Tax news

Tax experts at PwC Nigeria have said digitising the processes of tax payment in the country will increase compliance level, among other benefits. The Head of Tax, PwC Nigeria, Mr Taiwo Oyedele, said this on the sidelines at the PWC Tax academy held in Lagos recently. He lamented the stress and some of the issues associated with the paper tax filing and its proneness to several losses of documents or mix-ups, adding that the earlier “we sort full digital alternatives in tax filing processes, the better.” Oyedele said: “I think it is no longer a question of tax; everything we do today is impacted by technology and technology is making things better and faster and more cost-efficient and cost-effective. “So, it is no longer acceptable for authorities to live in the past. Even though Nigeria is starting late, they say better late than never. “So the idea now is to make technology the platform, not an option, for tax compliance in terms of calculating your taxes, making your payments, and filing your returns, such that even when you need, say for example, your tax clearance certificate, in the past, this used to be like rocket science. “With technology now, one should be able to get that immediately. We know that these platforms are not perfect yet, so our role as PwC, helping so many people to pay their taxes and also paying taxes ourselves, it is to say once we identify what the problems are, we get the stakeholders to come together to see how we can fix it. It is not enough to criticise, we must find the solution together.” He further added: “With our experience dealing with other countries, we know things that work in other places. So, it is very good that we have the Federal Inland Revenue Service, the Lagos State Internal Revenue Service and PEBEC. It is the beginning of the process, and we hope that by this time next year, all these processes will be much better such that the experience of the taxpayer will be a lot better.” He further pointed out that technology would increase tax compliance and in turn increase contribution to the Gross Domestic Product. He added: “Nigeria doesn’t rank very well on the ease of paying taxes. So, Nigeria’s tax revenue to GDP ratio is one of the lowest in the world, yet it is one of the most difficult places to pay tax. “So, it is a contradiction: you need tax money but you make the process very difficult. So, if you simplify it by using technology, what that does is you encourage more people to pay. There is something about compliance cost; it is something that does not benefit government and the taxpayer. “It is actually the money the taxpayer pay that doesn’t get to the government. So, both the taxpayer and the government have an objective to reduce that cost. That is something that technology does for you. It reduces your cost of compliance, and therefore you can get more people into the tax net.”   Source: Thisdays

Abuja, March 20, 2019 (TNE) The Tax Appeal Tribunal sitting in Abuja on Wednesday adopted the terms of settlement entered by 44 insurance companies and the Federal Inland Revenue Service (FIRS) over N579.5 million overpaid stamp duties charged the companies. The companies on Nov.19, 2018, filed a motion for an order for variation of a consent judgment delivered by the tribunal on May 10, 2016, having noticed the shortfall in the judgment amount. They averred that the overpaid stamp duties to FIRS occurred during the re-capitalisation of insurance companies between 2002 and 2006. In her ruling, the tribunal chairman, Mrs Alice Iriogbe, held that the tribunal carefully studied the terms of settlement entered by the parties. “The tribunal has now adopted the terms of settlement as its judgment as full and final settlement of the claims in the suit.” She said that the appellants had applied for the sum of N579.5 million being the balance of the admitted excess stamp duties paid to FIRS in 2012. Iriogbe said that FIRS also admitted on the grounds that it was due to arithmetic errors and the amount had a shortfall of N579.5 million. She said in their terms of settlement the parties have agreed to the provisions. The tribunal noted that the Executive Chairman has approved the said amount and will be paid to the appellants counsel Bayo Osipitan and Co. in full and final settlement of the claim for excess stamp duties refund.   Source: Thenigerianexpression

Plans are underway by the Federal Government to increase Value Added Tax, VAT, by up to 50 per cent (from current 5 per cent to 7.5 per cent), a move that would stoke-up inflationary pressure in the economy. The move is coming as a measure to raise funds for the implementation of the new minimum wage about to be passed into law by the National Assembly. Also to be increased, according to the government officials, are Company Income Tax, CIT, and Petroleum Profit Tax, PPT. These were disclosed, yesterday, when Minister of Budget and National Planning, Udoma Udo Udoma, and Executive Chairman, Federal Inland Revenue Service, FIRS, Babatunde Fowler, appeared before the Senate Committee on Finance for an interactive session over 2019 to 2021 Medium Term Expenditure Framework and Fiscal Strategy Paper, MTEF/ FSP. They hinted that the tax increases were inevitable, arguing that the new national minimum wage will further increase the size of the 2019 budget already in deficit Fowler particularly told the Senator John Enoh (APC, Cross River Central) led Committee on Finance that the proposed payable VAT by Nigerians based on the increment would be between 35 per cent (6.75 per cent) and 50 per cent (7.25 per cent). The FIRS boss, who noted that the set goal of the revenue generating agency was to achieve N8 trillion revenue target this year, of which N3 trillion is expected from VAT, just as he puts total tax revenue for 2018 at N5.3 trillion; N4.03 trillion in 2017; and N3.31 trillion in 2016. He stated: “By the end of this year, we should be ready for an increase in the VAT. A lot of Nigerians travel to Ghana and other West African countries and they can see that their’s is much higher. They pay when they go for those trips. We should be ready for an increase in VAT. “I can certainly see an increase in VAT of at least 35 per cent to 50 per cent this year based on our enforcement activities. There, certainly will be an increase in Company Income Tax and also on Petroleum Profit Tax.” FG sets up c’ttee on funding new minimum wage On his part, Udoma who disclosed that the Federal Government had concluded plans to set up a committee to look into ways of increasing revenue to fund the new national minimum wage, however, stressed that in view of this, government was considering to forward requests to reflect slight adjustments to the 2019 budget especially as regards sourcing revenue to foot the bill for the new national minimum wage. The minister also disclosed that the committee was expected to enter into negotiation with those who are already above the minimum wage bracket and lower the burden on government. Udoma who noted that the Technical Advisory Committee on the minimum wage would submit its report to President Muhammadu Buhari this week, said: “It will be recalled that as a result of agitations from the unions that the President set up a tripartite committee to look at the Minimum Wage. “Every five years, it is supposed to be reviewed. It has not been reviewed even though there is no doubt that for both the Federal Government and states; it is a tough time to review wages. But the N18,000 is really too low and it is difficult for people to live on N18,000. “The President supported a revision but it is important that as we are revising (the minimum wage), we make sure that it can be funded that is why we set up the Bismark Rewane Technical Committee. “So we will be coming to you. There may be some changes maybe in VAT and other things. But we will be coming to you in order to make sure that we can fund the minimum wage.” The MTEF, the document on which the 2019 budget is predicated, was sent to the National Assembly on November 7, 2018, although with slight differences on the expenditure. While the MTEF has an expenditure framework of N8.7 trillion, the budget shows a figure of N8.826. The Minister of Budget and National Planning however attributed the difference to recent upward review of the salaries of the police and expressed concern that the New National Minimum Wage will further increase the size of a budget already in deficit. How FG’ll implement 2019 budget Meanwhile, Udoma told the Senate Committee that some slight adjustments were effected on the 2019 MTEF/FSP between when it was approved by the Federal Executive Council and the finalization of the 2019 budget proposals. The minister, who was briefing the Committee on the 2019 Revenue and Expenditure Projections said the adjustment only affected the expenditure levels as it was done to reflect some unanticipated expenditure items and the consequences of those adjustments. Before giving an overview of the 2019 Expenditure Framework, the Minister briefed the Committee on the 2018 expenditure outcomes. He stated that of the total appropriation of N9.12 trillion, N7.24 trillion had been spent as at December 31, 2018; representing 79% performance. He indicated that Debt Service and the implementation of Non-debt Recurrent Expenditure, including payment of workers’ salaries and pensions, were on track.   Source: Punch

If resources from tax revenue are properly harnessed, Delta state could sustain itself, the State Coordinator Tax Justice and Good Governance, Mrs Bridget Anyafulu, has said. Anyafulu stated this on Thursday while presenting a report on “Taxation in the Informal Sector in Delta State,’’ at a meeting of the Platform in Asaba. According to the coordinator, the report was a research work in 2017 by the International Centre for Women Empowerment and Child Development (ICWECD), a Non-Governmental Organisation in the state sponsored by OXFAM. She said that other countries in the world lived on tax revenue, while Nigeria lived on oil earnings, adding that the situation needed an urgent change. Anyafulu explained that Nigeria should not rely totally on oil as it could come to an end some day, urging the country to follow the changing global trends. “Tax revenue drives other economies in the world, while the Nigerian economy has continued to depend on revenues from oil. “In 2015, this current administration came in with lot of challenges arising from recession due to a fall in oil price in the international market. “Other countries in the world live on tax revenue but we live on oil revenue; this has to change because oil will go some day, and we must follow the world. “The Gov. Ifeanyi Okowa-led administration looks into accountability and the only reason the people can demand for accountability is when they have done their part by paying their taxes,’’ she said. Anyafulu called for transparency among the people and charged all stakeholders to create the needed awareness to sensitise those in the informal sector to pay their taxes and get value for their money. “The platform is for organisations, individuals and groups interested in engaging issues related to tax justice and promoting a fair, just, equitable and progressive tax regime in Nigeria. “We intend for all parties to work together, involve all relevant stakeholders through information sharing and pulling available resources to undertake some reforms in the tax system in Nigeria, particularly in the informal sector. “Our objective is to facilitate the development of an effective legal and policy regime that promotes a fair, progressive and transparent tax system and administration in Nigeria. “It is also necessary to undertake research and evidence-based campaign against all forms of harmful tax practices that undermine government ability to generate maximum tax revenue to fund development, among others. She said that the era of engaging tax contractors were over, adding that the state Board of Internal Revenue should train and equip its staff to take up their responsibilities for fairness, equity and accountability in tax collections. On his part, Mr Paul Itawansa, Director of Operations, State Board of Internal Revenue, said that the platform would enable the informal sector become properly captured into the tax system, to ensure equity and fairness. He noted that with adequate information and a workable system, everybody would be carried along without being embarrassed in the process of tax collation because in the new reform tax law, all adults must pay tax. Mr Martin Bolum, State Vice Chairman, Trade Union Congress (TUC), pledged the unions’ commitment to driving the tax system in the state, adding that the union was in the forefront of enforcing tax payment in the state in 2015. “This administration has given a lot of benefits to tax payers, particularly for those in the informal sector. “The governor has captured these groups in the health insurance scheme and with massive roads construction in all the nooks and crannies of the state, it is also of benefit to the tax payers,’’ he said. Mr Chuks Iku, Consultant, State Board of Internal Revenue, said the benefits in payment of taxes were enormous, adding that Delta Government had maintained peace and security which has enabled the people to do their businesses without fear. He said that work on documentation of the operators in the informal sector was on, adding that the data would be utilised for proper tax assessment in the state. “Okowa’s administration has built markets and provided other facilities from the revenue available to it and if it gets more, it will do more. “We are currently collecting data on the informal sector and the information collected is submitted to the state contributory health commission for the enrollees to access healthcare. “But the determination of what the informal sector owns remains a challenge, unlike the formal sector which is being taxed appropriately. A representative of the Market Women, Mrs Grace Mragbozo, called on government to check the issues of double taxation and the menace of “Development Levies’’ among other challenges being faced by traders and women. She pledged the resolve of the traders to key into a new tax regime in the state that would ensure transparency, fairness and equity.   Source: Thenigerianvoice

PwC Nigeria has said the deployment of technology will help Nigeria to reduce tax compliance costs in order to encourage more people to pay taxes. The Head of Tax, PwC Nigeria, Mr Taiwo Oyedele, spoke on Tuesday in Lagos on the sidelines of the firm’s Tax Academy, with the theme ‘Technology and tax: Navigating tax authorities’ digital platforms for effective tax compliance’. Oyedele, who stressed the need to simplify the process of paying taxes through technology, said, “Nigeria doesn’t rank very well on the ease of paying taxes. Nigeria’s tax revenue to GDP ratio is one of the lowest in the world, yet it is one of the most difficult places to pay tax. It is a contradiction: you need tax money but you make the process very difficult. “So, if you simplify it by using technology, what that does is you encourage more people to pay. There is something about compliance cost; it is something that does not benefit the government and the taxpayer. It is actually the money the taxpayer pays that doesn’t get to the government. So, both the taxpayer and the government have an objective to reduce that cost.” He said the technology would reduce the cost of compliance, adding “therefore, you can get more people into the tax net.” Oyedele said, “Everything we do today is impacted by technology and technology is making things better, faster and more cost-efficient and cost-effective. So, it is no longer acceptable for authorities to live in the past. “Even though Nigeria is starting late, they say, ‘Better late than never. So, the idea now is to make technology the platform, not an option, for tax compliance in terms of calculating your taxes, making your payments, and filing your returns.” Noting that getting a tax clearance certificate was like rocket science in the past, he said, “With technology now, one should be able to get that immediately. We know that these platforms are not perfect yet; so, our role as PwC, helping so many people to pay their taxes and also paying taxes ourselves, is that once we identify what the problems are, we get the stakeholders to come together to see how we can fix the problems. It is not enough to criticise; we must find the solution together.” “With our experience dealing with other countries, we know things that work in other places; so it is very good that we have the Federal Inland Revenue Service, the Lagos State Internal Revenue Service and the Presidential Enabling Business Environment Council here today. It is the beginning of the process, and we hope that by this time next year, all these processes will be much better such that the experience of the taxpayer will be a lot better.”   Source: Punch

The Federal Inland Revenue Service (FIRS) on Tuesday apologised to the Tax Appeal Tribunal sitting in Abuja for the delay in serving processes on an appellant, Mr Joseph Daudu (SAN),  in the case of alleged N1.2 billion error in taxation. Daudu said he was dissatisfied with the 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, therefore, prayed the tribunal to restrain FIRS. At the resumed sitting, Mr Abedayo Adedeji, counsel for Dauda, told the Tribunal that FIRS served them a witness statement on oaths only this morning. He said that on the face of it, it necessitated a response from them, ( the appellant) according to him “we have not been properly served. ” In his response, Prof. Taiwo Osipitan SAN, counsel for FIRS apologised for the delay in serving the appellant as the respondent was trying to get all the processes served which did not work out as planned. He told the tribunal that they however have other processes to serve on the appellant but had served only one this morning and would serve the remaining before the next adjourned date. The tribunal, which was presided over by Mrs Alice Iriogbe, adjourned sitting until April 16, for parties to be served and reply before the next adjourned date. NAN reports that Daudu, claimed that it was a misnomer for the appellant, who operates a law firm as a legal practitioner and does 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 in the sum of N977.  5 million,” 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 payment made under the period in review. FIRS, therefore, prayed the Tribunal to declare that the notices of assessments issued on the appellant for 2010- 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 the Economic and Financial Crimes (EFCC) on non-declaration of income as well as tax evasion. (NAN).   Source: Oraclenews

Nine months after the Federal Government approved the removal of Value Added Tax (VAT) from air transport, the decision is yet to be implemented. Capt. Nogie Meggison, the President of Airline Operators of Nigeria (AON), had lamented that its members paid at least N10 billion annually as 5 percent VAT to the coffers of the Federal Government through the Federal Inland Revenue Service (FIRS). According to AON, the remittance of VAT was negatively affecting its operations and it called on the government to emulate other countries in removing VAT from revenues collected from its members. Investigation by Daily Independent revealed that after the government’s announcement of the approval of VAT in June, last year, AON wrote series of letters to the government reminding it of the pronouncement and the need to commence implementation immediately. But nine months after, the government was yet to reply to any of the letters written to it by the leadership of AON. Air transport is the only form of transportation that remits VAT to the government, while rail, road, and marine don’t. Alhaji Muneer Bankole, the Chief Executive Officer (CEO), Med-View Airline Plc, in an interview with Daily Independent, confirmed that the government was yet to implement the VAT removal policy. He explained that the umbrella body of the airline had made attempts to ensure its implementation without success, stressing that the government still needed to inform the Ministry of Finance through memos which, he said, had not yet been done. He called on the government to hasten the implementation to further reduce the financial burden on the operating airlines in the country, saying that while the Nigerian government was collecting five percent VAT from the indigenous airlines, their foreign counterparts that operate in the country don’t remit such, either in the country or at their bases. He said: “As at today, the answer is negative. Nothing is being done in that direction. All we are praying for is still to have the relevant authorities to do the right thing. “The government will still need to talk to the Ministry of Finance, budget and everybody, including the National Assembly, to have it down and become a law.” Besides, a source close to one of the operating airlines told Daily Independent that FIRS still insists on the collection of VAT from the airlines despite the pronouncement of the government. According to the source, FIRS officials said the collection would continue until the airlines fast-tracked the gazetting of the pronouncement. The source, who is a management staff of the airline, also said that the carrier had written series of letters to the government on the issue to no avail. He said: “It’s true that the government publicly made the announcement on June 1, 2018, but nine months after, nothing is heard from the quarters of government. We still remit VAT to FIRS and, most times, it is internationally inflated. “This pronouncement is not different from the one made on removal of waivers on customs duties. “At times, officials of customs still frustrate the waivers, too, through their antics. It is a different thing when a government makes a pronouncement and another thing when that pronouncement is followed with action. We need to walk the talk in this country.” Prior to the Executive Order, AON had threatened that its members would no longer pay VAT with effect from June 14, 2018. The group had said then that the decision was taken after deliberations by the chief executive officers of airlines in the country. The body had argued that Nigerian domestic airline travel was the only mode of transportation paying VAT in the country, while road, rail, marine and international airlines don’t pay, alleging further that some of the domestic airlines were exempted from paying VAT and called for a level playing field for everyone. The body had added: “The AON’s position is that the VAT on airline ticket sales for domestic carriers must be removed completely forthwith as road transportation, rail, marine and international air travel carriers are not subjected to VAT. “Moreover, a situation whereby some airlines are paying VAT, while some other privileged airlines are not paying VAT, and the VAT, which we pay is being used to subsidise our competitors against those that are making payment is unfair.” Few weeks later, President Muhammadu Buhari, through an executive order, had announced removal of VAT from the levies paid by the airlines, which received commendations from all stakeholders and professionals in the sector.   Source: Independent

FEDERAL Inland Revenue Service (FIRS) on Monday arraigned Fortless Global Concept Limited and Everyday Wine Shop and their representatives at the Federal High Court, Abuja on alleged tax evasion, obstruction of official duty and attack on staff of the FIRS on duty among other charges. In the Charge No: FHC/ABJ/CR/48/2019, between the Federal Government of Nigeria (Complainant) and Fortless Global Concept Limited (also known as Fortless Supermarket and Stores and Chukwu Ejike (Defendants), the FIRS preferred a six-count charge bordering on tax evasion and assault on FIRS staff on duty on the defendants pursuant to Section 174 (1) of the Constitution of the Federal Republic of Nigeria 1999 (As Amended) and Section 47 of the FIRS Establishment Act No: 13, 2007. Similarly, in the Charge No: FHC/ABJ/CR/47/2019, between the Federal Government of Nigeria (Complainant) and Everyday Wine Shop (also known as Everyday Wine Shop &Bar), Mbah Sunday and Epkeha Peter (Defendants), FIRS preferred a six-count charge also bordering on tax evasion and assault on FIRS staff on duty on the defendants pursuant to Section 174 (1) of the Constitution of the Federal Republic of Nigeria 1999 (As Amended) and Section 47 of the FIRS Establishment Act No: 13, 2007. Representatives of the two companies who are currently on administrative bail: Mbah Sunday and Epkeha Peter for Everyday Wine Shop and Chukwu Ejike for Fortless Global Concept pleaded not guilty to the charges. Justice Taiwo O. Taiwo of the Federal High Court 10, Abuja granted the application of the leader of FIRS prosecution counsel, James Binang and scheduled March 21, 2019, for the FIRS to prove the charges against the defendants. The Court also granted that the counsels should bring the defendants to Court on 21 March 21, 2019, for further hearing. Some of the Charges against Everyday Wine Shop are: “That you, Everyday Wine Shop (aka Everyday Wine Shop and Bar) 2. Mbah Sunday and 3. Epkeha Peter on or about the 24th day of January 2019 at the Federal Housing Estate, Lugbe, Abuja, within the Jurisdiction of this Honourable Court, being obliged to deduct and remit Value Added Tax (VAT) in the course of your business, conspired amongst yourselves to participate in Tax Evasion; and you thereby committed an offence punishable under Section 49(1) and (2) of the Federal Inland Revenue Service (Establishment) Act, No: 13, 2007. “That you, Everyday Wine Shop (aka Everyday Wine Shop and Bar) 2. Mbah Sunday and 3. Epkeha Peter on or about the 24th day of January 2019 at the Federal Housing Estate, Lugbe, Abuja, within the Jurisdiction of this Honourable Court, being taxable persons conspired amongst yourselves to obstruct and assault authorised officers of the Federal Inland Revenue Service (FIRS) in the course of the performance of their official functions; of pasting Value Added Tax (VAT) Non-Compliance Notice on business premises of persons and individuals adjudged by the Service to be Non Tax Compliant; and you thereby committed an offence contrary to Section 49(1) and (2) of the Federal Inland Revenue Service (Establishment) Act, No: 13, 2007. “That you, Everyday Wine Shop (aka Everyday Wine Shop and Bar) 2. Mbah Sunday and 3. Epkeha Peter on or about the 24th day of January 2019 at the Federal Housing Estate, Lugbe, Abuja, within the Jurisdiction of this Honourable Court, being taxable persons conspired amongst yourselves obstructed and assaulted Miss Funke A. Shodunke, an authorised officers of the Federal Inland Revenue Service (FIRS) in the course of the performance of their official functions; of pasting Value Added Tax (VAT) Non-Compliance Notice on business premises of persons and individuals adjudged by the Service to be Non Tax Compliant; and you thereby committed an offence contrary to Section 49(1) and (2) of the Federal Inland Revenue Service (Establishment) Act, No: 13, 2007,” the Charges read.   Source: Tribuneonlineng

The Anambra state Internal Revenue Service (AIRS) says it would on April 1st, 2019, embark on annual audit of companies, businesses and institutions operating in the state in oder to confirm their level of adherence to deduction and remitting of income taxes. The executive chairman of AIRS, Dr. David Nzekwu, who disclosed this in a press conference in Awka on Friday, explained that the exercise was backed by relevant tax laws. Nzekwu said it was expected that every company operating in the state should at the beginning of every year file in their annual returns before 31st January, with details of employees working with them from whom they make Pay As You Earn (PAYE) deductions.  He said: “In addition, the companies are also expected to file in their own returns as a company to the board of internal revenue before 31st March. It is established that any company that fails to file in their tax returns within this period will pay penalty of N500,000. While the penalty for individual is N50,000. It is well spelt out in section 81 and section 41 under the relevant subsections of personal income tax 2011 as amended. He however, commended businesses and companies operating in the state for their compliance to tax payment, adding that it was responsibilities of every citizen and corporate entities to adequately and promptly pay their taxes. On tax evaders, the AiRS chairman, he said the agency would continue to follow due processes, which include obtaining court judgement and executing them accordingly, like it did some months back when it sealed off all branches of United Banks of Africa (UBA) in the state.   Source: Blueprint