TAX SERVICES

If you need more time to file your federal tax return, it’s possible to apply for an extension of up to 6 months. By filing for an extension, you can avoid making tax mistakes and make sure you are adequately prepared to fill out your return with no rush.  A tax extension is free, not dependent on your income, and sometimes automatic. The only thing you must do to qualify for the extension is estimate your tax liability on the form and pay any amounts that are due. Some people automatically receive an extension if they meet certain criteria. If you work in a combat zone for the US Armed Forces, live and work abroad as a US citizen, or live in an area of the US hit by a severe natural disaster, there is no need to file for an extension.   However this isn’t the case for most people. Many assume that tax extensions won’t be accepted and don’t even bother to file one. They have no idea they’re missing out on some benefits that might really help them.  Here’s just a few: Avoid Harsh Penalties It’s important to remember that an extension does not change your tax payment deadline. You can avoid the late-filing penalty of 5% of your balance per month by applying for the extension. If your balance is unpaid by April 15th but you file for an extension, you will only pay 0.5% of your balance per month. More Time to Receive Your Tax Refund Doing this can also preserve your tax refund. There is a three-year deadline for receiving a refund check if you are owed one by the IRS. This three-year statute of limitations is also extended by 6 months when you file for an extension, meaning there is more time for taxpayers to receive their refunds if they are behind on submitting their tax returns. Save Money on Tax Preparation Fees Another thing to consider is that accountants tend to raise their prices when it is close to the April deadline. For the frugal taxpayers, it makes sense to file for an extension if you are looking to save on your tax preparation fees. It also allots you more time to convert to a Roth IRA or traditional IRA and reap the tax benefits. Make Sure You’re Prepared If you are missing any of the necessary forms needed to file your taxes, don’t make estimations about your income and risk having to make corrections later. Learn how to file for a tax extension online and spare yourself the stress of filing before you are ready to. All you need to is: Your name Address Social security number Estimate of total tax liability Total already paid for the tax year (includes both withholding and estimated payments) The amount you are paying along with the extension. If you are filing jointly with a spouse, you will also need to include their full name and social security number. How to File Online If you are paying your taxes online, you can receive an extension through the IRS payment portal and skip filing a separate form. If you choose to do the process in two steps, you will need to fill out IRS form 4868. Depending on your income, you’ll either have to use Free File Software, or Free File Fillable forms. It’s important to note that filing for an extension is not a way to delay paying, and failing to file on time can lead to larger penalties than you would incur by failing to pay. A tax extension is the prime way to avoid any unnecessary fees.  Most of the time, the IRS will not even require that you explain your reasoning for requesting one, and it will not prompt an audit.   Filing for an extension is a good option for those who are dealing with an unexpected life event, extra time to ensure your paperwork is complete and accurate.   Source: Proshareng

While competitive enough to bolster the country’s appeal to foreign investors and skilled expats, Nigeria’s tax system is also tasked with the responsibility of providing the government with enough resources to finance the country’s development – company tax and petroleum royalties in fact account for the primary source of government revenue. Here is an overview of the main taxes in Nigeria. Tax residency in Nigeria The Nigerian tax regulation defines a Nigerian resident as an individual who is living in Nigeria for more than 6 months a year. A foreigner holding a Nigerian residence permit (CERPAC) is also deemed to be a tax resident. Individual residents in Nigeria are taxable on their worldwide income, whereas a non-resident is only taxable on the income earned from business activities performed in Nigeria. Non-resident expatriate employees are therefore subject to income tax in Nigeria unless:     they work for an employer based in a country other than Nigeria,     their compensation is not paid by a “fixed base” (i.e. permanent implantation) of their employer in Nigeria, or     their compensation is taxed in another country (you should check in advance whether your home country has a tax agreement with Nigeria). Good to know: Taxes in Nigeria are all collected by the national Federal Inland Revenue Service (FIRS). Personal Income tax in Nigeria Employees simply pay their income tax through the Pay As You Earn (PAYE) system, whereby employers deduct the due tax at source from the salaries and transfer it directly to the FIRS on a monthly basis, while independent workers and beneficiaries of additional income are required to file their own tax returns. Income tax in Nigeria is levied at a progressive rates capped at 24%. Here are the applicable rates for personal income tax in Nigeria : Annual income (NGN):     First 300,000: personal income tax rate of 7%     Next 300,000: personal income tax rate of 11%     Next 500,000: personal income tax rate of 15%     Next 500,000: personal income tax rate of 19%     Next 1,600,000: personal income tax rate of 21%     Above 3,200,000: personal income tax rate of 24% Corporate tax in Nigeria Resident companies in Nigeria are subject to the Company Income Tax (CIT) on their worldwide income, while only the income from Nigerian source of non-residents companies is taxed under the CIT. The CIT is generally levied at a flat 30% rate, but is reduced to 20% for smaller companies (with a turnover not exceeding NGN 1m) operating in the manufacturing industry and wholly export-oriented. Resident companies are also charged a 2% tertiary education tax. Additionally, companies operating in the petroleum industry, whether resident or not, are required to pay the Nigerian government a special Petroleum Profit Tax (PPT) at rates varying from 50% to 85% according to the age of the company and its relationships with the Nigerian National Petroleum Corporation (NNPC). Other types of tax Nigeria Value Added Tax (VAT) in Nigeria is levied on all products and services traded within the country and payable to government at a 5% rate, one of the lowest in the world. The sale of real estate properties is subject to a 10% tax on the gains.   Source: Expat

Federal Inland Revenue Service (FIRS) has recently been issuing Notice of Refusal to Amend (NORA) assessments issued in respect of on-going tax audit exercises. This is notwithstanding that taxpayers have objected such assessment notices or that some of the issues raised by FIRS have been resolved/documented at reconciliation meetings. In letters issued to some taxpayers, FIRS demanded settlement of the alleged additional tax liabilities within 30 days of issuance of the NORA, irrespective of the level of progress made during the tax audit reconciliation process. FIRS also expressed its intention to commence enforcement actions to recover the alleged tax liabilities where these are not paid within the said timeline. While Section 69(5) of the Companies Income Tax Act (CITA) empowers FIRS to issue NORA, it only allows FIRS to do so in the event of a stalemate during the reconciliation process. This is distinguishable from FIRS’ recent practice of issuing NORA solely on the basis that tax issues have remained unresolved for at least 6 months despite reconciliation. Furthermore, there is no provision in CITA or any other relevant legislation that empowers FIRS to issue NORA only on the basis that reconciliatory processes have spanned more than a defined period. By this development, FIRS has disregarded all the time and resources invested by itself and taxpayers in resolving such pending tax disputes. Aggrieved taxpayers may consider proceeding to the Tax Appeal Tribunal (TAT) to challenge FIRS’ action/decision; thereby increasing the cost of dispute resolution, regulatory compliance and ultimately, inhibiting the ease of doing business in Nigeria. In enforcing tax compliance, it is essential that tax authorities’ actions should not deter voluntary tax compliance. We therefore expect FIRS to revisit its approach and avail taxpayers more time to close out ongoing tax disputes/audit exercises. Also, where FIRS insists on issuing NORA, it should consider issues that have already been resolved during the reconciliation phase and focus only on unresolved tax issues. In the meantime, we advise taxpayers with ongoing tax audit cases to engage FIRS to reconcile their tax positions in order to prevent any adverse decision of FIRS.   Source: Mondaq

The Federal Government’s intention to generate almost double of the amount realised last year in tax revenue may set it on collision path with the Organised Private Sector (OPS). The concern for a possible friction stems from the nation’s current economic situation, poor infrastructure, and difficulties in accessing funds among others, which members of the OPS are sounding a serious warning that the Federal Government would be making a mistake if it intends to generate the target revenue through tax increases. The new Director General of the Nigeria Employers Consultative Association (NECA), Mr. Timothy Olawale, lamented that businesses in Nigeria are presently encumbered with the payment of over 55 different taxes at the three levels of government. He also speaks on how banks have failed playing their role of ensuring small businesses thrive. Olawale, while expressing the readiness of the OPS to pay the new Minimum Wage of N30,000, said that anything below that is criminal. The NECA DG, among other issues, expressed worry over the nation’s rising debt profile, the Economic Recovery Growth Plan (ERGP) among other issues in the economy. Excerpts:  Support for new minimum wage We stuck out our neck on the issue of new minimum wage because it came out as a result of a process in which we are actively involved. We were actively part of the discussion, decision and we agreed and believed in the discussion of the tripartite committee with every sense of responsibility coupled with the fact that we believe in corporate responsibility. The second reason is that when you think about the welfare of workers, we believe N30,000 is ideal and that anything below that is inappropriate. Employers have the responsibility of taking care of their employees before they can increase productivity. You are not making life meaningful for them if you don’t pay them good salary. Is N30,000 really enough for workers? We all know the value and worth of money in the present economy. The question we should ask ourselves is how far will the N30,000 go in taking care of a worker and his or her entire family. By the time a worker goes to and from his/her workplace everyday, that N30,000 will substantially have gone. Don’t forget that there are also other basic needs like shelter, feeding, medicals, education for the children. So when you benchmark all these with the said amount, it can’t go far. And I want to say personally that anything below that is criminal. Effect of N30,000 minimum wage on the economy Yes, there is going to be a consequential effect, but it is going to be minimal and it is going to be controlled. One of the effects is that there is insufficient enlightenment to the general public to let them know that the fact that there is new minimum wage now, does not mean that everywhere will be awash with money.  Because based on that belief, there will be an increase in the prices of goods and services. Everyone, both market women and men, will want to benefit directly from the new minimum wage. And when that happens, the effect is that workers’ welfare will be totally lost. What it means is that the new minimum wage will not have any positive effect on the workers. The disadvantage of this is the prolonged process in arriving at the new minimum wage. Because everybody that doesn’t even know what minimum wage is all about before are aware now and are anticipating when it will take effect so that they will also benefit. It is so unfortunate, but that is Nigerians for you. OPS complying with new minimum wage There is no reason all members of the OPS should not be able to pay N30,000 minimum wage. This is because they all agreed after due consultation. So, we are saying authoritatively that all members of the OPS will implement N30,000. The simple truth is that 70 per cent of the organised labour is paying way above N30,000 as minimum wage. So, the consequential impact is very minimal, if not nil, because it is supposed to affect the chain or review, where your benchmark is below N30,000. So, if you are paying way above N30,000, you need not bother, except if you want to enter what we call a ‘sweetheart agreement’ with your workers and you decide to raise their salaries. As we speak, some sectors have started negotiating without waiting for government’s decision on the N30,000 proposal. My concern, however, is the informal sector – the Small and Medium Enterprises (SMEs), which are struggling and don’t have enough support from the government and its agencies to survive. The question is: are they well positioned to absorb the effect of N30,000? Can they implement it? We have encouraged them to embrace the plan of relevant bodies like the International Labour Organisation (ILO), which NECA is a part of, to help them transit from informal to formal sector. This will help their businesses and deepen their access to capital. Also, they need to engage their workers because the major problem that has reflected in the rate of unemployment is that what Nigerians are even looking for is to be able to leave their houses and have a means of survival in the first instance. Majority of our teeming population are out of jobs; well over 30 million Nigerians are said to be out of job. Abraham Maslow’s hierarchy of needs talks about subsistence level. In other words, the physiological need is: ‘Let me even have somewhere to go and have something to sustain myself and my family.’ It is after meeting that need that you start thinking of how to improve on it and then maybe the issue of minimum wage will arise. Our focus – and what we have always told the government – is for us to have a situation where majority are gainfully employed in the first instance. Then, we can talk about improving on it. We have also advised the