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NECA rejects FG’s call on states to increase VAT

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The Nigeria Employers’ Consultative Association (NECA) has rejected calls by President Muhammadu Buhari to state governments to increase Value Added Tax (VAT) in order to increase their Internally Generated Revenue (IGR). The group said, yesterday, that such move would do more harm to the already burdened private sector. Speaking in Geneva, capital of Switzerland, where the International Labour Organisation (ILO) conference is holding, NECA Director-General, Mr. Timothy Olawale, stated that though the president meant well by urging state governments to increase their Internally Generated Revenue (IGR), considering the reported over N2 trillion in bailout funds to many of the states, increase in VAT or any other form of tax as a way to increase IGR at this time is not only misplaced, but will do more harm to the already burdened private sector and further impoverish the citizens that the president promised to take out of poverty. Olawale e said that state governments cannot unilaterally increase VAT without amendment to the Value Added Tax Act by the National Assembly. The NECA boss averred that “the common man will definitely be at the receiving end of any increase in VAT. Even if businesses are taxed more through likely illegal levies and rates outside the provisions of the law, they will naturally pass the cost to the customers whose purchasing power is already at the lowest ebb.” While proposing a way out for the state governments, he noted that “what needed to be done by the governments and indeed the Federal Government in an aggressive taxpayer enlightenment and expansion of the tax net to capture more citizens as has been posited, arguably as less than 40% of Nigerians are tax compliant.” “Secondly the states should put mechanisms in place to eliminate leakages as a large chunk of the IGR realised does not find its way into government coffers.” “Finally as reiterated over and over again they should drastically cut the cost of governance. Several unnecessary retinues of aides kept by them at prohibitive cost to the state are needless. Besides, ingenious idea of corrupt practices in the name of security votes and frivolous foreign travels by state government functionaries are veritable examples of cuttings in avoidable expenses draining state government purses,” Olawale said.   Source: Daily trust

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RMAFC explains involvement in tax monitoring, verification

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The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), says on-going monitoring and verification exercise on tax collections by Deposit Money Banks appointed by FIRS and Customs is within its mandate. It said this in a statement issued by Mr Ibrahim Mohammed, Head, Public Relations, on Sunday in Abuja, adding that the exercise was in order. Mohammed said as contained in Section 6(1) of the RMAFC Act, 2004, the mandate provided that the commission should have powers to among others, monitor accruals to and disbursement of revenue from the Federation Account. NYSC Ogun tasks 2438 Corps members on skills acquisition(Opens in a new browser tab). He said the organisation was not a tax authority but a revenue watchdog that monitored revenue collections by revenue generating entities like the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS). Other entities it monitored revenue collections from were the Department of Petroleum Resources (DPR), Nigeria National Petroleum Corporation (NNPC) and others that remited directly into the federation account. Envoy assures diaspora commission of safety of Nigerians in Ghana(Opens in a new browser tab). Mohammed said the revenue streams that accrued into federation account under the watch of RMAFC included tax (Withholding Tax and Value Added Tax) royalties, signature bonuses, customs duties and tariffs among others. According to him, the has clarification is imperative following reports that challenges the legality of the exercise by vested interests. “It is worth clarifying that RMAFC do not deal with individual tax payers directly but monitors collections by collaborating with sister agencies like Central Bank of Nigeria (CBN),NNPC, DPR, Customs and FIRS.  “This is to ascertain how much was actually collected and remitted into the federation account to minimise revenue leakages,” he said. He recalled that in an earlier exercise covering January 2008 to June 2012, RMAFC had announced the recovery of N4.2 billion from banks, promising that more recoveries would be made. “Buoyed by the huge success recorded, the commission following the approval of the National Economic Council (NEC) launched the second phase of the exercise covering the period of July 2012 to December 2015 which so far establishes N57.7 billion. “Thus far, N48.7 billion has already been recovered and remitted into federation account while the remaining balance of N9.07 billion which relates to withholding tax on dividend only has been duly released to benefitting states Boards of Internal Revenue (SBIR),” he said. Mohammed, however, said the commission was working to ensure transparency and accountability in revenue generation and remittance with a view to reducing revenue leakages. He added that to achieve that, the commission sought further collaboration and cooperation of revenue generating and regulatory agencies, anti-corruption agencies, Civil Society Organisations (CSOs) and the media. RMAFC was established to monitor accruals into and disbursement of revenue from the federation account, review from time to time, the allocation formula and principles in operation to ensure conformity with changing realities.   Source: Vanguard

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Five Ways To Get Better Tax Credit For Your Organization

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Tax credits are much welcome, and often invaluable additions to any organization’s finances. A tax credit is the amount of money that taxpayers can subtract from their taxes. They differ from tax deductions and exemptions in that while they reduce the amount of your organization’s taxable income, tax credits reduce the actual amount that you owe the government. This guide contains some of the ways you can reduce the amount of tax that your organization pays. Some of these ways require more planning and execution than others, but they can all save your organization a lot of money in the long run. Claim Specific Tax Credits Relevant To Your Business And Industry Some tax credits are general to all businesses and organizations. However, some like the alcohol fuels credit are more industry specific. You should find out what tax credits apply to your specific industry, and take advantage of them. Register Your Business Correctly Businesses registered as sole proprietorships are subject to different tax laws than those registered as Limited Liability Companies (LLC). Sole proprietors have to pay self-employment taxes that LLCs do not, and as a result, your organization could be paying a lot of unnecessary taxes. Registering your organization as an LLC could mean more for you in tax credit, as well as other tax benefits available to LLCs. Maximize Your Tax Refunds While on the subject of saving money through taxes, tax credits are not the only way you can get more back from your taxes. Simple ways to get the most refunds on your taxes include itemizing deductions like charitable contributions, unreimbursed business expenses, and casualty loses. If you’re eligible, you could also take advantage of above the line deductions. Above the line deductions are tax deductions that exclude certain expenses like education expenses from your gross income so that you’re only concerned with your adjusted gross income. Stay Up To Date On Tax Laws When you’re out to get as much out of your tax as you possibly can, it’s very important to stay up to date on tax laws. Countries all over the world are constantly updating their laws, making it easier for entrepreneurs and businesses to function and thrive. However, you still have to know about these tax laws if you’re going to take advantage of them. For example, in America, the new tax rate for all seven income brackets was reduced. Little bits of knowledge like this can go a long way for your tax credit. Avoid Taxing Fees There’s no point in getting tax credits if your organization is just going to lose them paying fees and penalties. One of the common fees people fall victim for is late filing penalties. Depending on your type of business, you could get severe penalties. For example, C corporations can be subject to late payment penalties on unpaid tax dues, while S corporations are subject based on the number of shareholders as well as unpaid tax dues. Since the penalties can be quite costly, it helps to file your taxes on time even if you’re currently unable to pay.   Source: CEO World

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TAX: NECA, NACCIMA, LCCI fume as Buhari asks govs to raise IGR

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President Muhammadu Buhari on Thursday asked the governors of the 36 states to raise their internally generated revenues and the Value Added Tax in the next four years. The President said this was to help the states to meet the challenges of providing infrastructure and the funding needed to provide equipment for fighting insecurity. However, the President told the governors to raise the taxes in such a way that there would be no disruptions to business operations. Buhari, who spoke at the Presidential Villa in Abuja when he inaugurated the National Economic Council for its 2019-2023 session, also advised the governors to pay adequate attention to education, agriculture and health. But the Nigeria Employers’ Consultative Association, Lagos Chamber of Commerce and Industry, Association of Telecommunication Companies of Nigeria and the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture have cautioned the government against increasing tax and VAT, saying it would add to Nigerians’ burden. They advised the government to strike a balance between its desire to raise IGR and VAT with job creation. Rather than contemplating VAT and tax increases across the board, the Federal Government should increase the tax of the rich and politicians. But at the NEC chaired by Vice-President Yemi Osinbajo, on behalf of the President, Buhari insisted that without IGR and VAT increment, it would be difficult for the state governments to meet their needs. He said, “Going forward, states must in the next four years find ways to increase internally generated revenues, improve Value Added Tax collection and increase agricultural output without disrupting business activities. “I also want you to work with the federal agencies and the service providers in ensuring that broadband infrastructure is made available all over the country. Information and Communications Technology is the future of work and we must not allow ourselves to be left behind.  “Let me restate the high expectations on NEC as a veritable source of articulating policies and programmes that are expected to drive growth and development, secure our environment and take the country to the next level. Your Excellencies, the challenges that confront us in the next few years, especially in the areas of security, human capital development and employment for our youths are monumental and historic. But we are more than equal to the task.” The punch recalls that as of 2015, many states could hardly afford to pay salaries to their workers, resulting in backlogs of uncleared wages. The Federal Government had to intervene through the offer of bailouts to the states, restructuring of loans and Paris Club Refund, totalling N2tn to reflate the economies of the states. The financial situation in many of the states today is said to be worse than the case in 2015, amid dwindling revenue shares from the Federation Account. On security, the President called for collaboration between the Federal Government and the states, while he also told the governors to focus more on education, health and agriculture in the years ahead. Buhari added, “While the Federal Government has primary responsibility for security and will not shy away from it, the states also have a critical role to play; in particular Your Excellencies, as state governors. You can definitely make a difference, not just by assisting the security agencies in your respective states, but also by keenly pursuing policies and programmes that forestall communal, tribal, religious and societal conflicts; policies and programmes that promote education, information, dispute resolution, vocational training and youth employment. “I have no doubt that if these four areas – security, education, health and agriculture – are actively implemented and closely monitored by NEC and the Nigeria Governors’ Forum, we shall in the near future see a more peaceful and prosperous Nigeria.” The President also asked the governors to run an inclusive government, irrespective of the political party in control of power in their respective domains.   Source: Punch

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LIRS To Introduce Unique Biometrics-Based Identifier For Taxpayers

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The Lagos State Internal Revenue Service (LIRS) has issued a public notice (the Notice) on its intention to integrate the LASG-EBS Taxpayer Identification Digit (PID) module into the National Tax Identification Number (TIN) system with the Joint Tax Board (JTB). The TIN module is biometrics-based, with the aim of ensuring identity uniqueness for taxpayers. The proposed integration is set to achieve the following objectives: Facilitate smooth sharing of taxpayers’ data for JTB, State Board Internal Revenue Services (SBIRS’s) and other stakeholders     Remove the incidence of multi payer ID     Simplify the taxpayers’ registration process     Provide a unified taxpayer database     Ease the tax payment process The Notice states that going forward, access to LASG-EBS platform for all transactions including but not limited to registration and creation of payer ID for new taxpayers, payment of taxes and validation of taxpayers’ profile shall compulsorily require taxpayers’ Bank Verification Number (BVN). The BVN provides LIRS the fastest and least disruptive route to achieving the planned integration with the JTB-TIN system. Based on the above, all self-employed individuals are required to provide their BVNs to LIRS in order to assist in the creation of their unique PID. Corporate organisations are also required to ensure that their employees who qualify for tax clearance certificate include their BVN in their individual e-TCC forms. The integration is expected to provide LIRS with a more reliable taxpayers’ database which will improve planning, reduce tax evasion and invariably increase tax revenue. In an attempt to address the potential reluctance of taxpayers to share personal and confidential information, LIRS has assured taxpayers of the safety and security of all data/information in its custody. Please click here for a copy of the public notice. We will continue to monitor developments on this issue and share further updates with you as they become available.   Source: Punch

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Chike-Obi Urges FG To Expand Tax Net, Reduce Rate

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Pioneer chief executive of the Asset Management Corporation of Nigeria (AMCON), Mustafa Chike-Obi, on Monday in Lagos reiterated the need for the Federal Government to harness the huge economic potentials inherent in taxation to raise revenue and effectively diversifying the economy from crude oil. This, he said, is possible if the tax net is expanded such that much more people attracted into the tax net, thereby reducing the burden on the few that faithfully pay, a situation he expects will reduce tax rate in the country from the current 30%, the highest in the world today. Chike-Obi, Executive Vice Chairman, Alpha African Advisory, who spoke on the theme: Repositioning Nigerian Economy for Sustainable Growth,” at the Finance Correspondents Association of Nigeria (FICAN) Bi-Monthly Forum, an event meant to set economic agenda for second four-year term of the Muhammadu Buhari administration, while addressing key economic issues, challenged government to discourage multiple taxations, as part of efforts to enhance voluntary compliance. Speaking on the plethora of intervention funds and why adequate infrastructure is needed to stimulate the economy instead, also noted the need for a lower interest rate of between 12 to 15% per annum. For him, “all these intervention funds don’t work… Let me tell you why they don’t work. If you lend to a farmer at 5% you think you are helping him, but everything around him is at 26%. So, he gets a little bit of relief on his financing, but he doesn’t get reliefs on his supplies, diesel, food, employees… So, at the end of the day, those things he gets at 26% invades his 5%.” Chike-Obi said intervention funds also don’t work because “the default rates are as high as default rates of non-intervention funds. So, they don’t work. They are not very efficient”. What Nigeria’s economic managers should do in the new dispensation is to provide capital at reasonable interest rates that work for everyone. “There must be access to capital at a reasonable price. With a 26% interest rate, you cannot do business successfully. So, we must find a way to provide interest rate to everybody at a reasonable rate. We must have an interest rate that will support our economy. And it cannot be much higher to the borrower at 12 to 15%. Every Nigerian should be able to borrow money at between 12 to 15%… So, we must have capital available.” He also spoke on what foreign lenders look out for when lending to developed markets, warning that borrowing in US$ may not be cheaper on the long-run than the Naira as widely believed in some official quarters. For example, he stressed, even the country borrows in US$ at 8%, creditors are concerned with the exchange at the time of repayment, as it is unlikely to remain at N360/$, just as the foreign creditors consider borrowers with a capacity to generate needed funds for repayment of such loans. “The reason why they are lending money at 8%, instead of 16%, is because they know that by the time that money matures, your Naira will not be exchanging at N360/$. This is because the Naira always depreciated by approximately 50% every five years,” Chike-Obi argued.   Source: Invest Data

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Elebutu: Lowering Tax Rates Attracts More Investments

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You know, every question on tax always start with a tax to Gross Domestic Product (GDP) ratio of six per cent. For me, it is rhetoric, unfortunately. But fundamentally, if you really want to get tax level to increase, you have to grow the economy. When the economy is not growing, you can’t expect the tax level to increase. So we need to really get back as a country and say to ourselves what is the minimum growth rate we need to drive this economy. I’ll give you an example: After Tiananmen Square in China in 1989, the Chinese government decided that so as not to have a repeat of what happened, minimum growth rate would be eight per cent. And they achieved eight to 10 per cent for about 25 years and transformed the economy. Fundamentally, because it took many people out of the low-income economy to middle-class and they had much more to pay taxes. That was one aspect. Another major aspect is the issue of trust. Taxpayers need to see what they are using their money to do. That is because if you are using the money to clear expenditure or finance elephant projects, then why shouldn’t we pay tax? In that sense, it is granted as a civic duty and everybody must pay tax. But the reality is that countries where the political leaders or those at the helms of affairs do not use tax money to grow the economy, would find that in such situation, trust will be broken. And for Nigeria, that is the first step. Lagos State government over the last 20 years has tried very hard and improved the trust situation significantly. I could remember very well in 1999, when Bola Tinubu became Governor, the Internally Generated Revenue (IGR) was about a billion naira, but today, as at last count, it has gone to over N30 billion. And you see what is happening in Lagos in the last 20 years? They still have a lot of work to do, but there has been a lot of transformation around the way the city has developed over time, using mainly taxpayers’ money. So to recap, if there is no growth, you won’t see an increase in tax rate and you can’t tax businesses that are not doing well. When a company is making losses, it will make tax not work. And you can carry losses forward for a number of years, which means that if you make profit the following year, you are recouping and still will not pay full taxes. To cut it short, many countries use taxes to drive investments because low taxes means that it affects investments. And finally for me, we have to move away from the way we do our budget. This is because fiscal policy for me is about how we grow the economy; how we drag the economy to be attractive for investment and how do we use that investment to ensure that we can create more revenue sources and also to get people to pay more taxes. We have always focused on appropriation. So, every year the National Assembly prepares the budget and after a long debate, it turns into an appropriation bill. Many countries have moved away from the Appropriation Bill, into more of a Financed Bill, which reflects the fiscal policy of the government, which includes just numbers, how we are going to spend, and how we are going to drive revenue. But if you want to make amendments to the tax law, you don’t have to wait until amendments start, you can use the Finance Bill every year, then treat the tax law regularly so that you can actually have revenue sources clearly in the Finance Bill; drive revenue sources and it’s a more balanced document for everybody to understand and read because there you have the revenue side; that’s the fiscal policy, you have the spending side based on recurrent and capital expenditure. And of course, one day, the oil revenues that we have today, will not be there, so we need to prepare for the long haul when the revenues from under there are no longer available.   Source: This Day

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VAT revenue down by N9bn in Q1 2019

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The National Bureau of Statistics (NBS) says Nigeria generated N289.04 billion from value-added Tax (VAT) in the first quarter of 2019, representing a decline N9billion from the N298.01 billion generated in Q4 2018. This is contained in a Sectoral Distribution of VAT report for the first quarter 2019 released by the bureau. This, it said, represented a 3.01 per cent decrease quarter-on-quarter and 7.13per cent increase year-on-year. VAT is a consumption tax placed on a product whenever value is added at each stage of the supply chain – from production to the point of sale. According to the report, the manufacturing sector generated the highest amount of N31.42 billion. It was followed by professional services with N24.31 billion, while commercial and trading generated N14.92 billion. NBS further said the mining sector generated the least amount of N59.88 million, with pharmaceuticals raking in N201.58 million, while the chemicals and allied industry generated N298.14 million. The report noted that N137.06 billion was generated as non-import VAT locally, while N98.97 billion was generated as non-import VAT for foreign items in the quarter under review. According to the bureau, N5.01 billion was generated as Nigeria Customs import VAT within the period under review.   Source: The Sun

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Tax evasion: Court renews Okocha’s arrest warrant

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A Lagos State Prosecutor, Mrs Y. A. Pitan, has told an Igbosere High Court in Lagos that former Super Eagles captain, Austin Okocha, has not liquidated the alleged tax debt he owed the state. Pitan told Justice Adebayo Akintoye on Tuesday that Okocha had visited the Lagos Internal Revenue Service office but failed to settle the 2017 income tax. “The LIRS informed us that the defendant (Okocha) visited their office. He went there to reconcile accounts but has not settled yet,” she said. The prosecutor said the former footballer had also failed to appear in court since Oct. 5, 2017 when the case first came up. Okocha, who was not in court, was not represented by any lawyer either and the judge renewed the warrant for his arrest for the third time. Akintoye, who had earlier issued arrest of warrant to Okocha on Jan. 29, adjourned the case until Oct. 10 for further directions. Earlier, the prosecutor had filed a three-count charge against Okocha on June 6, 2017, accusing him of failure to furnish LIRS return of income for tax purposes, and failure to pay income tax. He said the offences contravened Section 56(a) and (b) of the Lagos State Revenue Administration Law No. 8 of 2006. The prosecutor said the offences also contravened Section 94 (1) of the Personal Income Tax Act Cap P8 Laws of the Federal Republic of Nigeria, 2004 (As Amended).   Source: Punch

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Trouble for tax evaders as FG inaugurates Project Lighthouse Committee

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Trouble is brewing for recalcitrant tax evaders in Nigeria, as the Minister of Finance, Mrs Zainab, Shamsuna Ahmed, on Friday inaugurated the Steering Committee for “Project Lighthouse” in line with government’s blueprint to aggressively collect more taxes and grow its non-oil revenue base. Project Lighthouse is an initiative which entails using advanced data mining and analytics techniques to identify tax defaulters, establish their tax liabilities and send notifications to appropriate authorities for necessary action. As at June 2018, the initiative, which aggregates data from multiple sources such as bank accounts, land registry records, company registration data, tax filings, Customs records and asset ownership records, has identified a batch of over 130,000 high net worth individuals and companies whose tax records are not up to date due to detected underpayments. Speaking at the inauguration, the Minister said she would Chair the Committee, while the Deputy-chair will be the Permanent Secretary, Special Duties at the Ministry, Dr Mohammed Kyari Dikwa. She added that the Presidential Initiatives for Continuous Audit (PICA) and Department of Technical Services at the Ministry of Finance will serve as the Secretariat of Project Lighthouse. The Minister, in her address, regretted that despite living in a technologically-charged and data-centric world, Nigeria has not developed a culture of using data and information to guide the formulation, implementation and impact assessment of various initiatives and policies or even in carrying out its mandate as a Ministry. She said: “You will recall that one of the key economic policy objectives of the current administration, as contained in the Economic Recovery and Growth Plan (ERGP), is improving overall Federal Government revenues by targeting and increasing revenues from non-oil revenue sources. “You will also recall that in the last few months, major steps have been taken to address our chronic revenue challenges. One of such steps is the launch of the Strategic Revenue Growth Initiatives (SRGI), which some of you have been participating in. “Following the ratification of Project Lighthouse at Federal Executive (FEC) on Wednesday 9th May, 2019, the Federal Ministry of Finance is entering in a post-VAIDS or Phase 2 of the Project. “However, this time around, Project Lighthouse is being positioned as a single source of truth for revenue and tax-related intelligence that will support the Ministry, its agencies, revenue agencies, tax authorities and other stakeholders to be better positioned to address the revenue challenges we are facing.” Ahmed stressed that in the first phase of Project Lighthouse, “we will be using Big Data analytics, date sciences and related technologies to gather and analyze financial data and revenue related data from multiple but related sources. We would also use the sophisticated date analysis tools to ‘connect the dots’ between different data sets. The terms of reference of the Steering Committee include, provide strategic direction for the Project; serve as the source of the data required to populate the Project Lighthouse Platform; assist the Federal Ministry of Finance with relevant data/information on mining of information of tax payers and revenue value chain; review of technical aspects of the Project and report on the progress of the project to relevant stakeholders. While urging stakeholders to put in their best to ensure the successful implementation of the initiative, the Minister said, “we can drastically change our revenue story by fully and innovatively exploiting the great power of Big Data Analytics, Data Science and related technologies.” Earlier, the Permanent Secretary Special Duties at the Ministry, Dr Dikwa, who will also serve as the Deputy Chairman of the Committee, in his opening remarks, said Project Lighthouse, was part of the strategic revenue growth initiatives, which are measures to boost revenues in line with the provisions of the Constitution, the Fiscal Responsibility Act and other associated laws. He noted further that Project Lighthouse will be a platform that will help the Ministry gather information from both the formal and informal sectors for the purpose of boosting internally generated revenues to adequately fund the budget. Members of the Steering Committee include, Nigerian National Petroleum Corporation (NNPC), Federal Inland Revenue Service (FIRS), Joint Tax Board (JTB), Nigeria Customs Service (NCS), Nigeria Inter-Bank Settlement System Plc (NIBSS), Central Bank of Nigeria (CBN), Security and Exchange Commission (SEC). Other members are, Office of the Accountant General of the Federation (OAGF), Corporate Affairs Commission (CAC), Abuja Geographical Information System (AGIS), Nigerian Financial Intelligence Unit (NFIU), Special Presidential Initiatives on Recovery of Public Properties (SPIRPP), Permanent Secretary Finance (PSF), Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practice and Other Related Offenses Commission (ICPC), Budget Office of the Federation (BOF), Revenue Mobilization Allocation and Fiscal Commission (RMAFC), Department of Petroleum Resources (DPR) and National Bureau of Statistics (NBS).   Source: The Sun

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