Tax news

Buhari pledges to end illegal tax collections

President Muhammadu Buhari on Friday in Abuja pledged that the Federal Government would look into the issue of illegal tax collections to encourage more private sector businesses to thrive in the country. The president made the pledge when he received the leadership of the Amalgamated Union of Foodstuff and Cattle Dealers Association of Nigeria (AUFCDN) led by Alhaji Ali Tahir. Buhari Buhari told the delegation that his administration had genuine intentions to eliminate illegal taxes in the country, despite the fact that ‘‘old habits die hard.’’ The President was responding to a request by the association on the need for the Federal Government to rein in on the unhealthy practice of illegal tax collections. He said: ‘‘I am appalled to learn that these illegal tax collections still persist. Bad habits are not easily dropped. ‘‘But let me assure you that relevant security agencies will be reminded of their duties in preventing these bad practices and safeguarding people like you who go about their legitimate businesses. ‘‘I will take up all your appeals and complaints in due course and together with State Governments, we will attend to your proposals.’’ While describing the association as very important and strategic to the nation’s economy, the President said: ‘‘The merchandise and products you trade in are basic to any economy. “The real wealth of this country lies in agriculture and livestock rearing.’’ He, therefore, pledged that the administration’s continuous assistance to the sector, noting that some of the more advanced countries like Argentina, Australia, New Zealand and Denmark built their economies primarily on agriculture and livestock trade. On the 2019 elections, Buhari welcomed the associations’ support for his administration, recalling that they also demonstrated their solidarity for his candidacy in the build-up to the 2015 elections. In his remarks, the General Secretary of the Union, Alhaji Ahmed Alaramma, declared that they would work for the re-election of Buhari because the administration has taken the country back to the path of sustainable growth. Alaramma appealed to the President to ensure that the “union is represented on the national campaign teams for the Buhari/Osinbajo re-election movement to enable it play the campaign role effectively’’. On the issue of illegal tax collections, he said: ‘‘Roadblocks are mounted by unknown persons on several highways including those in Adamawa, Taraba, Benue, Cross River, Ebonyi, Abia, Enugu, Anambra, Imo and Bayelsa States and these continue to constitute a hindrance to our businesses.’’ While commending the Buhari administration for the progress of work on the Lagos-Ibadan rail project, the group urged the Federal Government to establish a food and livestock market with close proximity to road and rail around Lagos-Ogun State expressway. Source: Vanguard

LIRS directs employers to deduct 10% tax from termination benefits.

THE Lagos Inland Revenue Service, LIRS has directed employers to deduct Capital Gain Tax (CGT) from employee’s termination of service payments, which is 10 percent of the terminal benefits of employees. According to LIRS, such compensations are subjected to taxation in line with section 6(a) of    the CGT Act, although it is exempted from taxation in paragraph 26 of schedule three of Personal Income Tax    (PIT) Act and the compensation will be exempted from Pay As You Earn (PAYE) if the sum was not agreed on or before the disengagement process began. The notice read: “Pre-agreed amounts are generated from employment and subject to PAYE. Gratuity payments are tax deductible for PAYE purposes if they are paid under an approved pension scheme in line with Section 5 of the Pension Reform Act (PRA) 2014. “If paid outside the PRA, the gratuity payments would be taxable if the conditions under Paragraph 18 of the 3rd Schedule is triggered, i.e. The service period is not up to 10 years; Any amount in excess of N100, 000; and Where the service period is not up to five years (or an aggregate of 63 consecutive months in the case of a service that is not continuous), the exemption allowed is N1, 000 per annum for such period or aggregate period of employment. Any excess calculated does not qualify for the exemption.”   The agency enjoined employers to henceforth, notify the LIRS of payments for compensation in a situation of loss of employment.   “It is no longer acceptable to lump terminal benefits under the heading of compensation for loss of employment. Employers are required to show each pay component and the corresponding payments in their tax returns to enable the LIRS determine the correct tax treatment,” its stated… Source: Vanguard