Tax news

The year 2018 was not the best of years for the stock market but the economy grew at its fastest pace since the recession in 2016 after real gross domestic product in 2018 expanded at 1.9 percent. Companies like Zenith Bank and Dangote who have released their 2018 results have seen strong profit growth in the past year, however, BusinessDay has identified 3 companies who despite having a better business performance in 2018 than in 2017 are on course to still deliver lower profits when their full year results are released, and you will never guess why. In 2017, companies like Seplat, Forte Oil and Presco had Uncle Sam to thank for their big profit after tax (PAT) figures. These three companies received combined tax credits from the government totaling around N83.7 billion, which helped boost their bottom-line figures significantly. The highest tax credit was enjoyed by Seplat who received about N67.6 billion, which helped the company report full year PAT of N81.1 billion in 2017 after the oil exploration company had earned only N13.4 billion in profit before tax (PBT). Based on projections using the 2018 Q3 report, analysts now expect that excluding any tax credit, the full year profit of the oil company will be around N36 billion, representing a profit decline of around 56 percent. Don’t be fooled by the bottom-line numbers though, Seplat had one of its best years in 2018. Although net profit could decline, the company will deliver revenue growth of around 67 percent while PBT will jump around 444 percent, capping a fantastic year for the company after the oil price rebound has helped boost revenue and allowed the company pay down some of its debt. Analysts told BusinessDay that they do not expect Seplat to allow its PAT to fall that low considering they could still call on more tax credits in 2018. The company currently holds around N41.83 billion in deferred tax asset and has already paid about N9.6 billion of tax liabilities in advance as at the end of Q3 2018. Therefore, the oil producer still has more tax credits to collect at their disgression which may see them report profits that significantly exceeds our forecasted N36 billion PAT. A deferred tax asset is an asset on a company’s balance sheet that may be used to reduce taxable income. It is created when recorded income taxes payable are higher than the income taxes paid to the government. Presco, one of Nigeria’s largest oil palm producing companies is expected to see its PAT decline to N7 billion in 2018 from N25.4 billion in 2017. Presco owes most of its profit in 2017 to the government after it received about N14.4 billion in tax credit, adding to its PBT of around N10.9 billion. The tax credit accounted for around 57 percent of PAT and 132 percent of PBT. Asides the tax credit, Presco’s profit was also lifted by revaluation gains of around N2.78 billion which analysts now expect that the revaluation gains and tax credits may not be available for pickup as it was last year. Another oil company with a similar story is Forte Oil which has been in the news lately as its former owner is currently divesting away from the company. In 2017, Forte Oil received tax credit of around N1.6 billion, which helped the company deliver PAT of around N12.2 billion after the company reported N10.6 billion in PBT. This year, analysts project that the company’s full year 2018 PAT will be around N8.9 billion if Uncle Sam fails to extend a helping hand once again. Unlike Seplat, the company’s revenue and PBT is expected to be slightly lower in 2018 than it was in 2017 due to sluggish sales. “We will have to wait and see if these companies take a hit on profit in 2018 when their full year reports are released. While I see Forte oil and Presco reporting lower yearend profit, its possible Seplat will deliver profits that show marginal growth if the deferred tax assets are converted to tax credits in their reports,” said Tochukwu Okafor, Lecturer in Banking and Finance department at Covenant University. Dangote Cement another benefactor of tax credits in 2018 reported its highest profit ever in 2018 after it collected tax credit of around N89.5 billion when it secured its pioneer status last year. Analysts say the company may struggle to match its N390.3 billion PAT it achieved last year in 2019.   Source: Business day

A disclosure the other day by the Federal Inland Revenue Service (FIRS) boss about possible pursuit of 85,000 millionaire tax defaulters is curious and unfortunate. There is no reason for serious alarm before such a critical service can be delivered and the reasons are not too far to seek. Tax payment to governments by qualified individuals and corporate organisations, has been a feature of both the ancient and modern world. It is generally recognised as a civic duty or responsibility through which governments gather revenue/financial resources with which the machinery of state and the common needs of the people are satisfied. Essentially, payment of tax is important for governments and their institutions to survive and serve the needs of the people. Every qualified taxpayer ought to know and comply with this basic need of paying due tax. And so, the other day, a report that the Federal Inland Revenue Services (FIRS) was seeking help from and collaboration with other stakeholders like the Nigeria Police Force (NPF), to catch-up with “wealthy tax defaulters” to cause them to fulfil their tax obligations, sounded unthinkable that the wealthy in our midst could be fingered as part of tax defaulters in the country. Despite having been rewarded with wealth through their various undertakings and endeavours, the little they are ordinarily expected to do is to support the machinery of the government and the welfare of the people. No one expected them to fail to pay their taxes. To have chosen to default in their tax obligations is to say the least the highest level of ingratitude and no doubt, irresponsibility. According to the report, out of the N5.32 trillion tax revenue FIRS achieved in 2018, about N2.3 billion was recovered from 45,000 “wealthy tax defaulters.” Against this development, FIRS plans to go “after another set of over 40,000 millionaire tax defaulters in 2019.”  It is necessary to observe that FIRS claimed to have been scrutinising accounts of banks’ customers for the purpose of its tax revenue generation. Indeed, there have been reports that the apex tax agency has engaged in placing liens on bank accounts of suspected tax defaulters. Placement of such liens means that the affected bank customers will be unable to have access, in part or whole, to their account balances until they resolve whatever the issues may be with FIRS. In other words, affected bank customers will not be able to make withdrawals until they settle tax liabilities dictated by FIRS. It is, therefore, obvious that FIRS, in its tax revenue drive, is using coercive method to compel individuals and organisations to pay tax. This is curious in the polity. While tax revenue, like other revenue sources open to governments, is essential for the government to be able to carry out its duties and responsibilities in the interest of the citizenry, there is hardly any doubt that FIRS must ensure that whatever method it has adopted or plans to adopt in pursuit of suspected tax evaders is in line with subsisting legal and regulatory provisions. This is even more exigent if the tax agency has to pass through the banks in its recovery of tax debts.  It should be noted that banks, as custodians of public and private funds, have obligations to their customers, especially with regard to confidentiality of transactions. So, any attempt or indeed breach of this near-sacred and long-established understanding between banks and their customers, (outside what is permitted by law) has implications not just for the banks but also the larger economy. As is well known, the Central Bank of Nigeria (CBN) always laments that the amount of money outside the banking system is very high. In spite of CBN’s efforts to bring much of the money outside into the banking system, successes recorded are yet to change the situation significantly. Consequently, effectiveness of monetary policies has remained impaired. And this is not in the best interest of the economy. On the other hand, banking institutions are having their own challenges – rising bad debts, poor liquidity, fraud, money laundering, etc). It is foreseeable that FIRS’ debt recovery approach will send signals -right or wrong- to customers of banks. One such signal may be that it is no longer safe for persons to keep their money in banks, without intrusion by third parties. When such happens, customers, who ordinarily have multiplicity of choices, will begin to consider alternatives to safekeeping and safe-guarding as well as utilisation of their funds. Consequently, more funds will find their way outside banks.  If this country returns to a situation where banks’ customers avoid or minimise using the banking system, the first casualties will be the banks. Their deposit portfolio will significantly decrease and with very high debt levels in banks already, an invitation to banks’ distress will, knowingly or otherwise, have been made. If the situation reaches a critical state where many banks may become distressed, Nigerians and their government will most certainly begin to place side by side tax debt recovery vis-a-vis banks’ distress to decide which, among the two, should be placed on hold. Therefore, for FIRS to continue or commence its intended incursion into the banking industry for the purposes of recovering tax revenues outstanding against the wealthy, it is imperative that both the regulators of the banking system and operators, at the highest level of decision-making, must properly and effectively engage themselves, prior to embarking on this explosive venture. There is the need to thoroughly consider and abide by legal and regulatory provisions. Proper planning and setting up of implementation procedures as well as consistent public awareness and/or orientation are important. In all respects, arbitrariness, high handedness and breach of relevant subsisting laws and regulations must be eschewed.  So, in the main, tax payment is a worldwide legitimate and civic responsibility of persons who are not exempted (for varying reasons) from such payments. Therefore, every tax liable person has a responsibility to meet such liability without waiting for the tax man’s knock on the door. Whether

A court in Abuja on Thursday blocked an attempt by Zinox Technologies Limited to suppress press freedom and stop PREMIUM TIMES from continuing its reporting on the allegation of N170 million contract fraud against the computer firm. In its ruling on the motion by Zinox Technologies seeking an injunction to restrain PREMIUM TIMES from further reporting the scandal, the High Court of the Federal Capital Territory, Apo, Abuja, dismissed the application for lack of merit. In his judgment, Justice SC Oriji said a close examination of the totality of evidence and address by Zinox Technologies did not show any cogent reason why the court should grant the injunction in its favour. According to the judge, a media organisation cannot be restrained from publishing a report yet to be proven legally as libellous. The judge said when a media organisation considers its publication factual, and its publishers have sworn to defend the facts of the publication, the court will infringe on the public’s right to know if it stops the press from exercising the responsibility guaranteed under Section 39 of the Constitution. Consequently, the Court dismissed the application by Zinox Technologies and upheld PREMIUM TIMES’ argument that the former had no good reason to warrant the Court granting the injunction. The matter was adjourned to March 11 for the hearing of their motion for extension of time within which they can file their reply to our statement of defence. ROOTS OF THE CASE On May 15, 2017, Zinox Technologies, an affiliate of Zinox Group, filed a suit seeking to restrain PREMIUM TIMES and some of its officials from continuing its reporting on the N170.3 million contract fraud scandal involving five of the company’s officials, including its top management. Zinox had accused the newspaper’s editors of libelling it and its chairman, Stanley Ekeh, through the series of publications on the scam. Apart from its demand for N2 billion in damages, Zinox asked for an order of perpetual injunction restraining PREMIUM TIMES from further publication, an apology as well as court directive for the removal from the newspaper’s website series of publications on the scandal. But, PREMIUM TIMES pushed back with a counter application demanding N10 billion as damages against Zinox Technologies and its top officials, for attempting to suppress press freedom by asking the court to stop the discharge of its role inform the public factually on issues in the society. Pending the commencement of hearing on the substantive suit, Zinox, on December 3, 2018, filed an application seeking the court’s injunction to restrain PREMIUM TIMES from publishing any further report on fraud scandal against its top officials. Hearing on the matter was adjourned to January 8. At the resumed sitting, after arguments were heard from both parties, the court adjourned till February 28 for the ruling, and commencement of hearing on the substantive suit. On Thursday, the court ruled against Zinox in favour of PREMIUM TIMES. But, the commencement of hearing on the main suit, which was earlier scheduled to commence immediately, was adjourned to March 18, 2018. Counsel to PREMIUM TIMES, Jude Muoka, hailed the judge for delivering a sound and erudite judgment by upholding the right of the press to publish factual and credible information and defending the right of the public to know. “We have always known the application was never on a firm foundation. Zinox Technologies and its officials were only using the application to attempt to shield themselves from the searchlight of the public over the scandal,” Mr Muoka said. Meanwhile, during the court sitting, Mr Muoka said he drew the court’s attention to the continued publication of defamatory materials against PREMIUM TIMES. Some of the publications surfaced in various online platforms a fortnight ago about the purported clearance by the police and the Economic and Financial Crimes Commission (EFCC) to the accused Zinox top officials over the fraud scandal. The reports featured in publications including Sabi News, Brand Spur, Grassroots.NG,   Communications Week, Independent, ThisisLagos, and Latest Nigerian News. But, the police and EFCC have since denied knowledge about the substance of the reports. EFCC spokesperson, Tony Orilade, told PREMIUM TIMES the question of clearance to Zinox does not even arise because it is not part of the mandate of the anti-graft agency. “As a rule, EFCC does not give clearance to any person or group in cases under prosecution. It is only the courts that are authorised to do so after the matter has been diligently prosecuted and the accused person or group discharged and acquitted,” he said. Also, police spokesperson, Frank Mba, said he had no knowledge about Police clearance of the Zinox officials. “I am not aware of any such report (of clearance of Zinox officials), I can assure you. I don’t know anything about it, and I don’t have anything to do about it for now,” Mr Mba said on the telephone.   Source: Dabawa

The National Council of Managing Directors of Licensed Customs Agents (NCMDLCA) has called on the federal government to take urgent steps and stop the recent additional shipping charges by shipping companies called “the government and port taxes”. According to the agents, by the action, the shipping companies had violated the provision of the Convention of World Trade Organisation (WTO) Articles VIII 3(b). In a petition addressed to the Minister of Transportation, Rotimi Amaechi and signed by its national president, Mr Lucky Amiwero, the body said the additional shipping charges was introduced through circular issued by shipping companies to their customers dated October 28, 2016, which is being implemented. The customs agents added that the increase captioned “Government & Port Taxes,” was charged at N38,000 per container without any government intervention in line with the provision of the legislative instruments and the memorandum of understanding (MoU) signed by all the stakeholders. The provision of the law authorises the carrier to hand over the goods to the consignee at the port of discharge without any cost, as all cost are embodied in the freight paid by importer based on the law. “Any other charges introduced by the shipping companies, contravenes the provision of the convention of WTO Articles VIII 3(b), the domestic laws and regulation, the practice constitutes very high percentage of charges that is not tied to service, which is a contributory factor to the high clearing cost that necessitate the diversion of Nigerian bound vessels to neighbouring West African ports,” Amiwero said. He added: “The shipping line is an agent to the carrier who are double agent in Nigeria, collecting from their principal-(carrier) and from the Nigeria importers, shipping line charges, without any operational cost like the provision of the following: Non-provision of terminal space, non -provision of equipment, non-provision of security and non-provision of staff. “There is the need to stop the present increase and any other charge that is not tied to services in line the United Nations Convention on Carriage of Goods by sea (Ratification and Enforcement) Act 2005, WTO Articles VIII and the various domestic laws and regulation in Nigeria.” The Association of Nigeria Licensed Customs Agents (ANLCA) recently accused shipping companies and terminal operators of sabotaging the Nigerian economy by charging fees that are unfounded and increasing the cost of doing business at the nation’s ports in favour of other countries. Former president of ANLCA, Olayiwola Shittu, had stated this when the Managing Director of the Nigerian Ports Authority (NPA), Ms Hadiza Bala-Usman paid a courtesy visit to ANLCA in Lagos. Shitu, said shipping companies and terminal operators have increased charges claiming that the NPA has increased its due. Some of the charges, he stated, included: shipping due departing charges, facility charge and others. He said: “There is also the sea protection levy that is also being charged by the Nigeria Maritime Administration and Safety Agency (NIMASA). At the end these charges are transferred to the consumer, making life unbearable for them “Shipping companies and terminal operators are reaping us off charging all manners of fees. They believe Nigeria is big and they can get all the monies they want from the country to service other West African region. We have it on good authority that what the shipping companies get from Nigeria is what they rely on for survival because of the next- to-nothing charges they get from other countries in Africa. “Again, the demurrage they are charging in Nigeria; they don’t have the facility to support it, they are required to have holding bays they don’t have. It does not matter if the fault is theirs or not – you are still charged demurrage. Their charge is the cause of the high cost of doing business at the port and this is affecting the Nigerian economy.” They also urged the NPA to consider the illumination of the ports as they cannot clear cargo at night ANLCA also accused the NPA security personnel of aiding touts and beggars at the port while denying their members entrance to the port. “We were asked to get gate pass and we have complied. Severally, I have had to go to the gate to intervene when the NPA official are harassing our members who has genuine gate pass whereas beggars and touts are allowed to move freely within and outside the port premises. I want you to take it into consideration and put an end to this anomaly,” he said.   Source: Thisday  

crucial part of the everyday life of every person. We encounter taxes everywhere: at work, in a supermarket, and even at home. However, personal income tax is the most important of them. We have gathered all the vital information about it so that you understand all the intricacies of the law. Income tax image: pixabay.com Source: UGC If a thought about calculating and paying your personal income tax scares you, do not worry. Luckily, you have us to help you with this issue. Read on and become a fearless master of taxes. What is personal income tax and personal income tax act? To start off, we should understand what a tax is. It is an obligatory payment all citizens of a country must make to a government. A government, in turn, uses this money to improve and sustain the functioning of a country and the life of its residents. Personal Income Tax (PIT) is a kind of obligatory levy that all individuals who gain any type of profit are obliged to pay. These people usually either are employed or have their own enterprises with or without employees. Personal income taxpayers also can be self-employed people. Money coins Image: pixabay.com Source: UGC All profits of the Nigerians fall under taxation. Even if you earned your money working for a foreign company and this revenue has a foreign origin, the levy is applied if the money is remitted to Nigeria. However, artists and athletes who earned money abroad are not obliged to pay the levy for these funds. They pay the levy only for money earned on the territory of Nigeria. Foreigners also pay the tariff only for funds earned in Nigeria. Personal Income Tax Act is the amendment of the Personal Income Tax Cap P8, LFN 2004. This law is relevant to levies and taxpayers. In Nigeria, taxpayers are all people who earn salaries or gain any kind of profit out any other sources of money. Your rights and obligations as a taxpayer Coins Image: pixabay.com Source: UGC As a taxpayer, you can demand from the authorities to be informed about what your levy money was spent on. Also, you are able to request any information about the procedure of paying the levies and all related matters, the authorities must fulfil this request. Having rights never goes alone without having certain obligations. In the case of PIT, all individuals must not keep in secret their sources of revenue and the amount of money they make. Also, based on your salary, you should pay your tariffs in time and calculate correctly the amount of taxes you have to pay. If you have, under any circumstances, failed to pay a PIT, certain penalties will be applied. 10% of the sum of levies not duly paid will be added to your obligatory payments. Additionally, you will be forced to cover all expenses related to the attainment of the funds not initially paid to the government. There are two ways by which the PIT can be paid. The first one is PAYE or pay-as-you-earn method. It applies to all people who work full-time for an employer. In this case, the employer is obliged to pay the levy for you by subtracting it from the salary you earn. Thus, you get your money with levies deducted already. By the way, employees who earn less than N300,000 a year must apply for a return of the levy. The second way is applied to self-employed individuals or those people owning a business and is called self-assessment or direct assessment. In this case, such individuals calculate the levy themselves and pay it to the relevant tax authority directly. Personal income tax rate in Nigeria In Nigeria, the rate of the PIT depends on the amount of money a person makes in one year. For the first N300,000, the levy rate is 7%. If a person makes another N300,000, then the rate increases to 11%. The next N500,000 escalate the deductible tariff rate to 15%, and subsequent N500,000 heighten it to 19%. The next N1,600,000 raises the levy rate to 21%. Then, in case a person receives another portion of revenue over N3,200,000, the rate soars to 24%. What is income tax in Nigeria? Money to pay Image: pixabay.com Source: UGC You should not confuse personal income tax with income tax (IT) or companies income tax (CIT). CIT is applicable to corporations and similar organisations. Such companies are entitled to pay the IT at the rate of 30% of their annual income. All corporations located in Nigeria are liable to this kind of taxation. Personal income tax in Nigeria can be a tricky matter. All Nigerian citizens have to pay this levy if they gain any revenue. The rate of the levy depends on how much money an individual makes. Your employer can pay PIT if you are an employee, or you have to calculate and pay it yourself if you are a self-employed person. Paying the tax on time is crucial. In the other case, unpleasant penalties will be applied. DIsclaimer This article is intended for general informational purposes only and does not address individual circumstances. It is not a substitute for professional advice or help and should not be relied on to make decisions of any kind. Any action you take upon the information presented in this article is strictly at your own risk and responsibility!   Source: Legit