TAX SERVICES

The Federal Inland Revenue Service (FIRS) on Tuesday said it will surpass in 2019 the N5.32 trillion it generated in 2018. The N5.32 trillion remains its highest yearly collection so far. In a paper titled: “The imperatives of regulatory processes, procedures and compliance in the Nigerian business sector” presented at a forum organised by the Nigerian-German Business Association in collaboration with The Nation in Lagos, FIRS Chairman Babatunde Fowler said the agency realised N1.6 trillion between January and March. Before 2018, the highest revenue made by the Service was N5.07 trillion in 2012. Represented by a FIRS Deputy Director, Sunday Okeowo, Fowler said the Service for the first time crossed the N1 trillion threshold in Value Added Tax (VAT) collection in 2018. Another achievement was the e-stamp duties collection, which is also on a steady increase, and a collection of N15.66 billion last year. His words: “Year on year, with the exception of the year 2016, the collection performance of the FIRS grew by an average of 21per cent  for the four year period.” According to him, technological initiatives introduced by FIRS in delivering taxpayers services such as e-payment channel, e-receipt among others have contributed immensely to tax collection. Nigerian-German Business Association Director-General Gbenga Adebija said non-compliance to regulations by operators hinders growth in the industry. Against a backdrop of operating concerns, he said Nigerian businesses are being outpaced by their international rivals in terms of revenue and profit growth because of regulatory challenges. Despite this, he said local businesses still spend a great deal of time and money ensuring that they are compliant with commercial, tax, health and safety and environmental laws. He said compliance with regulations would eliminate crisis in the industry and guarantee the long-term viability of the industry. He observed, however, that compliance should not be seen as a burden but as an opportunity to improve business efficiency. Adebija said there was a need for business owners in the country to follow the laid down principles and the guidelines set up the government to end the unstructured and relatively chaotic business environment and erosion of profit margins. National Agency for Food and Drug Administration and Control (NAFDAC) Director-General Prof Mojisola Adeyeye said the enhancing food safety mechanism to make sure food offered for import meets the nation’s food safety requirements. Speaking through her Special Assistant, Prof Adeyeye said there was increased surveillance to keeps out unsafe foods, and effective response when unsafe imported food is found, and that the agency has an effective and efficient food import programme. According to her, enhanced inspections at ports of entry and foreign food facilities, are part of the strategy to improve its oversight of imported foods.   Source: The News Guru

The Federal Inland Revenue Service has intensified its drive to recover outstanding tax liabilities from taxpayers in default of tax obligations. To this end, FIRS has been writing to taxpayers’ bankers, appointing the banks as collecting agents, to collect outstanding tax liabilities from the taxpayers’ bank account balances. This is referred to as tax substitution. FIRS based its appointment of the banks as collecting agents on the provisions of Section 49 of the Companies Income Tax Act 2004, and Section 31 of the Federal Inland Revenue Service (Establishment) Act 2007. Section 31 of the Federal Inland Revenue Service (Establishment) Act 2007 provides that: “The Service may, by notice in writing, appoint any person to be the agent of a taxable person if the circumstances provided in sub-section (2) of this section makes it expedient to do so. “The agent appointed under sub-section (1) of this section may be required to pay any tax payable by the taxable person from any money which may be held by the agent of the taxable person. “Where the agent referred to in subsection (2) of this section defaults, the tax shall be recoverable from him. “For the purposes of this section, the Service may require any person to give information as to any money, fund or other assets which may be held by him for, or of any money due from him to, any person. “The provisions of this Act with respect to objections and appeals shall apply to any notice given under this section as if such notice were an assessment.” Section 49 of the Companies and Income Tax Act, 2007 also empowers the FIRS to collect tax due from companies and appoint agents to collect tax due from companies. It stated that: “The Board may, by notice in writing, appoint any person to be the agent of any company and the person so declared the agent shall be the agent of such company for the purposes of this Act, and may be required to pay any tax which is or will be payable by the company from any monies which may be held by him for or due by or to become due by him to the company whose agent he has been declared to be, and in default of such payment, the tax shall be recovered from him.” Typically, FIRS instructs the bank to set aside an amount equivalent to the taxpayer’s outstanding tax liability, and remit same to FIRS. FIRS also directs that the bank place a restriction on the taxpayer’s accounts and inform FIRS of any transaction on the taxpayer’s account prior to execution on the accounts. The bank is also expected to release the taxpayer’s bank statements and other financial records to FIRS. The banks, probably concerned about compliance and cooperation with government agencies, are quite swift to comply with the directives. Some valued customers are lucky to receive some notification, prior to the bank’s execution of FIRS’ directives, others, not so much. Understandably, given how difficult it often is to recover outstanding debts from recalcitrant debtors, it may not be so surprising that FIRS devised this strategy. But the appointment of banks as collecting agents has stoked several fundamental issues in relation to the propriety or otherwise of the action. Chief of them is the constitutionality of FIRS’ appointment of banks as collecting agents to collect and remit outstanding tax liabilities of taxpayers, without court orders. This is besides the conversation around the hardship that may be occasioned the taxpayer who has had his bank account restricted, particularly where it turns out that the restriction is unjustifiable. However, a salient issue that seems to have eluded discussion is the query: “Is a bank legally enabled to act as collecting agent to collect outstanding tax liabilities from its customers’ bank account(s) on behalf of the FIRS?” The provisions of Section 31(3) of the Federal Inland Revenue Service (Establishment) Act 2007 and Section 49 of the Companies and Income Tax Act, 2007 impose a mandatory responsibility on the bank appointed as collecting agent, rather than a commission earning activity. By these provisions, where the FIRS-appointed bank fails to remit the outstanding tax liability from the taxpayers’ funds in its custody, such bank would be personally liable to FIRS for the taxpayer’s outstanding liability. This certainly places the banks between the devil and the deep blue sea. A pressing issue for concern, as to the propriety of the banks’ appointment as collecting agents for FIRS is the unavoidable breach of a bank’s fiduciary duty to its customer. This issue has raised a lot of hue and cry, over FIRS’ appointment of banks as collecting agents over their customers’ outstanding tax liabilities. A bank and its staff are obliged to keep secret, information regarding the business and account(s) of its customers. In Tournier v National Provincial and Union Bank of England, (1924) 1KB 461, Bankes LJ of the Court of Appeal of England held that confidentiality was an implied term in the customer’s contract and that any breach could give rise to liability in damages if loss results. As with every general rule, there are exceptions to the duty of the bank to keep secret; every information regarding the customer’s account(s). These exceptions are:     Where the bank has duty to the public to do so.     Where the bank’s own interest requires disclosure: – This occurs for example, where legal proceedings are required to enforce the repayment of an overdraft or where a surety has to be told the extent to which his guarantee is being relied upon. Where the bank has the express or implied consent of its customer to do so: – where he supplies a reference to its customer or where it replies to a status inquiry from another bank.   Source: Punch

The Nigeria Anti-Corruption Vanguard has called ‎on the Economic and Financial Crimes Commission, EFCC, to probe activities of Orion Agro Industries‎ Nigeria Limited, manufacturing cigarettes in Ilorin Kwara State, considering the alleged interest of the Senate President, Bukola Saraki in the affairs of the company. It alleged that the firm was being allegedly used by the Senate President for illicit financial transactions since 2003. The group also called on the Board of Customs and Legal Department to halt process of renewing import license for the firm. The group stated this in a statement to DAILY POST on Thursday, adding that the firm was only looking for tax waiver.‎ The statement was signed by the National Coordinator of the group, Oloye Akin Ayokunle. It also called on the Comptroller General of the Nigeria Customs Service, Col. Hammed Ali to do its due diligence before processing the Orion Agro Industries application for renewal of importation license. The statement added, “One of our concerns again is the speed at which the process of renewing this firm license is taking at Customs, there is a government policy that additional investments should not be entertained in the Tobacco sector, Orion Agro Industries has not been in business for almost 20 years. “According to our investigation Bukola Saraki bought into the company when he was elected the Governor of Kwara state in 2003. Since then the firm has been a signpost for illicit money laundering activities for Saraki and his cronies in the PDP. “After closing shops for many years, the firm suddenly using Saraki last minute influence has applied to the Nigeria Custom for renewal of its license and tax waivers on pretense of building it’s factory in Nigeria. “The company imports from it’s main manufacturer in Poland, not a single stick of cigarette was produced in Ilorin Nigeria since 2004 when it was importing tax free. “The company should be made to give account for its local investment in Nigeria and engagement with its host communities during its years of waivers before it’s license is renewed. “Also this company has not paid a dime as tax into the federation account and the Kwara state government. It’s in public domain that Kwara state Governor AbdulFatai has given the company 20 years tax holiday, meaning the government at all level will not get anything in return from Orion Agro Industries.” “Everything about Orion Agro Industries‎ is shrouded in secrecy, details of the company has been pulled out on the Corporate Affairs Commission,CAC registered companies portal neither does it have Standard Organization of Nigeria SON approvals on production or importation of tobacco products in the country. “Also the company does not have any records in SON since 2003 it has been in operation but has been moving money out of the country in guise of importation,” Ayokunle said. ‎”We are also calling on the EFCC to probe in to the financial transactions of Orion Agro Industries‎ and its link with Senate President Bukola Saraki.”‎ The group recalls that under the PDP government in Nigeria, license were issued, “to anybody for anything, once you get access to Aso Rock. This Orion is just one of the many companies in Nigeria that have illegally benefited from waivers and tax holidays from government. But failed to deliver on regulation guiding the sector.”   Source: Daily post

It has been revealed that the number of taxpayers in Nigeria, which was at 10 million in 2015, is about to hit 45 million in 2019. Executive Secretary of the Joint Tax Board (JTB), Oseni Elamah, made this disclosure in Abuja on Monday, while presenting a report on the new Taxpayer Identification Number (TIN) Registration System to Babatunde Fowler, in Abuja. The Joint Tax Board is led by Fowler who is also chairman of the Federal Inland Revenue Service (FIRS). According to Elamah, the FIRS fostered an uncommon collaboration between the States Internal Revenue Services (SIRS) and the FIRS resulting in several collaborative projects in the last five years. He added that the ongoing integration of databases will fetch the nation a total of 45 million individual and corporate taxpayers. Elamah also said that the JTB has completed the building of a new TIN Registration System which is an integration of TIN numbers of various organisations in Nigeria, adding that the growth of the taxpayers’ database is a major flank of the goals of the JTB in collaboration with the apex tax authority, the FIRS. “When the integration of the new TIN Registration System is launched, it will afford prospective taxpayers the opportunity to register for tax from the comfort of their homes and print their registration certificate” Fowler said. Fowler expressed happiness over the completion of the new TIN Registration System and said that the system would encourage transparency, efficiency, and convenience in tax administration in Nigeria. “I congratulate the JTB for finalising the new TIN Registration System in record time. We now have a consolidated database for all taxpayers in Nigeria. “If you (a taxpayer) go to any other country or visit another state in Nigeria and they want to check your tax status, what this means is that they can check your tax status by a touch of a button. We want to assure all taxpayers that we are ready to serve them more with technology, convenience and accountability,” Fowler added. Speaking on the benefits if the system, Elamah said: “State Revenue Authorities are expected to enjoy immense benefits from the new TIN System”. “Among these are: Taxpayer Information Accessibility and Accuracy: the registration and recording of taxpayer information is one of the fundamental functions of tax administration and to a great extent, this will drive how other core administrative functions operate,” Elamah added. “The timely and accurate collection and recording of basic identifying information of the taxpayer will permit the tax administrator to understand its taxpayer base, staff itself accordingly and to effectively plan other core administration functions. The existence of an accurate taxpayer database will inevitably lead to effective compliance programmes observation. “The redesigned, development and deployment of a TIN system leverages on existing taxpayer data available from databases of multiple organisations like CAC (Corporate Affairs Commission, banks through BVN (Banks Verification Number), Identity Card Management Commission and other. “It is a web-based solution with centralised management of all the various functions of the TIN registration system offering and accessible to authorised users of the system for reviews and approvals of registration requests, TIN certificate issuance and integration with relevant stakeholders. “It makes possible integration and exchange of data with sister state Boards of Internal Revenue, FIRS and other third party organisations through web services”. According to JTB, there were 10,006,304 people registered for personal income tax purposes in all the states of the federation including the FCT as of 2015/6. Out of this, about 4.6 million or 46 percent were registered with the Lagos State Internal Revenue Service (LIRS). Updated data, quoted by Vice President Yemi Osinbajo shows that only 14 million economically-active Nigerians paid taxes in 2017 — a number which increased to 19 million as at May 2018. Going by the latest disclosure from JTB, it is suggested that Nigeria’s taxpayers base will have increased by over 25 million in the when Nigeria eventually hits 45 million.   Source: Ripples

Kaduna and Kano State governments through their Boards of Internal Revenue have taken some Federal Government agencies to the North-West Zone of the Tax Appeal Tribunal. They are dragging the agencies to the tribunal sitting in Kaduna for failure to remit taxes to them. The Kaduna State Board of Internal Revenue dragged the Ahmadu Bello University, Zaria, before the tribunal on Wednesday, with respect to unremitted Pay-As-You-Earn and withholding taxes, totaling N6.16bn. The amount was for all taxes due to the Kaduna State Government but was unremitted between 2007 and 2012. The tribunal, which has just been newly reconstituted, with Umaru Adamu as Chairman, also attended to tax issues against Kaduna Polytechnic brought before it for unremitted personal income taxes and withholding taxes, for the period, 2007 and 2012, totalling, N3.34bn. On the other hand, the Kano State Board of Inland Revenue will on Thursday, take before the tribunal, appeals to determine whether they were entitled to recover from the National Orthopaedic Hospital and another, the sum of N18.6m. The amount is also for withholding and PAYE taxes due for the 2011 and 2012 year of assessment. Bayero University Kano, alongside the Minister of Education and the Minister of Finance were also brought before the tribunal with respect to withholding taxes and PAYE taxes for the 2004 to 2009 year of assessment in the sum of N1.82bn. The Tax Appeal Tribunal was established pursuant to Section 59 (I) and the Fifth Schedule of the Federal Inland Revenue Service (Establishment) Act, 2007.   Source: Punch

Chairman of Heirs Holdings, Mr Tony Elumelu, hinted that the Nigerian government can generate more revenue, up to $40 billion from tax. He said government must executive reaching tax reforms, while the National Assembly must urgently pass the Executive Tax bill into law for the country to experience economic transformation. Mr Elumelu, who was a guest speaker at the 21st Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN) titled National Development: Unlocking the Potentials of Taxation, said the present tax system was killing small business owners. Quoting a young entrepreneur beneficiary of the Tony Elumelu Foundation, Mr Elumelu said, “The average business owner in Nigeria is a local government authority on his own because he caters for his own electricity with generators, he builds his own borehole, handles his own waste disposal, and the government can make his life easier by creating favourable tax policies that support SMEs.” The Chairman of United Bank for Africa (UBA) Plc said, “The average number of taxes businesses pay in Nigeria is 48, compared to 33 in other Sub-Saharan countries. In Hong Kong, it’s just 3. Multiple taxation remains a significant burden for SMEs and corporates operating in the country.” Continuing, he noted that, “With a population of close to 200 million people in Nigeria, we have only 75,000 registered SMEs in the country. No one needs to tell us that people are avoiding tax or refusing to be a part of the system.” He said with high cost of compliance, complex and costly business registration processes, many SMEs are choosing to remain informal, which in turn results in a low tax base and low tax contribution to GDP. “Nigeria’s tax to GDP ratio is only circa 6%, compared to far smaller populations like Rwanda at 16%. Imagine the economic transformation we can achieve as a country if we can move our Tax to GDP ratio by 10%. We will raise an additional $40billion in government revenue – identical to the sum of our foreign reserves,” Mr Elumelu explained. He advised government to educate, inform and raise tax awareness, saying, “Government should drive mass mobilisation of citizens – let citizens know why they need to pay taxes and give them the assurance that their tax will be properly utilised.” In addition he stated that, “government should employ the use of smart tax incentives to attract and incentivise local and foreign investors.” Mr Elumelu also tasked the country’s ambassadors and embassies with a two year timeline to increase the number of double tax treaties between host countries and Nigeria. “Nigeria has 14 taxation treaties while a country like South Africa has 79 double taxation treaties, and we are the largest economy in Africa. Our embassies should adopt a target in the next two years to sign tax treaties with our top 100 trading partners in the world,” he said. Speaking as the leading proponent of entrepreneurship in Africa and an advocate for entrepreneurs, Mr Elumelu charged government to put in place tax systems to encourage SMEs-— the engine for job creation in the economy. “Until there is a reduction in what SMEs pay as tax, elimination of multiple taxation, abolition of minimum income tax and excess dividend tax, it will be difficult for us to expand the tax base. It will be difficult for us to attract investors into this country, and it will be difficult for us to retain the ones already in the country. It will be difficult for us to mobilise our SMEs to help create employment that we need so much in this country. It will be difficult for us to have the citizens hold leaders accountable.” In conclusion, he reminded the National Assembly members of their mandate in office, “We must encourage government to pass the Executive Bill immediately. Let’s get the National Assembly to fulfil their obligation to society and pass the bill immediately, so we can start making progress”. Speaking in response to the presentation, Former President of the Chartered Institute of Taxation in Nigeria, Chief Mark Anthony Dike emphasized the urgency for the Executive Tax bill to be passed into law. He said: “Every year during the military regime, there was a Finance Miscellaneous Provision Decree aimed at looking at what has happened and review the areas that need to be amended. As they say, the taste of the pudding is in the eating. We may conceptualise, but in order to know the efficacy of a theory, we have to test it. Until the provision of the Executive order is tested, we cannot know how efficacious it will be.” Also present at the event were Dr Ikemefuna Nwobodo, President, Chartered Institute of Taxation in Nigeria, Permanent Secretary, Ministry of Finance, Dr Mahmud Isa-Dutse, Mr Babatunde Fowler, Executive Chairman, Federal Internal Revenue Service, Mr Ayo Subair, Chairman, Lagos Internal Revenue Services, Members of the council of CITN and the Auditor General of the Federation, Mr Anthony Ayine.   Source: Business News