TAX SERVICES

Mrs Ene Obi, the Country-Director of Actionaid, has called on all taxable citizens and corporate bodies to pay their correct taxes to boost national development. Ene, represented by the Governance Manager, Actionaid, Mr Celestine Odo, made the appeal on Tuesday in Lagos at the opening of a three-day workshop on breaking barriers to education by increasing fair tax revenue in the country. She said it was fair for everyone to pay their taxes so that inequality does not spiral out of hand in the country. The country-director said tax revenue remained the most sustainable way to develop the economy and provide adequate public services to Nigerians. To this end, Obi appealed to workers in the formal and informal sectors, as well as local and foreign companies in the country to pay their fair share of tax. She said taxation was a powerful tool for redistributing wealth within the society to address poverty and inequality rate. “A functioning state that can meet the basic needs of its people must rely ultimately on its revenue to meet its development objectives. An effective tax structure can also create incentives to improve governance, strengthen channels of political representations and reducing corruption,’’ she said. Furthermore, Obi said without increasing tax, the Nigerian government can generate additional tax revenue by blocking leakages and end the regime of granting unnecessary tax incentives to companies and high net-worth individuals. Similarly, the Education Programme Coordinator, Actionaid Nigeria, Mr Laban Onisimus, said government is unable to make adequate investments in quality public education especially for children in remote areas due to lack of sustainable financing for the sector. (NAN)   Source: Daily Trust

The Association of Licensed Telecommunications Operators of Nigeria has lamented the huge tax burden telecoms operators bear as a result of statutory and non-statutory taxes and levies from government agencies. The Secretary, ALTON, Mr Gbolahan Awonuga, said in a statement that the cost of doing business in the country was enormous despite the Ease of Doing Business initiative of the Federal Government. He noted that the cost of running business in the country was triple the cost in Ghana and other neighbouring countries. “We have witnessed in Nigeria today that most of the regulatory bodies have left the regulatory functions and now turn to revenue generating bodies and this brings about multiple taxation and regulation. “Please don’t forget that telecommunications operations are not isolated to the ecosystem, the cost of running business in Nigeria, especially telecoms is triple the cost of running same in Ghana and neighbouring countries.  Almost all agencies of government are after telecommunications, why?  We cannot afford to have crisis in the industry because we operate one network in all networks. He called on the Federal Government to consider a review of the Tax and Levy Amended Order 2015 signed by a former Minister of Finance, Mrs Ngozi Okonji-Iwaela. According to him, the order has created a lot of confusion in the industry. The association complained about the sabotage operators were facing in some states, saying the cost of right of way formed more than half of the cost of constructing telecoms infrastructure. Awonuga added, “This order has created a lot of confusion in the taxes and levies regime and making the environment harsh for business, not minding the government Ease of Doing Business programme. “The telecommunications industry has been the best customer-centric sector, where issue pertaining to subscribers are taken very seriously by both the operators and the regulator and despite all the challenges, there has not for once be an outage compare to other sectors, where you are put on estimated bills and inconsistence in flight schedules that has made several people missed appointments and valued meetings just to mention few. “We are talking about smart state initiatives and last mile penetration but some states’ demands on Right of Way are outrageous.  The states are supposed to provide infrastructure for operators to lease but telecoms spent about 70 per cent of their capex on Right of Way leaving the remaining 30 per cent to build, this is not fair.” Awonuga also clarified some media reports which stated that there was a face-off between the Nigerian Civil Aviation Authority and ALTON and its members. According to him, ALTON sought clarifications on the charges, which led to the formation of an Advisory Committee which comprised NCAA and ALTON representatives. Awonuga added that the agency had also explained reasons for aviation height clearance, saying it was for safety as pilots needed guidance on the routes to navigate. “We were informed that there are categories of aircraft, big, medium and small, also the choppers and the drones are part of their responsibilities and these are not limited to telecoms infrastructure but to banks, radio stations and high-rise building.  The director general said there were lots of airstrips and helipads, thus the reason for charging across the board,” he said. “The issue of aviation mast height clearance was discussed at the meeting because our members are being charged across the nation be it close to the airports or not and the agency tried to increase some of the charges as reported to us by our members and we took it up with the NCAA.   Our members are responsible corporate citizens of the country and natural partners in progress that follow due processes. Source: Punch

NIGERIA’s deepening frustration in her bid to boost non-oil revenue is a self-inflicted morass. Apparently finding it difficult to meet its revenue projections, the Federal Inland Revenue Service has vowed again to clamp down on wealthy tax evaders. The FIRS chairman, Babatunde Fowler, recited this mantra at his inaugural meeting with the acting Inspector-General of Police, Mohammed Adamu, saying that the service will pursue affluent tax defaulters in 2019. In an era of volatility in the prices of crude oil, which contributes the bulk of Nigeria’s earnings, this is a sound statement of intent. Nevertheless, in Nigeria’s pathetic enforcement milieu, Fowler’s avowal seems superficial. Irritatingly, the FIRS had missed almost all the previous deadlines to act decisively in reining in tax offenders. Although it generated a record N5.32 trillion in 2018, as many as 85,000 millionaires and billionaires, and corporate organisations still refuse to pay tax, Fowler stated. Through a scrutiny of 45,000 tax debtors in 2018, the FIRS collected N23 billion, but several more debtors are escaping the dragnet. “So far, we have 45,361 that have TIN (Tax identification Number) and are making payments,” Fowler said. “We have 40,611 that have TIN that made tax payment and, we have 44,504 that have no TIN and no payment. 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 is for all Nigerians.” This, really, is the bottom line. A habitual indulgence, the rich in Nigeria get away without paying tax. Thus, Nigeria’s non-oil tax-to-Gross Domestic Product of six per cent is very low. Comparatively, South Africa has a tax-to-GDP ratio of 28.5 per cent; Kenya 18.4 per cent; and nearby Ghana 18.2 per cent. Among the developed economies, the United States boasts 26.0 per cent, the United Kingdom 34.4 per cent and Germany 44.5 per cent, the World Bank said. Therefore, a chunk of the tax here is derived from the public sector workers. A one-way traffic, it lopsidedly imposes a heavy burden on this group and the few compliant private sector workers. By bringing in the rich into the net, a 2018 report said the Federal Government could generate an additional $1 billion. Over the years, this complacency has cost the country dearly in revenue, apparently because the income from crude oil lulled the managers of the economy into shifting attention away from taxes. Vice-President Yemi Osinbajo told a bewildered nation in 2017 that just 214 Nigerians, all based in Lagos, paid a tax of N20 million and above each, annually. In all, 914 others paid N10 million in tax, with two of them based in Ogun State and the rest resident in Lagos. Out of a population of almost 200 million, in which 69 million are taxable, only 14 million paid taxes. This is ludicrous. It makes the target to achieve a tax-to-GDP rate of 15 per cent by 2020 a tall order. Cyclically, the government gives an impression that it is deadly serious about improving tax revenue. To make up, it proposed various schemes, including its intention to raise the value added tax and other taxes. This is poor thinking, a lazy way out that is likely to harm the economy the more. With criticism attending the VAT increment, government touted the Voluntary Assets and Income Declaration Scheme. A sensible scheme, it allowed tax defaulters to voluntarily pay what they owed without penalties. In the first 11 months of the amnesty period, it brought in N30 billion. That figure was 90 per cent to the government at the centre and 10 per cent to the states. It also increased the national tax base from 14 million tax paying adults in 2017 to 19 million in 2018, Fowler stated. Ominously, all seems to have gone quiet since the grace period elapsed in August 2018. In Nigeria, that silence is a bad sign; it is often an indication of the lack of political will to enforce the law, especially when the rich are involved. In contrast, the wealthy are being heavily subjected to taxation in Europe, the United States and Australia. Revenue, Ireland’s tax body, offers a sterling illustration. Periodically, it publishes a list of defaulters. The agency said it pursued 101 listed cases of under- and non-declaration between April and June 2016, which netted €17.44 million. Other settlements within that period yielded €125.3 million for the authorities. Spain, in the past two years, has brought famous sports stars to book for tax evasion. Among others, Cristiano Ronaldo, the world’s richest footballer, upon conviction, settled his case by paying €19 million last January. The trial judge turned down Ronaldo’s request to be accorded the privilege of using a backdoor entry into the court to avoid the prying eyes of the media on the day judgement was delivered. Nothing is left to chance in these countries and no one is above the law. Every Nigerian must pay tax. The FIRS and state revenue agencies should act creatively and firmly, bringing in more people into the tax net. It is scandalous that public office holders who earn jumbo remuneration pay unusually meagre tax. Government should intensify policies on progressive taxation, in which case, the richer you get, the more you pay, as is the practice in Europe. Source: Punch

Financial experts have urged the Federal Inland Revenue Service (FIRS) to evolve effective communication and engagement mechanism with taxpayers to sustain economic growth. Speaking in Lagos recently, director-general of the Lagos Chamber of Commerce and Industry (LCCI), Mr Muda Yusuf said that imposing a tax lien should be a last resort of FIRS to force businesses to pay taxes, adding that tax administration should be consistent with the principles of equity, fairness, legality, accountability and due process. Yusuf was reacting to FIRS’s directive to banks to lift lien on tax defaulters’ bank accounts for 30 days. A tax lien is a legal claim by a government entity against a tax defaulter’s assets. Some corporate bodies complained of freezing and debiting of their bank accounts by FIRS through appointed banks on grounds of tax default. The FIRS, on Feb.15, wrote to banks’ managing directors to unfreeze bank accounts of the affected tax defaulters. It said the directive was issued because of the large number of taxpayers that besieged its offices in their bids to regularise their tax positions, and the inconveniences they were going through. He said: “Taxpayers should be given ample opportunity to defend their positions on tax matters before a lien is placed on their bank accounts. Some companies’ accounts are frozen in error because there is no proper engagement, documentation or communication with the taxpayers,” he said. Also, Mr Taiwo Oyedele, Tax Leader, PricewaterhouseCoopers (PwC), West Africa, said the substitution power granted FIRS under the relevant laws did not support freezing of bank accounts in the manner done by the service. “For most of the companies affected, FIRS did not send an assessment to them; they only got to know about it when they got to the banks and discovered that their accounts had been frozen. “The power granted to tax authority under the various laws is to be exercised strictly under specific conditions; it does not confer the right on FIRS or any tax authority to forcefully collect taxes that are under dispute or arbitrary tax assessments. “An assessment is undisputed where it results from a self-assessment by the taxpayer or where the taxpayer has specifically agreed to the assessment,” he said. Oyedele said that the power conferred on FIRS must be exercised with caution and in accordance with the law to avoid negative impact on the business environment and ease of paying taxes.   Source: Leadership

The President and Chairman of Council, Chartered Institute of Taxation of Nigeria, Chief Cyril Ede, has said that part of the functions of the institute is to educate people on taxation. Ede said this during a tax forum for corporate and professional women with the theme, ‘Building a new Nigerian  tax culture through women’ organised by the Society for Women in Taxation, an arm of the CITN in Lagos recently. He stated, “Taxation is a price we pay for a civilised society and we cannot go away from it, that is why CITN is devoting time to make sure that we encourage everybody to make the knowledge known so that it does not become a crime. We have been doing that to our children in schools as tax clubs. We are trying to catch them young.” The CITN president said the government should allow tax education to be part of knowledge in schools so that they could grow with the understanding of taxation. The first female President of CITN, Mrs Adebimpe Balogun, explained that what professional women were doing today could be compared with the case of Aba women riot. She stated, “In those days, our women were not enlightened enough to understand the role of taxation and they were so unfairly treated, because in those days, a woman could not do a number of things but to take care of her home, that was why the women fought against taxation those days.”   Source: Punch

The incidence of multiple taxes, which have crippled operations of many listed firms in Nigeria, has spawned fresh criticisms, as capital market experts at the weekend, urged the incoming administration to abolish such investment obstacle. The experts, who canvassed a downward review of the withholding tax charged on dividend paid by quoted firms, also condemned a situation where companies that recorded losses are made to pay taxes from their turnover. According to them, the tax system depletes returns on investment, erodes capital base of listed firms, and subsequently trigger businesses collapse. They added that it largely undermines efforts by capital market regulators to woo more companies to list their shares in the market, a move that will make investors have access to many investment opportunities and deepen the market. There are over 2,000 registered public companies, but less than 500 are listed on the Nigerian Stock Exchange (NSE), and this, they believe is because tax on dividend and capital gains are punitive compared to taxes on savings like bank deposits or treasury bills. Besides, when more companies enlist, the federal government will earn more revenue in form of tax. But instead of listing and enjoying the benefits, most of them stay away from the market. Therefore, they suggested that the incoming administration must review the tax system and multiple taxes levied on Nigerian firms to induce savings, generate high employment opportunities, and grow the nation’s Gross Domestic Product (GDP). An independent investor, Amaechi Egbo, said: “Even though the government has in recent times moved towards a low tax regime, there is no denying the fact that current tax rates both corporate and personal are still too high to promote compliance and attract investment. “Beyond being a disincentive to participation in the capital market, this situation has wider economic implications. The tax regime of quoted companies is an important tool for decision-making by multinationals whether to list or stay away from the market. Egbo “further argued that government has not provided the needed infrastructure and amenities to justify the current tax regime in Nigeria. A professor in the Department of Business Law, College of Law, Igbinedion University, Okada, Prof. Nat Ofo, said: “Multiple taxes are bad for businesses, as it unduly depletes the resources of companies, short changes shareholders by reducing the amount available to pay them dividend, and imposes inefficiency on companies. “Government and regulators should provide an enabling environment for businesses to thrive. Multiple taxes are inconsistent with that objective, and should consequently be discouraged and discarded.” The National Coordinator, Progressive Shareholders Association of Nigeria, Boniface Okezie, said: “the tax regime in Nigeria is indeed killing, what is government doing with these levies? They are not using it to better the life of the ordinary Nigerian. The infrastructure are not there; power that would enable these companies run their factory is absent, and most of these industries have no good road network, and at the end, it would affect dividend declaration and shareholders will suffer. “The incoming government must give priority to the issues of multiple taxation, some of these companies need tax holidays in other to recoup the money invested in infrastructures so that there will be room to pay dividend to those who invested in them and employed more hands.” The Managing Director, Highcap Securities, Imafidon Adonri, said: “Multiple taxes are a disincentive to investment; the incoming administration should abolish them.” Agreeing, the Publicity Secretary, Independence Shareholders Association, Moses Igbrude, said not only is multiple taxes a disincentive, but also a big challenge to businesses. “This heavy tax burden ranges from FIRS, SIRS, and local governments, even thugs move around business premises collecting different levies and fines from companies, their customers and suppliers. “All this payments hit the bottom line, making shareholders to go home without dividend at the end of every year. This is discouraging and hinders the growth of businesses in Nigeria.”   Source: Guardian