TAX SERVICES

The Lagos Chamber of Commerce and Industry, LCCI, yesterday, countered the move by the Federal Inland Revenue Service (FIRS) to restrain bank accounts of some individuals and businesses over tax defaults. Muda Yusuf, LCCI boss…debt stock profile not sustainable In a communiqué by the Council of the LCCI, the Director General, LCCI, Mr. Muda Yusuf, said the move would be counter-productive to other measures of the government aimed at promoting investments and financial inclusion. LCCI said, “Revenue generation is not an end in itself, it is a means to an end.  The ultimate objective is to ensure equity, improve welfare of citizens, create jobs and promote the advancement of the economy.  The activities of agencies of government should be in tandem with the Ease of Doing Business Agenda of government and the promotion of the ideals of the Economic Recovery and Growth Plan (ERGP).” Yusuf noted that tax administration should be consistent with the principles of equity, fairness, legality, accountability and due process. “Taxpayers should be given ample opportunity to defend their positions on tax matters before a lien is placed on their bank accounts.  There are instances where company accounts were frozen in error because there was no proper engagement, documentation or communication with the tax payers.   Source: Punch

The Federal Inland Revenue Service is to dispose of the properties of 52 companies over tax debts valued at about N3.4bn. Investigations by our correspondent in Abuja showed that already, the Legal Department of the Service had begun the process to sell the properties in a bid to effectively implement the initiative. It was learnt that apart from the 52 companies, ten other companies are still under investigation for tax evasion while enforcement action is expected to be carried out on another 10 companies in Lagos with a total tax value of N727.42m. Our correspondent gathered that based on an investigation conducted by the FIRS, some private organisations that own properties in Nigeria had not been paying any form of taxes. Following this discovery, it was learnt that the agency took a review of all properties that were under corporate ownership. By law, where a company has not filed or paid any taxes, the tax authority used an estimated assessment based on the company’s turnover. In order to ascertain the level of turnover, the FIRS wrote to commercial banks asking for details of the turnover of some of the affected companies. The first letter to commercial banks from the FIRS, findings showed, was written in May last year. The letter requested a list of companies, partnerships and enterprises with a banking turnover of N10bn and above. The move was aimed at ascertaining those companies that are compliant with the tax laws and those that are not compliant. The second letter according to findings was written to all commercial banks in October 2018, and the responses from the banks are currently being reviewed by the FIRS. It was learnt that the move was part of the special programme to drive compliance. The special programme is targeted at recovering tax liabilities from non-compliant companies that are currently being assessed for tax under the Company Income Tax Act. Speaking on the steps to ensure compliance, the FIRS Chairman, Mr Tunde Fowler, had on Thursday during a meeting with the acting Inspector-General of Police, Mohammed Adamu, explained that the agency would collaborate with security agencies this year to go after wealthy tax defaulters. He had requested the Nigeria Police to assist the FIRS to bring the tax defaulters to pay their taxes. He said, “We looked at businesses, partnerships of any activity that has banking turnover between N100m and N999m. We have done a review of this group of businesses. “We have about seven more banks that we are still waiting for the return from and to review their information. “So far, we have 45,361 that have TINs and are making payments. We have 40,611 that have TINs, that made tax payment and, we have 44,504 that have no TIN and no payment. “So, when you look at it from a glance, we have close to 75,000 in this group that are still not taxpayers and we have said the payment of tax is not only for the civil servants. it’s for all Nigerians. “So, the millionaires and the billionaires will pay tax on behalf of what is due to the national coffers.” Fowler commended the Nigerian Police Force for its support and collaboration over the years, which he said, had helped the FIRS to achieve its target and requested for more support to enable it to recover taxes due to rich tax evaders in 2019.   Source: Punch   

The Lagos State Internal Revenue Service (LIRS) has extended the statutory deadline for employers to file their annual Pay-As-You-Earn (PAYE) tax returns by six working days from 31 January 2019 to Friday 8 February 2019. The extension became necessary to accommodate the significantly high number of taxpayers who are yet to file their PAYE tax returns through the designated online channel due to glitches on the platform.  The LIRS also announced that, with effect from Monday 4 February 2019, it will establish an alternative platform for taxpayers who have high volume of tax returns to file. Employers who are yet to file their PAYE tax returns to the LIRS should, therefore, take advantage of the extended window to comply, and promptly escalate any further teething problem with the e-filing platform to the LIRS. Source: Proshare 

The Federal Government realised over N35 billion in tax recoveries out of N92.7 billion tax liabilities by tax defaulters as it deepened enforcement reforms to shore up its non-oil revenue. The tax reforms initiative increased the number of taxpayers to 19 million with additional of over five million new taxpayers enrolled, Minister of Finance, Mrs. Zainab Ahmed disclosed over the weekend in Lagos while interfacing with journalists on major economic mileages of the current administration. The government, in 2017 introduced Voluntary Asset and Income Declaration Scheme (VAIDS), a time-limited opportunity for taxpayers to regularize their tax status relating to previous tax periods and pay any taxes due. In exchange for fully and honestly declaring previously undisclosed assets and income, taxpayers will benefit from forgiveness of overdue interest and penalties, and the assurance they do not face criminal prosecution for tax offences or tax investigations. Ahmed said government was oblivious of pileups of tax related cases; a development she said hampered government tax revenues. To break the deadlock, she said eight Tax Appeal Tribunals (TATs) were constituted last year across the nation to accelerate the resolution of over 209 pending cases relating to tax revenues of about $18.8 billion, N205.654 billion and €821,000 respectively. The minister listed other steps taken by government to boost collection of nonoil revenues to include, the reconstituted Presidential Revenue Monitoring and Reconciliation Committee (PRMRC) to provide reconciled data on oil and non-oil revenues (1999 – 2018; & 2019); to enable real-time monitoring of oil and none oil revenue collection; enhance scrutiny of budgeted expenditures and operating surplus remittances by Government-Owned Entities (GOEs); increased tax collection through Federal Inland Revenue Service’s automation of VAT collection at source and implementation of Project Lighthouse to mine data from recent tax amnesty exercises and recover unpaid taxes. Source: Headline Nigeria 

A whopping N248,871,621,023.767 billion went into the coffers of the Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS) and the Nigerian National Petroleum Resources (through the Department of Petroleum Resources) as income from cost of revenue collection for the Nigerian government in 2018 alone.   LEADERSHIP findings showed that the monies went into the respective major revenue generating agencies as statutory and Value Added Tax (VAT) entitlements between the period of January and December 2018.   Expectedly, FIRS got the highest chunk of the money. From January to November (11 months) of the year under review, FIRS’s four percent cost of collection amounted to N83, 755,175,660.67 billion (both statutory and VAT). On the other side, the Nigeria Customs Service’ seven percent deduction from the revenue generated in the 11 months stood at N47,892,491,791.84 billion, during which DPR took the sum of N45223953571.04 billion as its four percent cost of revenue collection.   In December alone, the three agencies also got the sum total of N72.187 billion, based on independent findings by LEADERSHIP. FIRS made the biggest revenue for itself in July when it took a whopping sum of N12.21 billion as cost of revenue collection for the month of June alone.   Compared to the N194.52 billion disbursed to the 36 States of the federation, FIRS would have made over double the allocation to each state in the month of July. A detailed analysis of the figures showed each State got N5.4 billion in July, in a month each of the 774 LGCs received paltry N189.987 million. DPR also got increased revenue sum of N5.4 billion, with NCS keeping its fair share of N4.818 billion within July. N4,141,323,813.22 billion. What that means is that each of the agencies, especially FIRS got more than the monthly allocation to each of the States. Compared to 2017, deductions to the agencies in 2018 were obviously higher than what was recorded in the same period of 2017 when the country was in recession and prices of oil products lower.   The agencies retain the respective percentage as cost of revenue collections they make on behalf of the federal government and the States and Local Councils. The deductions are for self-funding of their individual operations. The three agencies are not captured in the annual federal budget. Official documents showed that FIRS remitted about N4.63 trillion to the Federation Account between January and November, 2018. According to the revenue agency, the collections were chiefly from three major tax streams, namely Petroleum Profit Tax (PPT), Companies Income Tax (CIT) and Value Added Tax (VAT).   FIRS is setting an N8 trillion target of revenue generation for itself in 2019. It has failed to meet its target since the last three years. In that same vein, the Nigeria Customs Service announced a total revenue generation to the federation account last weekend. It put the total remittance at N1, 202,271,240,478.30 trillion for the year 2018. Its jubilation was that the 2018 figures N1, 037,373,967,400.80 billion collected in 2017 by are presenting N164, 897,273,077.50 billion. Comptroller-General of Customs, Col. Hameed Ibrahim Ali (Rtd) described the result to what he called dogged pursuit of what is right rather than being populist by compromising national interest on the altar of individual or group interests. Source: Punch

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