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The Tax Appeal Tribunal, South East Zone yesterday ruled that gratuities are tax exempted under the Personal Income Tax Act (PITA). Nigerian Breweries PLC in 2017 filed an appeal before the tribunal challenging the decision of the Abia State Board Internal Revenue to tax gratuities paid to its employees, contending that the Abia government erred when it assessed its employees to tax on gratuities paid by them. It argued through its counsel, Moshood Olajide that gratuities were no longer taxable, and therefore, remained the extant position in the PITA 2011 (as amended) and urged the tribunal to discharge the assessment notice issued by the respondent and declare that by virtue of Decree 1996, all gratuities in tax are exempted. But, Abia state government through its counsel, Obike Onyemeru urged the tribunal to dismiss the appeal and sustain the demand notice. Delivering judgment in the appeal, the three-man panel of tribunal agreed with the submissions of the appellant and resolved the three grounds in his favour. Chairman of the tribunal, Chukwuemeka Eze who read the judgment cited the decision of the supreme court which held that “it has been settled principle of statutory interpretation that although schedules of a statute can be useful handmaid in construing the provisions of a statute, they cannot however be interpreted to over-rule the plain words in the body of the statute,” and held that Paragraph 18(b) of the 3rd Schedule to the PITA does not apply to the appellant.   Source: Guardian

In line with its commitment to deepen the capacity and growth of businesses in Nigeria, particularly Small and Medium Scale Enterprises (SMEs), First City Monument Bank (FCMB) will next week in Lagos, host a seminar on tax matters. The seminar, tagged, “Tax Enforcement and Implications on Businesses in Nigeria,” is aimed at equipping entrepreneurs with requisite knowledge on taxation by promoting the exchange of ideas between tax regulators and businesses on existing and emerging tax matters to ensure compliance and avoid sanctions. The one-day seminar would have in attendance SMEs operating in various sectors, including, trading, manufacturing, agribusiness, renewable energy, creative industry, digital technology, healthcare, schools and individuals running businesses in their personal names or accounts. The Guest Speaker is the Director of Enforcement, Federal Inland Revenue Service (FIRS), Mr. Emeka Obiagwu. In a statement, FCMB said topical issues relating to the country’s tax system and laws as well as other fiscal policies that impact on the profitability and overall success of businesses would be discussed at the seminar by the guest speaker and other professionals. It would also provide an opportunity for entrepreneurs to understand their rights and responsibilities, especially as regards taxes, such as withholding tax and value added tax, among others. There would also be a session by FCMB Pensions Limited to enlighten participants on new pension initiatives in the country, the implications for SMEs and the attendant benefits. Responding to inquiries about the seminar, the Executive Director, Business Development of FCMB, Mrs. Bukola Smith, was quoted to have reiterated the commitment of the bank to go the extra mile to empower businesses with relevant technical and financial know-how that would boost their performance and contribution to national development. According to her: “As the dynamics of taxation continues to change in Nigeria, we recognise that many businesses, especially SMEs, in the country are not equipped with the requisite information and knowledge to discharge their responsibilities in this area appropriately. “It is based on this reality that we decided to organise a seminar on tax matters, which will go a long way towards helping SMEs to understand taxation and the processes involved better.”   Source: This days

The Edo State Governor, Mr. Godwin Obaseki, has said the state government’s insistence on the use of technology for tax collection as against non-state actors and consultants was to ensure that traders are protected from harassment and double taxation. He said his administration would strengthen ties with the Tax Appeal Tribunal, South-South Zone, to boost tax compliance in the state, especially with the recent influx of investors into the state. The governor disclosed this during a courtesy visit by the Chairman of Tax Appeal Tribunal, South-South Zone, Prof. Obehi Odiase-Alegimenlen, to Government House in Benin City. The governor explained that the ban placed on the use of consultants and non-state actors and the introduction of Information and Communication Technologies (ICT) for tax collection is aimed at protecting traders and other taxpayers from harassment and double taxation. “This move has led to a backlash, but we will not go back on that decision taken by this administration,” Obaseki added. Obaseki noted that taxation remains the main source of revenue for most states in the country, adding that any state focused on growing its internal economy must ensure that the people imbibe the culture of paying their taxes and demanding accountability from government. “I appeal that we work together on advocacy, especially in improving the communication mechanism to drive compliance. People ought to know the importance of paying taxes and that it is their civic responsibility,” he added. He said the state has undertaken significant reforms in tax administration and has implemented a series of initiatives in deploying technology for tax collection, which have made the process easier and more transparent. Obaseki explained, “We believe that we can introduce more technologies to drive transparency and make tax collection easier. People don’t want to pay taxes, forgetting that it is their civic responsibility as it helps to develop the economy.” The Chairman of the Tax Appeal Tribunal, South-South Zone, Prof. Obehi Odiase-Alegimenlen said the tribunal was set-up to resolve disputes from clients of tax authorities. “In the advanced world, taxation is a very important aspect of our development finance but not so in Nigeria. The Federal Government is trying to make taxation a relevant aspect of getting finance for developing the country,” he added.   Source: Punch

Gov. Babajide Sanwo-Olu of Lagos State has tasked the Chartered Institute of Taxation of Nigeria (CITN) to be proactive on deepening taxation practice in Nigeria. The governor gave the advice at the Investiture of the 14th President of CITN, Dame Olajumoke Simplice, on Saturday in Lagos. Represented by Mrs Balogun Olufunmilayo, Permanent Secretary, Ministry of Finance, he said that deepening taxation practice would enhance revenue generation of the state and country. He said that his administration would partner the Institute to strengthen and encourage taxation system for enhanced economic development of the country. “CITN has immensely contributed to the growth of taxation in Nigeria, but the reward for hard work is more work. “The Institute should not relent on efforts to have an efficient taxation practice as is obtainable in other countries. “Tax is a civic responsibility of every citizen of a country and remains a major medium through which the government can generate funds to fulfill its electoral promises,” he said. The Chairman of the Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, said that the issue of deepening taxation was a global issue that Nigeria should key into. Fowler, who was a special guest of honour at the Investiture, said taxation was a social contract that enables citizens to play significant roles in raising revenue for government. “By paying taxes, government will similarly have a strong motivation to account for revenues collected and the utilisation of such revenues. “Voluntary compliance by the taxpayers will ensure that revenue is made available for improving on the provision of social amenities and services,” the FIRS boss said. Fowler affirmed that the CITN had advanced to an enviable stage when considered from the level it started operation in Lagos State. In her acceptance speech, Simplice promised to widen the corporate horizon of the Institute through the review of its vision and mission statement. She said the institute would develop and deepen the use of technology by ensuring a full-fledged ICT department as the backbone of its operations.  “Our vision to be the leading Institute in training world class Tax Professionals has been driven over the years through various capacity building programmes. “Going forward, it is intended that the Tax Academy will be developed to project this fundamental driving force of our vision. “The Tax Academy will be repositioned in terms of capacity for a technically driven alternative route to membership through intensive training for revenue services staff,” Simplice said. She congratulated all the newly elected members and encouraged them to take up challenges that would take the Institute to a greater level.   Source: Punch

A row has broken out in Tanzania over the government’s decision to impose a tax on wigs and hair extensions. Many male and some female MPs applauded and thumped their desks in approval when Finance Minister Philip Mpango announced the tax in parliament. Supporters of the levy say it will help women keep their hair natural. But there has also been public outrage, with women saying they are being punished for wanting to look good in wigs and hair extensions. Tanzanians tend to uphold traditional values, but society is changing and many women now wear wigs and extensions, the BBC’s Aboubakar Famau reports from the capital, Dodoma. In his budget speech in parliament on Thursday, Mr. Mpango announced a 25% tax on imported wigs and hair extensions and a 10% tax on those made locally as part of a series of measures aimed at increasing government revenue. The cheapest wigs currently costs around $4 (£3.40), but they can sell for up to $130. Mr. Mpango also scrapped the exemption on value-added tax placed on sanitary towels, saying consumers had not benefited as businesses did not reduce prices when it was introduced   Source: Hubnaija

Since 1956 when crude oil was discovered in commercial quantity in Nigeria’s Niger Delta region, a flurry of economic experts have continually pitched the benefits of economic diversification to no avail. The immediate fallout of this negligence seesaws between a government perennially starved of funds for capital projects and a citizenry disillusioned by the absence of the social contract they expect from strict compliance with government policies. At present, the federal government is reportedly grappling with a budget deficit of N3.8 billion and debt profile of N2.7 billion in a country that boasts 57 million economically active citizens, among whom only 15,000 are tax compliant. The International Monetary Fund (IMF) reinforced this argument in 2016 when it estimated revenue collected across all tiers of government at 6 percent of GDP (70% from the oil sector) and 30 percent from the non-oil sector (30% of GDP). Small wonder the government has shifted its focus to alternative strategies for revenue generation from the non-oil sector in its 2020 inclusive economic agenda. The Better Tax campaign launched by the Nigeria Economic Summit Group (NESG) in Lagos recently is one such revenue generation initiative.  With the benefit of hindsight, the average Nigerian may be understandably sceptical of tax reform. After all, several initiatives launched previously were long on execution but drastically short on sustenance and impact. In 2017, the President Muhammadu Buhari administration sought to include more Nigerians in the tax net with the launch of the Voluntary Assets and Income Declaration Scheme (VAIDS). To facilitate the process, government set up tax clinics to offer free service, consultation and legal representation for defaulting companies wishing to voluntarily file their tax returns. However, analysts argue that the euphoria over N30 billion sourced from the initiative was short-lived because compliance was primarily incentive-based and did not outlast the 11-month lifespan of the project.  The Federal Inland Revenue Service (FIRS) has also done its bit by introducing several digital payment platforms such as e-Registration, e-Filing, e-Tax Clearance Certificates and e-Stamp Duty, among others. But it is instructive that of the 4,926,053 taxpayers in the FIRS database, only 13,131 are registered for e-Filing and of that number, only a paltry 3,064 actually use the service. This development calls for a more wide-ranging system that will not only sustain tax compliance but also close knowledge gaps.  At the launch of Better Tax recently, the Chairperson of the NESG Fiscal Policy Roundtable Dr. Sarah Alade argued that contrary to general perception, Nigerians are not necessarily averse to paying taxes. In fact, the NESG Citizen Perception Report, which is the product of a tax survey cutting across households and small businesses in the revenue value chain, found that about 70 percent of respondents had no reservations about paying taxes. Rather, they would prefer that the process is sustained by proper education and transparency on the allocation and application of resources by the government. Tax officials, on their part, are constrained by inconsistent tax policies, limited resources, unrealistic targets and inability to influence service delivery from tax proceeds.   Source: Pro Share