Tax news – Page 58 – Sunmola David & CO

FG moots idea of raising N6tn from petroleum tax, VAT

The Federal Government, through the Federal Inland Revenue Service, plans to generate N4.3tn from petroleum profit tax and N1.7tn through the Value Added Tax in 2019, The amount is part of the N8.8tn tax revenue needed by the government to finance the 2019 budget. Details of how the revenue would be generated are contained in the Medium Term Expenditure Framework Tax Revenue Projections for 2019-2021. The document, which was submitted to the National Assembly by the Executive Chairman of FIRS, Mr Tunde Fowler, was obtained on Friday by our correspondent. In the document, the FIRS said the N8.8tn would be realised through two major tax revenue components. They are oil tax revenue, where N4.3tn would be collected and non-oil tax revenue where the service had proposed to generate N4.5tn for the government. Further breakdown of the oil tax revenue showed that the entire N4.3tn is expected to come from petroleum profit tax. For the non oil tax revenue, an analysis of the document shows that N1.7tn is expected to be earned from company income tax, while gas income, capital gains tax and stamp duty are expected to earn N685.63bn, N6.27bn and N17.64bn, respectively for the government. Also, Value Added Tax is expected to contribute N1.7tn; education tax, N275.39bn; consolidated account, N99.78bn and Nigeria Information Technology Development Fund, N20.01bn. The FIRS in the document stated that the tax revenue target for 2019 was based on the Economic Recovery and Growth Plan of the Federal Government. It said that to boost tax revenue, a lot of initiatives would be implemented with support from the government. Some of them are the expansion of Tax Identification database to cover federal, states and local government to establish a reliable VAT tax base across the country. While engaging relevant stakeholders, the service said it would develop and propose tax laws targeted at emerging sectors of the economy such as digital economies. It said a review of existing tax laws to close the legal loopholes for taxes by adopting a sectoral, rules-based approach would be implemented. The FIRS also stated that it would develop a strategy for revenue campaigns targeted at the informal sector of the economy, noting that a unified nationwide tax payer database would be developed. It said a strong incentive programme aimed at encouraging tax payment by Nigerians would be designed. The incentive, it noted, could involve tying government projects to tax revenue collected. Source: New Digestion

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FG Must Review VAT Law – Tax Expert

Tax news / Tobi Aminu

A tax expert, Taiwo Oyedele, has urged the Federal Government to review its Value Added Tax (VAT) law and better policing of its borders to improve its VAT collections. Oyedele, Head of Tax and Corporate Advisory Services, PricewaterhouseCoopers (PwC), West Africa, gave the advice in an interview with the News Agency of Nigeria (NAN) on Monday in Lagos. He said the government could shore up its revenue through a review of VAT waivers and come up with a framework for VAT on imported services and digital transactions. “At the moment, we have a lot of issues with Nigerian VAT law because most times policymakers talk about the rate alone without saying anything about the rest of the law. `For instance, the country loses lot of revenue from the importation of a lawyer from Ghana who pays nothing for services rendered in Nigeria because he pays no VAT for such services whereas his Nigerian counterpart does. “The implication is that it makes the country’s lawyer less competitive because there is no legal provision in the VAT law that imposes five per cent VAT on such imported services. “The Federal Inland Revenue Service (FIRS) has seen this loophole and it is trying to block the leakage through the back door by issuing circulars to that effect. “The truth is that you cannot use circulars to impose tax, it has to be by law, so the government needs to amend the law to block this leakage and others,” he said. Oyedele said that the government should also have a regulatory framework for generating revenue from digital transactions. NAN reports that digital economy (transaction) is the worldwide network of economic activities, commercial transactions and professional interactions that are enabled by Information and Communications Technologies (ICT). He said that though some of the digital transactions operators such as Uber, Bolt (Taxify), office sharing and even technology platform providers like Facebook, Google, online stores and blogs pay VAT, the taxes were not backed by law. According to him, people place adverts on these platforms. “The government should explore these opportunities and back it up with law to ensure that not just few people pay taxes but all operators,” he said. He said South Africa had just released a regulation on its digital economy, adding that Nigeria should follow suit. Besides, Oyedele noted that four per cent cost of VAT collection by FIRS was too high by global benchmark standards, while 15 per cent allocation of VAT to Federal Government was no longer justified. “VAT law was introduced in 1993 and took effect in 1994; all over the world, including Nigeria, consumption tax is usually a state and local government tax. “But along the line, it was discovered that some states do not have capacity to collect the tax and agreed that the Federal Government should collect the tax on behalf of states. “That is why the Federal Government gets 15 per cent as cost of administering it while states get 85 per cent. “Technically for VAT, Federal Government gets 15 per cent and FIRS gets 4 per cent bringing total accrued to the Federal Government to 19 per cent. “Globally, the standard benchmark for collecting tax is one per cent, even many tax authorities in some countries collect less than one per cent,” he said. He added that should Federal Government take lesser percentage it would free funds for states to meet their financial obligations and become more financially stable. Source: The Pledge

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Tax man will be all over the British royal baby

Tax news / Tobi Aminu

Talk about being born with a silver spoon in your mouth: the royal baby of Prince Harry and Meghan Markle will have a particularly glittery one. And US tax authorities will be keen to know how much that utensil is worth. That’s because the baby will have dual nationality: British because of his father and US from his American mother, whose official title is the Duchess of Sussex. “When one of the parents is American and has resided in the US for five years with at least two after the age of 14, the baby is automatically a citizen,” said David Treitel, founder of American Tax Returns, a consultancy for US expatriates living in Britain. “This is the case with Meghan,” said Treitel, noting this case is a first in the British royal family. US nationality comes with a bevy of restrictive conditions: like any American who is born, grows up and dies anywhere in the world, year after year Meghan and Harry’s child will have to show the Internal Revenue Service his or her tax status is clean. From the moment of birth, money deposited in banks by the royal parents — eager to ensure a bright future for their progeny — must be duly reported to the tax man. The same would apply to money that comes in if mom and dad decide, say, to have the child follow in the footsteps of his ex-actress mother to become a star on TV or in movies. – ‘Accidental Americans’- Forget about privacy, said Treitel. The IRS will “get to know a lot more about the couple’s wealth” through the tax returns of the couple and their mother. “A lot more information is gonna get to the US,” he added. To wit: the IRS will demand that any valuable gifts from non-Americans to Harry and Meghan’s child — and he will be feted, won’t he? — also be declared as assets. “Imagine the queen giving the baby some nice beautiful book of art from the royal collection, with paintings by Van Gogh or Miro. If this gift if worth more than $100,000, it is reportable,” said Treitel. However, baby shower gifts that Markle received recently in New York will not have to be declared if they came from fellow Americans, the expert said. And although the baby and the mother will have to present forms that will be very time-consuming for their accountants, they may still not have to pay a lot in tax: these may be offset by duties paid in Britain, tax specialist Laura Saunders told The Wall Street Journal. US tax authorities’ efforts to keep a close watch on American expatriates can have serious consequences for people whose sole link to America is that they were simply born there. Such is the case of so-called “Accidental Americans” — such as thousands of people in France who automatically received US citizenship because they were born in the US but left America as little kids and no longer have any links whatsoever to the country. – Fines – Since the adoption of the Foreign Account Tax Compliance Act in 2010, which replaced the criterion of nationality with that of tax domicile, these people are obliged to report their income to US tax authorities and in some cases actually, cough up some money. Many of these people left the US when they were very young. The Association of Accidental Americans that brings them together asked President Donald Trump last year to find a solution to their quandary. Their status can be a touchy subject. If they refuse to play ball with the US tax authorities, their banks at home can be sanctioned. So these institutions can refuse them services like bank accounts and mortgages. To a lesser extent, the British royal family cannot dodge its US tax obligations either: a flawed tax return can trigger hefty fines. But there is a solution to avoid headaches for the royal couple’s accountants: Meghan can renounce her US citizenship. However, even if she does that, tax returns would still have to be filed for the child until age 18. Source: Punch

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FG to raise N6tn from petroleum tax, VAT

Tax news / Tobi Aminu

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Stakeholders Decry FIRS Plan to Commence VAT Collection on Gambling and Lottery games

Tax news / Tobi Aminu

The Executive Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, has disclosed the agency’s plans to charge Value Added Tax (VAT) on gaming activities, as well as automate VAT collection from lottery operators in Nigeria. Are value-added tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain. He disclosed this during a stakeholders’ meeting organised in conjunction with the National Lottery Regulatory Commission (NLRC) and lottery and gaming operators. According to him, the automation will help lottery players and bettors to easily pay VAT on each transaction. How VAT collection will be deployed in the gaming/lottery sector. The plan will see users of the services provided by the betting industry pay five percent VAT on every transaction made. The agency also aims to automate VAT collection in the gaming and lottery industry. Stakeholders kick against the new plan. Gaming and lottery industry stakeholders have unanimously expressed displeasure over FIRS’ decision to charge VAT on games and lottery activities. They are also not pleased with the plan to automate the VAT charges. According to the stakeholders, the additional 5 percent charge for VAT could discourage punters from using their services. Speaking on behalf of lottery and gaming operators, Akin Alabi, the Founder of Nairabet, said the intended automation is poised to kill the business. Alabi added that the potential reduction in hoped-for winnings, especially on low-odds bets, will drive customers from regulated operators into the hands of unregulated ones. He also argued that the FIRS should have consulted operators before taking the decision to impose 5 percent VAT and automating the collection process. Speaking on the development Digital Economy lawyer Adavize Alao praised the FIRS administration for seeking new ways of raising revenue for the government. The lawyer added that while the aim of the collection was good, gaming and gambling are not value added services and should therefore be exempt from VAT. He also stated that the FIRS administration ought to widen the tax met rather than collect VAT on gambling charges. Source: Lawyard

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We will recover all revenues accruable to government – FIRS

Tax news / Tobi Aminu

The Federal Inland Revenue Service (FIRS) says it is determined to recover all revenue accruable to the Nigerian government. The Executive Chairman, FIRS, Mr Babatunde Fowler, made this known in an address at the ongoing 30th Enugu International Trade Fair, in Enugu state. To achieve the objective, Fowler said it had already listed companies and organisations indebted to the government in fiscal year He explained that to fish out all outstanding revenue owed the federal government; they had, since 2018, focused on businesses with huge annual turnover. “You may be aware that since 2018, FIRS, has focused attention on businesses with huge turnover, but no record of commensurate payment of their tax obligations. “This will continue in 2019, several of such companies have already been contacted by the device leveraging on various data sources. “We urge you all to comply with the provisions of the tax laws as we are duty bound to recover all revenue due to the FG and the people of Nigeria,” he said. He, however, called on the business community, law enforcement agents and well-meaning citizens to continue to partner with FIRS to ensure that tax defaulters were traced to face the consequences while compliant businesses would receive all the support they required. Fowler said that the service was working hard to ensure that national revenue continue to grow through tax remittances. “We at the FIRS are working hard to ensure that we are in full alignment with all efforts to grow national revenue from taxation while easing the administrative burden inherent. “We place emphasis on human resources as one of several tools to achieving our aim of expanding the tax net which is why we recently recruited more young Nigerians to effectively provide adequate services to all the nooks and crannies of the country,” he added. Source: VON

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ICAN urges FIRS to upgrade electronic tax filing system

Tax news / Tobi Aminu

The Institute of Chartered Accountants of Nigeria has called on the Federal Government to address some of the gaps identified in the implementation of the ease of doing business reforms. Specifically, it called on the Federal Inland Revenue Service to address the challenges being experienced in its technology infrastructure to make it easier for taxpayers to process tax clearance certificate. The Chairman of ICAN Abuja Chapter, Mr Oluwafunminiyin Akande, said these in Abuja at a seminar on ease of doing business.. He said while the service had made some progress over the years in simplifying the process of tax payment, there are some identified gaps that had yet to be addressed. He said that the electronic filing system of the service needed to be worked on to cushion the impact of system failure which it had recorded within the last few weeks. Akande said that between January and the end of February, the FIRS e-filing and electronic delivery platforms were completely shut down. The development, according to him, made it difficult for tax practitioners to conduct tax related businesses with the service. He said, “Government has been saying so many things about making the environment to be friendly but we the practitioners know that we haven’t got there yet. “The policymakers and practitioners must meet regularly to discuss the areas that are not working yet. If we don’t give them the feedback, they won’t know how to improve. That is the reason why we are organizing this programme. “We have identified so many gaps. For instance, the FIRS has been talking about e-filing, electronic delivery and others but you discovered that it hasn’t been fully achieved. “From January till the end of February, their network was completely shut down. This means that as tax practitioners, you cannot process tax clearance and e-filing for your clients. “Meanwhile, there are penalties attached to some of these things. Apart from what it costs you, there is needed to be going there every day because you don’t know the time the network will be working. “How can you shut down your system for two months? Can such thing happen in a bank? So, until we start thinking in that way, the government agencies will not improve. “So if we don’t tell them, they won’t know how we feel. That is one of the gaps.” He also said the time it takes the FIRS to process Tax Identification Number and Tax Clearance Certificate needed to be reduced as it was currently taking the service longer than even the approved period to process them. He said, “They will also tell you that tax clearance certificate can be obtained within 14 days but it doesn’t work. You will get there to collect Tax Identification Number which ordinarily should be given to you on the spot but they will tell you to come back, and when you return, they will tell you network is not working.” Source: Punch

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Increase VAT Gains through Efficient VAT Management

Tax news / Tobi Aminu

VAT management is a solution to the complex process of VAT processing. It ensures that no VAT goes unclaimed while providing complete VAT tax compliance. VAT processing is every tax accountant’s nightmare. It gets worse with a multinational company. The task of researching on global VAT laws, the complex calculations, and the complication which results from erroneous calculations is a headache anyone would happily avoid. Automated VAT management is a solution provided by VAT companies. It is the use of intelligent and knowledge-based software to process VAT. It eliminates the element of human error resulting in a streamlined and accurate VAT process. Why Most Companies Lose their VAT Claim VAT recovery is a very complicated process. You have to consider a lot of factors such as the location of the purchase, the quantity of the item, and the nature of the purchase. The use of manual methods to process VAT under these complex conditions results in errors. In addition, VAT rates are always changing. For staffs who are already burdened with other tax compilation tasks, it can be hard to keep up. The work of studying and understanding local and foreign VAT laws, exemption certificates, and following up on recoveries is daunting. Errors and mistakes are sure to happen. What results is lost money in the form of unclaimed VAT and non-compliance which carries its own set of legal and financial consequences. Automated VAT management is the solution to not only avoiding VAT-related losses but also giving your tax staff an easier time. Here are a few reasons you should consider investing in VAT software. Benefits of Automating VAT Management It leads to the increased general performance of a company. By automating VAT, tax staffs spend less time researching, addressing tax errors, and making complex VAT calculations. Instead, they shift their focus to other tasks that require human resource such as strategizing on cost-saving. The financial reports produced with automated VAT are accurate reducing the high costs of audits. Accurate financial reporting is essential in the planning and creation of financial policies. You can avoid the legal and financial consequences of non-compliance with VAT laws by automating your process. The software ensures effective global compliance is achieved every time. Unlike humans, a system generated VAT process leaves no room for errors making it an efficient method. It collects data from multiple existing systems, validates and checks for eligibility, cross-checks with third-party sources and eliminates duplicates ensuring that the process is error-free. With the software processing every hidden VAT, you can be sure that losing your VAT gains will be a thing of the past. Automated VAT processing is fast. There is always so much to do and so little time. Reducing the time spent on VAT processing creates time for other essential tasks. You have nothing to worry about the safety of your company’s VAT data. It is not just safe, but easily retrievable on a need basis. It also makes it possible for the tax manager to revisit past reports. Technology is fast evolving. It has made life easier by automating complex processes, and VAT processing is no exception. Automated VAT management frees the tax personnel enabling them to focus on more important things. It reduces errors in the process leading to accurate financial reporting and ensures complete compliance while keeping your VAT data safe. Source: Proshare

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Nigeria Must Increase VAT And Excise Taxes, IMF Insists

Tax news / Tobi Aminu

Nigeria must embark on a comprehensive tax reform to “sustainably increase its non-oil revenue” considered to be among the lowest in ratios to GDP in the world, the International Monetary Fund (IMF) has said. The nation has important development needs “big time” and with its non-oil revenue to GDP at around 3.4 and total tax revenue to GDP around eight per cent, Nigeria will not be able to effect such developments without tax reforms, noted IMF Assistant Director, Fiscal Affairs Department, Cathy Pattillo. During a press briefing on fiscal monitor at the ongoing Spring Meetings of the Brenton Woods institutions in Washington on Wednesday, Pattillo added that there is an emphasis also on improving excise taxes. Noting that Nigeria has taken some steps in the direction of improving the excise taxes, Pattillo said that excise tax coverage should be expanded to cover “other goods and also higher rates on excises” as well as embark on “aggressive streamlining of tax incentives and exemptions.” This is as the Managing Director of IMF, Christine Lagarde, said that low income countries will have to spend $500bn in 2030 to deliver on five out of the 17 Sustainable Development Goals (SDGs) and the figure will be $2trn if emerging economies are included. The low income countries, however, she said “leave on the table over $200bn of tax that they should legitimately collect” due to practices they should have avoided “if they actually want to invest in hospitals, schools and roads.” “It means it will not be a domestic efforts but one that will require partnership and involvement of donor countries and all of us working together,” Lagarde said. Senator Olanrewaju Tejuoso, however, told National Wire on the sidelines of the Spring Meetings that Nigerians do not need any further burden more than they already have and that Nigerians have to “localize our problems,” insisting that Nigerians fix the infrastructure themselves. “We don’t need to increase the tax burden of the people as we are struggling to give them the infrastructure they need. People fix the infrastructure by themselves and you say you should tax them again. They are the ones who own their countries, let them keep on talking,” said the Ogun Central Senatorial District Senator, referring to the IMF/World Bank panelists. Source: National wire

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FIRS takes tax education to Enugu International Trade Fair

Tax news / Tobi Aminu

The Federal Inland Revenue Service (FIRS) has taken its tax drive and enlightenment services to the 30th Enugu International Trade Fair, our correspondent reports. An Assistant Director of FIRS. Mrs Beatrice Obi told our correspondent that they were taking advantage of the event to sensitize participants on the need to discharge their civic duties. Obi said that the platform was a veritable avenue to interface with private and corporate organizations and enterprises. She said that they also offered advice on the modalities for the registration of companies, adding that those finding it difficult to register their companies would receive useful information. The assistant director, Federal Engagement and Enlightenment Tax Team, said that though the FIRS also had the mandate to enforce tax payment, “we are not here for enforcement”. Obi said it was sad that the turnout of people for tax education had not been encouraging due to the limited number of exhibitors at the fair. Source: News verge

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