Tax news

Prince Adetokunbo Kayode, President of Abuja Chamber of Commerce and Industry (ACCI), has called for urgent tax reforms to save Small and Medium Enterprises (SMEs) from stifling demands for tax even before they make profit. Kayode who stated this while speaking with newsmen in Abuja, explained that the practice of mandatory requirement for tax clearance from companies newly registered was a disincentive for the growth and thriving of SMEs in the country and also one of the stumbling blocks in the Ease of Doing Business. While noting the ongoing progress in national tax reforms, the ACCI boss advised tax authorities to immediately review the tax clearance system to reduce the burden placed on new and young companies sprouting up across the country. “The growth of Small, Medium and Micro Enterprises depends very much on the enabling environment the government is able to create for them to grow. “Their growth will in turn create jobs and collective wealth for the nation. All that is necessary must be done to nurture such new businesses. “New companies should not be mandated to produce tax clearance until after a year or so of operations”, he noted. Wondering why tax must be imposed before operations, Kayode said members of the Chamber of Commerce had variously lamented the negative effect of that policy in their efforts to run their legitimate businesses. “If this country must grow and have a vibrant economy, the plight of the SMEs must be adequately taken into account. SMEs are of fundamental importance to us due the meaningful contribution they add to economic development. “They are constantly expanding output, generating employment, redistributing income, promoting indigenous entrepreneurship as well as greatly producing primary goods that strengthen industrial linkages. The sector is accountable for about 85 per cent of the total industrial employment in the country and between 10-15 per cent of the total manufacturing output”, the President of ACCI insisted.   Source: Punch

The Society of Women in Taxation, Lagos State Chapter, says it is committed to promoting tax knowledge to women in society. In a statement on Monday, SWIT said it would be educating women during its upcoming tax forum for corporate and professional women in Lagos with the theme, ‘Building a new Nigerian tax culture through women.’ The Chairperson , SWIT , Lagos State Chapter, Mrs  Dena-Rose Ajayi, said women were nation builders. “Thus, there is a need to properly enlighten them on tax policy issues,” she said The chairperson said participants at the forum would include women “who are captains of industries and successful women leaders in both private and public establishments.” She said the event would also feature award session during which deserving individuals and organisations would be recognised for their contributions to development of taxation in Nigeria. According to the statement, the chapter recently held its regular tax programme for the youth by organising an inaugural tax debate for the secondary school pupils both in public and private schools in the state.   Source: Punch

The Federal Inland Revenue Service has appointed Sterling Bank Plc as a collecting agent to recover taxes from 2,933 defaulting companies. This was disclosed in a letter signed by the Chairman, FIRS, Mr Tunde Fowler, and addressed to the Managing Director/Chief Executive Officer, Sterling Bank, Abubakar Suleiman. The letter, which was obtained by our correspondent, was titled, ‘Letter of substitution appointing your bank as collecting agent and notice for release of bank statement and other financial records of the following attached companies.’ In the letter, the tax agency informed the bank of the failure of 2,933 listed companies to comply with provisions of the tax laws by not paying taxes due to the FIRS. The letter read in part, “Pursuant to my powers under Section 49 of the Companies Income Tax Cap C12 LFN 2004 as amended and Section 31 of the FIRS (Establishment) Act No. 13 of 2007, I hereby appoint your bank as a collecting agent for the full recovery of the amount displayed on the attached schedule payable to the FIRS. “In this regard, you are required to set aside the aforesaid sum and pay same to the credit of these attached companies in full or partial amortisation of its aforesaid tax debt. This should be done prior to the execution of all or any related transactions involving these companies or any of its subsidiaries. “I further request that the FIRS be informed of any transactions prior to execution on the accounts, especially the transfer of funds to or from offshore or local accounts of these companies or any of its subsidiaries. Only on my authority should such transactions be exited.” The FIRS also requested the bank to forward to it, within 72 hours, the receipt of the appointment letter, detailed bank statements and financial records for the attached companies and/ or any of its subsidiaries, holding accounts with the bank. “You are also to provide records of all principal officers related to any of these companies. The statement should cover the period from the date the accounts were opened to the date of receipt of this notice,” it stated. The FIRS also informed the bank that failure to comply fully with the notice was an offence punishable under the various tax laws and the criminal code.   Source: Punch

The Federal Inland Revenue Service (FIRS) says it will go after estimated 40, 000 millionaire tax defaulters in 2019. Mr Wahab Gbadamosi, the Head Communications and Servicom Department of FIRS, disclosed this in a statement in Abuja on Thursday. Gbadamosi quoted the Executive Chairman of the service, Mr Tunde Fowler, as making this disclosure when he received the Acting Inspector General of Police, (I-G) Mohammed Adamu who paid him a courtesy visit. Fowler said that FIRS identified 45, 000 millionaire tax evaders in 2018 and recovered N23 billion through substitution of their bank accounts. He explained that N23 billion was realised from over 45, 000 tax defaulters that had over N100 million as turnover in their accounts. He called for collaboration with stakeholders like the Police to continue to go after wealthy tax defaulters in 2019. Fowler requested the Nigeria Police to help the Service bring the tax evaders to pay their taxes. He thanked the Nigerian Police Force for its support and collaboration over the years in assisting FIRS to achieve its target. He sought for more support and collaboration to enable it recovers due taxes from more 40,000 rich tax defaulters in 2019. “Let me put on record that the Nigeria Police Force has been extremely helpful to FIRS. Without the Police, I doubt if the Service would have been able to achieve what we have achieved. “2018 was a successful year. The FIRS collected a total of N5.320 trillion of tax revenue. This is the highest revenue collection in the history of the service. “This is significant, because this collection was when oil prices oscillated between $50 and $70 per barrel. “Oil price was at an average of $100 to $120 per barrel between 2012 when FIRS collected N5.07 trillion. “Oil component of the N5.320 trillion is N2.467 trillion, which represents 46.38 per cent, while non-oil element of the collection is N2.852 trillion, which is equal to 53.62 per cent,” he explained. The acting I-G assured FIRS that the Police would continue to support the service because the job of revenue generation was critical to the survival of the nation. Adamu said that the service rendered by FIRS was important for the survival of the country. He emphasised the need for the service to be supported by all stakeholders so that it could achieve its goals.     Source: PM News

A Federal High Court in Lagos on Thursday, fixed March 26 to hear a preliminary objection to a suit by MTN Nigeria Communication Ltd, against the Attorney General of the Federation, over alleged N242 billion and 1.3 billion dollars import duties and withholding tax assessments. The News Agency of Nigeria reports that MTN instituted the suit by a writ, dated September 10, 2018, challenging the legality of the AGF’s assessment of its import duties, withholding tax and value-added tax in the sums of N242 billion and 1.3 billion dollars. The plaintiff is seeking among other reliefs, a declaration that the AGF’s demand of the sums of N242 billion and 1.3 billion dollars from MTN, is premised on a process which is malicious, unreasonable and made on an incorrect legal basis. When the case was called on Thursday, Mr Damian Dodo (SAN), appeared for MTN, leading Messrs Tunde Fagbonhulu (SAN), Prof. Fabian Ajogwu (SAN) and Olabode Olanipekun (SAN). Mr Terhemba Agbe, a Senior State Counsel from the Federal Ministry of Justice, announced appearances for the AGF. Plaintiff’s counsel then informed the court that the matter was adjourned for mention, adding that plaintiff had filed all necessary papers and pleadings and is prepared to open its case. In response, Agbe informed the court of a preliminary objection to the suit dated November 5, 2018, and filed on November 7, 2018, which he said had been served on the plaintiff. He told the court that he was informed that the plaintiff had filed a reply to the objection, but that he was yet to receive same. Justice Aneke consequently fixed March 26, for hearing of the defendant’s preliminary objection. In its writ of summons, MTN is seeking declaratory reliefs on the following grounds: That the purported “Revenue assets investigation” allegedly carried out by the Federal Government on MTN, for the period of 2007 – 2017, and its decision conveyed through the office of the AGF by a letter dated Aug. 20, violates the provisions of section 36 of the constitution. A declaration that the AGF acted in excess of its powers, by purporting to direct through its letter of May 10, a “self-assessment exercise” which usurps the powers of the Nigerian Customs Service to demand payment of import duties on importation of physical goods. A declaration that the AGF acted illegally, by usurping the powers of the Federal Inland Revenue Service, to audit and demand remittance of withholding tax and value-added tax. A declaration that the purported “self-assessment” exercise instituted by the AGF via its letter of May 10, is unknown to law, null and void and of no effect whatsoever. In addition, the plaintiff wants a court order, vacating the AGF’s demand letter dated Aug. 20, for the sums of N242 billion and 1.3 billion dollars from MTN Nigeria Communications Ltd. Besides, MTN is claiming a total sum of N3 billion in damages, against the defendant, which covers General damages, exemplary damages, and Legal costs. Meanwhile, in its preliminary objection, the AGF argues that the plaintiff in seeking redress to the subject matter, has just three months from the date of the cause of action arose, to institute the action.   It argues that the plaintiff commenced the suit in clear disregard to section 2 of the Public Officers Protection Act, which provides that any action commenced against a public officer, must be made within three months from commencement of cause of action.   AGF argues further that plaintiff’s failure to commence the suit within three months as stipulated by law, robs the court of jurisdiction to entertain same.   Source: Punch

The Nigeria Labour Congress has called for an amendment to the present Income Tax Law so that the new National Minimum Wage of N30,000 will not be taxed. NLC’s General Secretary, Dr. Peter Ozo-Eson, made the call in Abuja in an interview with the News Agency of Nigeria on Wednesday. Ozo-Eson was reacting to a motion submitted by the National Union of Textile Garment and Tailoring Workers of Nigeria at the plenary session of the 12th National Delegates Conference of the NLC. NAN reports that the union had noted that there was a twin assault on the real income of Nigerian workers caused by unrestrained devaluation of naira and high rate of inflation. The union had also expressed concern that the process for the new minimum wage was taking too long, calling on the NLC to discuss strategies and plans for effective implementation of the new minimum wage, particularly at the state level. According to Ozo-Eson, the call has become necessary as the income tax law needs to be amended to protect workers’ purchasing power. Ozo-Eson, while appealing for protection of the new minimum wage, said that the N30,000 as agreed was a compromised minimum wage that was ‘so low.’ ‘‘Ideally, it should not be taxed; but I believe that the correct way to do it is to amend the Income Tax Law in order to raise the exemption bar if the N30,000 will fall within. ‘‘The law should be amended to ensure that the minimum wage level is below the taxable income. Under the present law, if you earn N18,000 a month, your tax is zero. ‘‘There is a tax table, but with N30,000, under the existing exemption guideline, there will be some little tax because it will be slightly above the exemption tax. ‘‘What needs to be done is to have an adjustment to the schedule so that the exemption is placed above the minimum wage,’’ he said. General Secretary, National Union of Textile, Garment and Tailor Workers of Nigeria, Mr. Issa Aremu, stressed the need to put pressure on the Federal Inland Revenue Service to raise the tax bar. Aremu said this should be done in such a way that the N30,000 minimum wage would fall below taxable income. He advocated tax holidays for some categories of Nigerian workers. According to him, ‘‘Now that we have raised the minimum wage to N30,000, we must impress it on the FIRS to raise tax bar so that the new minimum wage will be protected. ‘‘If you tax minimum wage of N30,000, we may as well go back to N25,000 or N27,000 by default. ‘‘The Deputy Speaker of the House of Representatives, Yusuf Lasun, raised the point and I think Labour must push the agenda to protect the new minimum wage. “The N30,000 is actually a compromised amount from N56,000 earlier proposed; so, it must be protected. ‘‘If the Federal Government can give 10 years’ tax holiday to companies, why not give the same to workers? ‘‘Given the collapse of income today, Nigerian workers deserve tax holidays. We are not asking for this because we consider our job as charitable, what workers have in their pockets is what will turn the economy around. ‘‘That is what we will use to purchase goods in the market and pay rent. ‘‘For economic recovery, it is good for workers to have a sustainable purchasing power or disposable income that is off the tax hook,’’ he added.   Source: Punch

LAGOS – To ensure the industry overcome its current challenges, the Association of Bureaux de Change Operators of Nigeria (ABCON),yesterday emphasized the need for the Central Bank of Nigeria(CBN) to exempt bureau de change operators from payment of Value Added Tax (VAT). The association’s president, Alhaji Aminu Gwadabe, stated this in his speech at the launch of the ABCON live run automation project in Lagos. He said the association should also be exempted from Commission on Turnover (COT), reduce BDCs annual license renewal fee and also expand their scope of transactions,lamented that the BDC sector has been confronted with many challenges that have continued to defy solutions. According to him,some of the challenges include multiple exchange rate, abnormal bank charges, Value Added Tax (VAT) and Commission on Turnover (COT), parallel market operators and illegal International Money Transfer Operators (IMTOs), porous international borders, complex documentation requirements and poor capacity/ skills of operators. He said these hitches have negative impact on BDCs’ efforts toward compliance to statutory and regulatory requirements, adding that six units within the CBN are involved with BDC regulations, supervision, licensing, monitoring. He, however, stated that the association currently has an understanding the Federal Inland Revenue Service (IFRS) where members now pay five per cent of commission made from their transactions. Speaking on the launch of the automation project, Gwadabe said the portal will sustain transparent transactions in the BDC corridor, boost the morale of operators and ensure continuous operations in ABCON. “The ABCON has fully upgraded its Information Communication and Technology (ICT) platforms, to achieve full digitization of BDCs operations in line with its goal of sustaining transparent operation and prompt rendition of weekly returns to regulatory agencies. “Of special note is also the integration of our platform to immigration platform for the verifications of international passport. Already, we are in advance engagement with the Irish technology experts for the achievement of this idea”, he said. On deepening capacity and skills of industry operators, Gwadabe said the association is appealing to the CBN to issue Letter of Consent for its proposed training institute. “This is going to boost the current ABCON Management commitment in building capacity for its members and to stimulate competency in the sector”, he said.   Source: independent