gathering of tax practitioners in Nigeria has ‘Unlocking the potentials of taxation,’ as its theme. She expressed optimism that the new tax amendment bill when passed into law would encourage more people to pay tax. She said, “The National Assembly is not helping in the development of the nation. Certain things should be considered as priority. Taxation is a dynamic thing. “There should be amendment of the tax laws every year but the last time there was amendment of tax laws in Nigeria was in 2011. They should put their personal interests aside and approve the bill. Nigerians should be encouraged to pay tax.”   Source: Punch