TAX SERVICES

The Head, Tax and Corporate Advisory Services, PwC Nigeria, Taiwo Oyedele, has said the high company income tax rate in the country is a disincentive for business growth. Oyedele, while speaking during the Finance Correspondents Association of Nigeria annual workshop, themed ‘Unlocking opportunities in Nigeria’s non-oil sector’, said Nigeria had one of the highest company income tax rates globally. According to him, Nigeria is among the top 10 in the world with highest income tax rate. Oyedele said, “We pay Company Income Tax at 30 per cent, education tax at two per cent and 10 per cent withholding tax on whatever is left. “If you add it together, it is more that 40 per cent already. If you now make a mistake of having a group and you say it is a holding company, that is another 30 per cent. Who does that?” Oyedele revealed that there existed a commencement rule, which was supposed to punish start-ups during commencement by making them pay tax twice. He noted that to address the challenge, operators in the private sector should focus on demanding removal of some of the disincentives that affected business operations. He said, “What I keep saying to government is that I can insist that I have a small pot and I must get 60 per cent of the pot by all means or I allow the pot to be big enough and then get 10 per cent of it. “Government must remove tax disincentives. One thing I am asking the business community is stop asking the government for incentives because they will think they are doing you a favour. Ask them to remove the disincentives that are not allowing us to do business.” Oyedele called on the authorities to change their thinking about taxation, saying the current approach had only made compliance difficult. According to him, the thinking of citizens around taxation is completely upside down. He said, “As a government, I should help you make money so that you can pay me tax; It is just common sense. Nigeria has a tax system that does not allow businesses to thrive, whether you are small or big. “The reason Nigeria cannot make money from tax, and it is not a curse, is that it continues to beat up the people at the bottom of the ladder. But they cannot give you what they do not have.” Oyedele said if the government could focus on the top one per cent rich and big companies, they would get the desired tax results.   Source: Punch

The Tax Appeal Tribunal, TAT, has warned petitioners that it was not susceptible to inducements and would only continue to treat appeals before it on their merits. Work on VAT implementation, not increase,Ex-ANAN president urges FG The Tribunal also said that it does not use technicalities to adjudicate matters before it, but dispense them meritoriously; noting that matters before it do not last beyond three months before judgments are delivered on them. Chairman of TAT South East zone, Mr. Chukwuemeka Eze made the disclosures in a stakeholder’s interactive forum on challenges and solutions of tax administration held in Enugu, Wednesday. Eze also clarified that the tribunal was not an extension of Federal Inland Revenue Service, FIRS, even though it was established by the ministry of Finance to deal on matters arising from taxation. He particularly said that the tribunal was established to resolve disputes among tax payers and their administrators. “There are instances that even the government and their agencies have lost petitions brought to us. We don’t take bribes, yes you can’t settle us. We have sworn to serve our father land,” Eze stated. Adeyeye’s sack by tribunal a travesty of justice – APC(Opens in a new browser tab) He said that Nigerians had lived in the past glory of not paying taxes due to the sharing of federal allocation, but emphasised that any serious society desirous of development needs to be tax conscious. In his contribution, the Chairman of Enugu State Board of Internal Revenue Service, Mr. Emeka Odo said “the poor hardly pay taxes. It is the rich that have business enterprises, properties and concerns that pay taxes. “We are looking for how to increase tax net in Enugu state so that more people can pay taxes. If you must enjoy social services in the state, you would have to pay tax and obtain your Enugu State Benefit Number, ESBN. If you don’t have income, we won’t tax you, but if you have, we will tax you.” Former President of Enugu Chamber of Commerce Mines and Agriculture, ECCIMA, Pastor Olisemeka Jideonwo called for closer collaboration between tax administrators and the business community, so that taxation would not rob off on employment opportunities.   Source: Vanguard

Chairman, Federal Inland Revenue Service, Babatunde Fowler, has advised accountants against colluding with tax evaders, warning that they have no power to substitute accounts. Fowler gave the advice on Wednesday at the ongoing 49th Annual Conference of the Institute of Chartered Accountants of Nigeria, where he was the keynote speaker at a panel discussion on FIRS Power of Substitution. Critical Review and Matters Arising. The discussion was chaired by former FIRS Chairman, Ifueko Omoigui-Okauru. While explaining the dynamics involved in the substitution of accounts, Fowler urged accountants at the conference to partner with FIRS in order to improve the revenue collection efforts of all tax authorities. Before the FIRS decided to place lien on bank accounts of defaulting taxpayers, noted Fowler, it granted a waiver of penalty and interest for three years (2013-2015), followed by the Voluntary Assets Income Declaration Scheme. According to him, it was when millionaire and billionaire taxpayers, with turnover of between N11 million and N1 billion, passed up the opportunity to pay their taxes that the FIRS decided to place lien on defaulting taxpayers’ accounts. He said: “All defaulting taxpayers were considered, provided that such taxpayers came forward to declare their indebtedness; pay at least 25% of the outstanding amount and present a payment plan on the outstanding tax liability that was acceptable to the Service. This window was opened from 5th October to 24th November, 2016. A total of 2,400 companies took advantage of the window, from which FIRS realized about N98.8 billion.” He noted that without chartered accountants, it will be very difficult to ensure that adequate taxes are being paid and called on accountants to be diligent and forthright when reviewing clients’ financial status. He said: “Do your own internal assessment on what your clients should pay; drop accounts that are not willing to do the right thing.” He explained that the revenue collected by the FIRS is distributed among the three tiers of government, adding that over 30 states rely on that monthly collection without which the service delivery in those states would have been considerably poorer. He said: “We are all here for this conference, certain that chartered accountants came from various states across the nation. If in your state, we were not able to support your revenue drive, what level of security would you have in your state? The FIRS boss explained that the Service has been empowered Section 8 (1) (a) of the act establishing it to assess persons chargeable with tax under the extant tax laws and enforce payment of taxes as may be due to government.  Section 8 (1) (c) of the FIRS Establishment Act, he said, empowers the Service to collect, recover and pay to the designated account any tax under any provisions of the Act, while Section 8 (1)(g) of empowers the Service to adopt measures, to identify, trace, freeze, confiscate or seize proceeds derived from tax fraud or evasion. He added that Section 31 of the FIRSEA provides for the power of substitution, which is one of the enforcement powers of the Service. However, his position was rejected by accountants and lawyers at the conference. Wole Obayomi, Head of Tax, KPMG in Africa, maintained that Sections 33 of the FIRSEA and Section 49 of Companies and Income Tax Act do not grant the FIRS such powers. Omoigui-Okauru, who chaired the session, insisted that the FIRS is acting within the law and suggested that FIRS and disaffected taxpayers should seek a middle ground, possibly through an Ombudsman to  address the complaints.   Source: Eagle

ARMED with a twin-argument on the need to raise revenue and match the continental standards, the Federal Government is about to implement a hike in value-added tax rate from five per cent to between 7.2 and 7.5 per cent. First, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said the sub-national governments in particular would need to fund the new minimum wage with the extra income from VAT. Second, at the current rate, government argues that Nigerians are paying the lowest VAT in Africa. It is a truism that modern governments run on tax, but beyond the mere increase of the VAT rate, the most critical issue for the authorities is to implement a wider, holistic tax reform. An increase in VAT now will hurt low-income Nigerians the most. If the controversial proposal sails through in the National Assembly, VAT revenue will shoot up to N2.09 trillion in 2020, Ahmed stated. She said, “The Federal Government will be receiving proposed aggregate of N4.26 trillion from the Federation Account and the VAT pool. The states and local governments are expected to receive N3.04 trillion and N2.27 trillion respectively.” On the surface, this looks sound. To the government, the upward VAT adjustment is enough to meet the increased personnel costs of the three tiers of government. Currently, with N18,000 as the minimum monthly wage, a majority of state governments find it difficult to pay wages and pensions so the extra funds will come in handy. Already, without the implementation of the new minimum wage, the personnel cost of the Federal Government rose from N1.7 trillion in 2017 to N2.1 trillion in 2018. So, the new rate is also essentially to cater to the new wage of N30,000, the implementation of which is being delayed by the consequential adjustments for senior civil servants. In all this, government is emboldened by the situations in other climes. At five per cent, the authorities collected N1.1 trillion in 2018, amounting to 0.09 per cent of Gross Domestic Product compared to about 3.8 per cent in the Commonwealth and ECOWAS, a PwC report notes. The government is disingenuous when it cites higher VAT rates in other countries. A World Bank report argues that VAT potentially distorts consumer behaviour less than many forms of indirect taxes and may therefore be comparatively efficient in generating government revenues. However, they involve some drawbacks, both in terms of efficiency and equity. By law, the European Union member countries are required to levy a standard rate of at least 15 per cent, but permit a reduced rate of at least five per cent, thus enabling members to have several rates to protect the lower income earners. Cyprus has a standard rate of 19 per cent, but charges only five per cent on basic foods, medicines, books and newspapers while charging nine per cent on catering and hospitality, its mainstay. Germany, Montenegro, Malta and several other EU countries also charge far less on food and medicines. VAT is used creatively elsewhere to meet national economic goals. But that is only half of the story. In most of these countries, social infrastructure is available and works efficiently. The tax net is inclusive and evasion and leakages are punished maximally. Here too,  23.9 per cent or over 20 million of the working population is jobless, inflation at 11.37 per cent by first quarter 2019 and GDP grew a disappointing 1.9 per cent in 2018, while foreign transactions on the Nigerian Stock Exchange dropped by N106.31 billion and domestic transactions dropped by 71.16 per cent. At a time like this, revamping the economy and creating jobs should be the primary goal; government should avoid policies that will translate into higher cost of living, higher costs for business or more factory closures and job losses as enunciated by the distraught private sector. It is a simple economic principle that keeping more money in people’s pockets is one sure way to get the economy back on track and reduce poverty. Nigeria is already the poverty capital of the world and the current figure of 94.35 million extremely poor could rise. An increase will invariably raise the inflation rate as VAT, a tax on all goods and services in the country, including imports, will hit the most vulnerable in a country that is import-dependent, even for food. The cynical resort to across-the-board tax increase to meet the increased wages of less than two per cent of the population is defeatist. Generally, poorer households spend a larger proportion of their income. A VAT is therefore regressive if it is measured relative to current income and if it is introduced without other policy adjustments. The government’s argument that it will make more money available to the states, who take 85 per cent of it, is also puerile as it imposes an unfair burden on Lagos that contributes 55 per cent of VAT, the FCT 20 per cent, while the remaining 35 states generate only 25 per cent.  To be sure, VAT rate, after 25 years, ought to be reviewed in line with current realities and national aspirations; It can be raised for some goods and services, lowered for others or the increase could be graduated over a period. The trouble with our public finance is mostly one of excessive spending, not inadequate VAT.  Corruption and waste define governance here. Wealthy Nigerians hardly pay tax. No serious government should feel comfortable in a situation where only 14 million of the 69 million taxable Nigerians file their tax returns annually. It is unimaginable that only 214 Nigerians paid up to N20 million or more as tax in Africa’s largest economy, according to the Vice-President, Yemi Osinbajo. The government should summon the political will to ensure that the well-heeled who are currently not captured in the tax net are brought in. In functioning countries, government takes serious exception to tax evasion, for which reason the offenders are seriously punished. National Assembly members are set to buy cars with public funds; the

Osun State Governor, Adegboyega Oyetola, has solicited the support and cooperation of traditional rulers on the need to mobilise their subjects to pay taxes regularly. He said the call was necessary to help the administration actualise its dreams of boosting the revenue profile of the state. Governor Oyetola spoke, yesterday during the presentation of staff of office and instrument of appointment to the newly appointed Olulamokun of Yakooyo, Oba Oyewole Oyediran, at Ife-North Local Government Area. He said the government will remain faithful to its avowed commitment to make life bearable for all citizens. The governor urged the monarchs to support the policies and programmes of the administration designed to move the state forward. He further implored the them to work in partnership with the government and security agencies, saying the government would continue to count on their support in the maintenance of peace, security, law and order. “I solicit more of your cooperation and prayers. The task of governing Osun and delivering the dividends of democracy is not a one-man show. It is the responsibility of all, which calls for involvement of all. “I, therefore, enjoin you to pay your taxes and rates as and when due,” Oyetola said. Earlier, Ooni of Ife, Oba Adeyeye Enitan Ogunwusi, lauded the administration for being responsive and responsible to the people’s needs. Yakooyo Progressive Union President, Adewale Oyebowale, called on the residents to be united to move the town forward. In his response, Oba Oyediran thanked Governor Oyetola, the Ooni of Ife and people of the town and promised to put in his best to advance the socio-economic life of the people of the town and the state as a whole. Meanwhile, the state government has disclosed that, as from today, it will begin the inauguration of 100 revitalised Primary Healthcare Centres (PHCs) across the state. The government said the revitalisation exercise would cover 332 PHCs, which is one per ward. It, however, disclosed that100 of them had been completed, some of which had already been put to use from the day they were completed because of exigency. The government noted that 21 PHCs would be inaugurated in the first phase, while the remaining would be done later. This was disclosed by members of the Osun Health Revitalisation Committee, Rafiu Isamotu, who was the immediate past commissioner for Health and Remi Omowaye at the Conference Room, Ministry of Health, Government Secretariat, Osogbo.   Source: The Sun