Tax news

The Edo State Internal Revenue Service has commenced aggressive tax enforcement exercise to collect revenue owed the state government. In a statement signed by its Executive Chairman and Chief Executive Officer (CEO), Mr Igbinidu Inneh, the tax agency advised members of the public to take note of the commencement of the exercise and make sure to settle all their tax liabilities to avoid sanctions. According to him, “This is to notify the general public that the Edo State Internal Revenue Service has embarked on an aggressive Tax Enforcement exercise of all Revenue owed Edo State Government, particularly Income Taxes, Consumption Tax as well as Road Taxes.”  “By this notice, the general public is advised to take note and settle all their tax liabilities to avoid sanctions,” he added.   Source: Vanguard

Nigeria is seen generating $13 billion in additional tax revenue if she could digitalise her identification programmes. This is according to a new McKinsey Global Institute report, which claims that high adoption of digital ID with the right principles can help unlock 3 percent economic value equivalent of GDP in advanced economies and as much as 6 percent in emerging economies on average. The report, which offers a framework to understand the potential economic impact of “good” use of digital ID, analyzed nearly 100 ways in which digital ID can be used, with deep dives into seven diverse economies: Nigeria, Ethiopia, Brazil, China, India, the United Kingdom, and the United States. “We estimate that Nigeria could use digital ID to expand the tax base to include informal income and reduce fraud and errors in tax filing to generate more than $13 billion in additional tax revenue. Nigerians could save 1.8 billion hours annually from efficient services that reduce the need for travel to and from government offices and filing of physical paperwork,” said Fiyinfolu Oladiran, a McKinsey partner. Eyitope Kola-Oyeneyin, Nigerian-based Partner at McKinsey equally said the Digital ID potential for Nigeria is significant and that based on MGI estimates, Nigeria could capture economic value equivalent to 5 to 7 percent of GDP by 2030 from greater formalization, fraud reduction, increased tax revenue, and financial inclusion. “Scaling Digital ID in Nigeria has to be a top priority for enabling inclusive growth,” he said. Around the world, governments and businesses are implementing digital identification programmes with mixed results and adoption levels. Yet when carefully designed, “good” use of digital ID programs can help people participate more fully in their economy and society, which can create enormous economic value and inclusive growth, the report said.  “We find that three-quarters of the potential economic value of digital ID could accrue to individuals in Nigeria, making it a powerful key to inclusive growth, while the rest flows to private-sector and government institutions,” said Rogerio Mascarenhas, managing partner of McKinsey’s Nigeria office. He added that the largely informal and self-employed workforce skews the overall benefits of digital ID toward individuals, who could receive 74 percent of the total overall value. He started that Nigeria’s unmet financial needs are significant. 60 percent of the adult population, or about 64.5 million individuals, do not have a bank account and therefore may be cut off from access to credit or the ability to deposit income. “The World Bank found that 18 percent of the unbanked population in Nigeria cited a lack of identification documentation as the primary reason for not opening an account. We estimate that increased lending to individuals and businesses resulting from an expanded deposit base could generate up to $21 billion in additional investment by 2030,” says Amuche Okeke-Agba, a McKinsey partner.   Source: Independent

Presidential candidate of the opposition National Democratic Congress (NDC), John Mahama has said his administration will scrap the luxury vehicle tax if it comes to power; if the Akufo-Addo government fails to do so. Describing the levy as an ill-conceived one, he said its introduction has overburdened the ordinary commercial driver whose vehicle possesses the white number plate. He argued that the amount of revenue raised so far is not even enough for the tax to be sustained. Speaking to some drivers during his road safety tour in Accra, Mr. Mahama urged them to exercise restraint as the NDC will not hesitate to abolish the policy.  “Not too long ago, the government introduced the luxury vehicle tax. This tax was not well thought through before it was rolled out. They should have exempted all commercial vehicles. There are commercial vehicles without the yellow plates, but rather white plates yet they carry commercial goods. Once they exceed three litres, they are charged this luxury tax. This has brought untold hardship on some of the drivers especially those who work for the companies and others. ” “Just recently, I heard that government has only been able to raise GHC 25million from the luxury tax if that is the case, then they should abolish it. If they don’t, we the NDC government will abolish it when we come into power,” he added. The government has collected some GH¢21.3 million in taxes from the use of vehicles with engine capacities of 2.9 litres and above between August and December last year, provisional fiscal data on public finances for last year has shown. The amount is GH¢82.7 million or 79.52 per cent below the GH¢104million that was projected to be collected within the period. The projections were contained in the 2018 mid-year budget review. The government expects to rake in at least 300 million cedis from the tax on luxury vehicles by the end of 2019. The tax, which forms part of the new policy measures introduced in the midyear budget review, is to help bridge the gap in revenue for the first half of the year [2018]. The figure was disclosed when Parliament passed the four bills approving the taxes introduced by the government.   Source: Afroinsider

The controversies dogging the nation’s tax reforms, now with Value Added Tax (VAT) regime, may not achieve anything positive unless a holistic approach is taken and urgently, tax professionals have said. The top tax administrators, at the sensitization seminar on proposed VAT increase and the non-assented housing fund bill, organized by the Chartered Institute of Taxation of Nigeria (CITN), at its headquarters building in Lagos, said tax is a serious issue and must be seen as such. The President of CITN, Chief Cyril Ede, who was represented by the Vice President, Olajumoke Surplice, admitted that time has come for comprehensive reforms of VAT regime, particularly as it relates to small business and imported items. Noting that such reforms will bring about balance with respect to disposable income of customers and stability of businesses, he also commended the government for refusing assent to National Housing Fund bill. Former Director of Tax Policy at FIRS, Chief Mark Dike, said the current discordant tunes trailing VAT rate are not new but have only shown lack of due process. According to him, the enactment of VAT in 1993 was a struggle and the process of the only recorded hike to 10 per cent and subsequent reversal in a short period was a display of shoddy arrangement. He said that discussions about tax must be inclusive, with professionals and other stakeholders consulted to smoothen the rough edges that must be followed strictly when agreed. “We must get back to the drawing and the same is true of the housing fund bill. The way we are currently going about these issues, we may not make any headway,” he said. Prof. Abiola Sanni, during a panel discussion, described the recent report on planned VAT increase as a moot, as there was no bill to that effect at the National Assembly, which must precede any discussion. For him, there has been inconsistency overtime in both actions and speech by some government officials but warned that any increase in VAT now would be in bad faith. “The best option is to widen the tax net, not increasing the burden now. Granted, there are opportunities in VAT segment, but it is not right at this point,” he said. The panel moderator, Prof Teju Somorin, said her study of over 15 countries, including Ghana, at the point of VAT increment, shows that there is always public outcry, with some of these countries raising their VAT to 30 per cent. But she appealed to government to follow due process and focus mainly on luxury items, while holding a standard rate of five per cent for non-luxury items, as well as broaden the tax base. Another tax administrator, Azeez Olatoye, said he wants a general review of tax processes to identify the challenges against VAT and other taxes, with a view to balancing the interest of all stakeholders. For him, the government must build trust, as it is not presently adding up, citing budget inconsistencies. He said that the country’s debt profile and the huge service bill is discouraging to taxpayers, who already know that the tax proceeds would not end up in development pursuits. He said that downward adjustment of tax rate would encourage more to voluntarily   Source: Guardian