Tax preparation services

The Association of Certified Fraud Examiners (ACFE), Lagos State chapter, has urged federal government to be strategic about imposing new and increasing existing tax rates. The association bared its mind on the tax environment during a training session it organised for ACFE members and non members in Lagos recently. Speaking during the training, President of the Association, Prof. Godwin Oyedokun, stated that a complex tax regime would scare away investors and further lure them to seek means of evading tax payment. He added that rather than increasing taxes, government should widen the tax net such that would accommodate more taxpayers. Making reference to the proposed 7.5 Value Added Tax (VAT), increment, he noted that in effect, quite a lot would resort to making open market purchases and avoid structured and formal markets like Shoprite, which on the other hand, would rub off negatively on the buttom line of formal retail outlets. He said that VAT increment would also affect consumption level, disposable income and cost of doing business. Oyedokun also cautioned government to thread softly in introducing punitive measures to aid tax compliance. According to him,”This in most cases is always counter productive as it gives room for undue negotiations and compromises from both tax payer and tax authority respectively. While I am not completely against penalty, I would say that the authority should use it selectively and also apply palliative measures before adapting it.” The 2nd Vice President of the association, Dr. Titilayo Fowokan, added that government could resort to moral persuasion and tax education instead of enforcing penalties. She said: “There should be tax justice such that tax payers can see the dividends of their efforts and be willing to pay more without being forced or pushed. Government should also strive to create an enabling environment that would make companies to generate employment. Once jobs are paid, income will be generated and more taxes will be paid”. Fowokan also explained the essence of the training to update members on latest fraud technology and trends in tax environment to enable them know how to deal with it.   Source: This day

Power distribution companies on Thursday said it was incorrect for an executive of PriceWaterhouseCoopers to claim that no Disco had paid any tax since the power sector was privatised since 2013. Speaking under the aegis of the Association of Nigerian Electricity Distributors, the umbrella body of Discos, the power firms stated that they had been paying taxes to both the federal and state governments. The Executive Director, Research and Advocacy, ANED, Sunday Oduntan, stated that the Discos were paying different taxes even though they were challenged. Oduntan stated that as responsible corporate citizens, all members of ANED took their tax obligations to the federal and state governments, as applicable, seriously. He said, “As a result, the Discos diligently pay all necessary taxes that apply to their operations. “These taxes include the minimum Company Income Tax, Withholding Tax and Value Added Tax.” He said the Discos would like to encourage all parties interested in the growth and success of the Nigerian Electricity Supply Industry to constantly and diligently verify their information.   Source: Punch

Timi Frank, political activist and former Deputy Publicity Secretary of the All Progressives Congress (APC), has dared the Federal Island Revenue Service (FIRS) to go to court, telling it to bury its face in shame over alleged corruption being perpetrated there. The activist had on Monday linked the agency with a N90 billion election fund it allegedly advanced to the ruling APC for the prosecution of the 2019 general elections. He also claimed that the ongoing attack against Vice President Yemi Osinbajo by unnamed Presidency cabal was due to his failure to give proper account on how the alleged sum was disbursed. But the FIRS, in a statement, denied any such transaction as it was against the law, and demanded an unreserved apology from Frank within 24 hours or risk legal action. But Frank, in his reaction, rubbished the threat as mere intimidation and vowed to meet the Service in court. He described the agency’s ranting as a puerile attempt to sweep the main issues in his public statement under the carpet. He said that the FIRS thinks it can continue to deceive Nigerians by claiming unfounded budgetary fidelity. The statement reads: “I read the statement by the Federal Inland Revenue Service and I am rather disappointed at their intellectual laziness. “Who is the FIRS trying to fool by claiming that its annual subvention is not up to a N100 billion? That is an unintelligent attempt to fool the public. “The FIRS, like the Nigerian National Petroleum Corporation, Central Bank of Nigeria and the Securities and Exchange Commission, are revenue-generating agencies of the Federal Government that do not depend on budgetary subventions. “These agencies are able to appropriate huge funds from the monies they generate for their use.” He urged the agency to come clean and tell Nigerians the reason for the discrepancies, which exist in their records of tax collection. “For example, on January 7, 2019, the Federal Inland Revenue Service announced that it had broken Nigeria’s all-time revenue generation record by generating N5.3 trillion in 2018.”   Source: Independent

Amongst other factors, the global dip in oil prices and the resulting economic recession in Nigeria resulted in an increased focus on revenue generation through taxation in Nigeria. Following the mandate by the Federal Government, the Federal Inland Revenue Service (FIRS) intensified its drive for tax collection and has so far reported giant strides in its collection efforts. However, the tax-to-Gross Domestic Product (GDP) ratio has continued to hover around an abysmal 6% despite the reported tax revenue increase by the FIRS. While the tax-to-GDP ratio is nothing more than the portion of a country’s output (i.e. domestic product) that is attributable to tax receipts, it is one of the most widely used tool for measuring the efficiency of a country’s tax system. Recent data from the National Bureau of Statistics indicates that Nigeria’s GDP stood at ₦31.79 trillion in the first quarter of 2019 (Q2 2019) while the total government collection in taxes was barely ₦1.5 trillion in that quarter. In this article, we have evaluated Nigeria’s tax-to-GDP ratio vis-à-vis the metrics for determining the current rate. We have also highlighted the underlying factors for the going rate and proffered recommendations on how both the tax revenue and the ratio can be improved. The Nigerian Tax to GDP ratio: When tax revenue grows at a slower rate than the GDP, the tax-to-GDP ratio drops; when tax revenue grows faster than GDP, the ratio increases. In most instances, the ratio of tax-to-GDP stays relatively consistent because tax collection is closely connected with the rate of economic activity. Thus, the general expectation is that GDP should grow parallel to tax revenue. However, low tax-to-GDP ratio is not an uncommon phenomenon with developing economies including Nigeria. Prior to the economic recession in Nigeria in 2016, the Nigerian GDP figures were rebased and the new figures were greatly celebrated as the news that the Nigerian GDP had grown to be the largest in Africa was widely published. Notwithstanding the reported growth, the tax-to-GDP ratio has remained at 6% which is even relatively lower when compared to other developing economies. In certain studies conducted on the Indian economy, also a developing economy, certain factors were identified as contributing to low tax-to-GDP ratio. These factors include unorganized informal sector, narrow tax base, tax exemption and subsidy policies as well as loopholes in tax laws. We have discussed some of these factors as they apply to Nigeria below: Narrow Tax Base:  Undoubtedly, a small tax base places huge burdens on honest and compliant taxpayers. According to the International Monetary Fund (IMF), out of the Nigerian labour force of 77 million persons, only 10 million persons are registered for tax purposes. This situation has adversely affected government’s revenue generation through taxes. On a broader note, in Q2 2018, the oil sector was recorded to have contributed 8.55% to the total real GDP in Nigeria while the non-oil sector was recorded to have contributed 91.45% to GDP. In contrast, total government revenue in taxes from the oil sector (Petroleum Profits Tax) totaled about ₦524 billion (39.26% of total tax revenue) while non-oil taxes totaled about ₦810 billion (60.74%).   Source: Mondaq

Babatunde Fowler, chairman of the Federal Inland Revenue Service (FIRS), says taxation is the country’s lifeline for economic development. Fowler made this known on Tuesday night in Abuja at the investiture of Kudirat Abdul-Hamid as the third national chairperson of Society of Women in Taxation (SWIT). Fowler was represented by Abiodun Aina, an official of the FIRS. He said aids, grants and loans were not reliable revenue sources to ensure the development of any economy. Charging SWIT under Abdul-Hamid’s leadership to continue to educate Nigerians on why they should pay tax for economic and national development, the FIRS while the service will continue to work to reduce the burden of taxation. Although Fowler noted that Nigerians were not convinced that their taxes were being judiciously used, he said the federal government has been more prudent in utilization of generated revenue from taxation. According to Fowler, revenue generated from taxation is currently being utilised by the government to improve the country’s infrastructure, electricity as well as create employment. In her remarks, Abdul-Hamid assured that she would not let Nigerians and members of SWIT down. “We shall ensure global best practices, value creation and addition; we hope to bring more women on board, including those operating in isolation,” she said. “We will remain resolute in not just talking taxation, but working to ensure that Nigerians pay their taxes.” NAN reports that Abdul-Hamid is a fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and Chartered Institute of Taxation (CIT) and a member of Nigerian Institute of Management, is presently the auditor-general for federal capital territory (FCT) area councils.   Source: The Cable

Residents of Cross River State, particularly low income earners, have been warned not to evade paying their taxes. The Speaker of the state House of Assembly, Eteng Williams, gave the warning in Calabar during a tax enlightenment town hall meeting organised by the Cross River State Internal Revenue Service as part of its sensitisation and enlightenment of tax payers on voluntary tax compliance.  Williams said for any low income earner to be exempted from the tax net, the executive arm of government would forward a list of those who qualified for exemption to the Assembly and then pay for them as the law did not allow tax exemption. “What the law actually says is that at the beginning of a tax year, which is before the appropriation is passed, we have to write to His Excellency to give us (the Assembly) the list of those to be exempted. “Tax is compulsory, which means the government must pay for those people. If the government does not pay, then they have not been exempted. You cannot exempt yourself from tax because it is against the constitution of the Federal Republic of Nigeria,” he said. “If the Cross River State Government is willing to pay for them, then they will be exempted, particularly the low income earners. When government categorises those who are low income earners and then gives us the list of these people, then they will be exempted and we will collect the money from government. “Everybody must pay their taxes. If you are being exempted, you have to tell the government to pay for you because when someone asks you to present your tax clearance certificate and you don’t, then it’s against the constitution. Any law that is in conflict with the constitution is null and void.”   Source: Punch

The Nigerian Investment Promotion Commission has rejected the application of 15 companies seeking pioneer status under the Industrial Development Income Tax Act. The pioneer status is an incentive from the Federal Government which exempts companies from income tax. It is also known as tax holiday and generally regarded as industrial investment device. This means the companies with pioneer status do not have to pay tax for a certain period of time, allowing the companies to get established. This tax exemption can be full or partial. The products or companies suitable for pioneer status are industries or products that do not already exist in the country. An analysis of the second quarter Pioneer Status Incentive report obtained from the NIPC showed that while 15 companies had their applications rejected, approval in principle was given to 10 firms. The report stated that two firms had their applications extended while 181 other applications were still pending. It put the number of firms currently benefiting from the tax incentive scheme at 32 while 104 companies had abandoned their applications with the NIPC. The 15 companies whose applications were rejected are Umugini Asset Company, Aristocrats Industries Ltd, Guinness Nigeria Limited, StrongPack Limited, Grit System Ltd, Scott Industries Limited and Flexipack Ltd. Others are Ultimus Constructions Ltd, NG Clearing Ltd, Dangote Ibese Lines 3 and 4, Dangote Cement Obajana Line 4, Promasidor Nigeria Ltd, Daraju Industries Ltd, West African Packaging Ltd and Flour Mills of Nigeria Plc. Providing reasons for the rejection, the commission in the report stated that the requests from two out of the 15 firms were time barred, while the activities of 10 other firms were not covered under the pioneer status-incentive list. For the other three companies, it explained that their applications were rejected because their expansion projects were not eligible under the Industrial Development Income Tax Relief Act. The NIPC in the report also stated that 10 companies got approval in principle for tax incentives. The companies are Amarava Agro Processors Ltd, Solis Agro Ltd, Indigo Feeds Nigeria Ltd, Polar Petrochemicals Ltd, Royal Pacific Group Ltd, Wacot Rice Ltd, Olam Hatcheries Ltd, Crown Flour Mills Ltd, Gowus Nigeria Ltd and Harvestfield Industries Ltd.   Source: Punch

The Minister of Industry, Trade and Investment, Mr. Niyi Adebayo, has said there is no going back on the federal government’s determination to increase public revenue through intensified tax collection. This is coming as the Tax Leader, PwC, Mr. Taiwo Oyedele, has raised the alarm that Nigeria’s  tax system contains 354 different taxes, stressing that these multiple taxations do not allow businesses to thrive. Speaking during the Lagos Chamber of Commerce (LCCI) 2019 Presidential Policy Dialogue on the Economy, held in Lagos at the weekend, Adebayo, said those expecting the government to reduce taxes and at the same time increase revenue to meet its responsibilities to the country should come and show the government how to perform the magic. He said: “You want us not to increase tax but you want us to increase revenue. May be, you will come and advise us on how to do it because I think that will require some serious magic. But one thing I can assure you is that I don’t think government has any plan to reduce tax at this point in time. “What we are doing is that government has embarked on aggressive tax collection and is doing everything possible to increase the tax bracket so that all the money the government has not been able to get in the past will be collected to improve our revenue generation.” The minister said he was at the Presidential Policy Dialogue to hear concerns of the private sector operators and transmit them to the government for favourable policy formulation.  “I believe that there are certain things that should be done by the private sector. That is why we are here. It is for you to tell government how to make it easie for you to achieve these things. “If you tell us, and advise us on how government can assist to make it easier for you to promote your businesses, then we will do our best to make things easier for you. I am here to listen to your problems,” Adebayo said. The minister’s statement came after the President of LCCI, Mr. Babatunde Paul Ruwase, spoke the minds of the organised private sector in the opening in which he decried the crippling effects of taxation on businesses. Ruwase said: “Multiple taxations are still issues with many companies. There are also issues of multiple levies and fees by government agencies at the federal, state and local government levels. While we were grappling with this, we heard the announcement of an increase in VAT from five percent to 7.5 percent. “This will no doubt put additional pressure on businesses because consumer purchasing power is already weak.” He noted that these are not the best of time for the Nigerian economy, saying the short-term outlook of the key economic indicators was not looking bright. He also called for policies that would transform the economy and end the countries reliance on oil, which was the major trigger of the economic downturn in Nigeria because of the volatility in oil price. “This time calls for reforms in the economy. We need the right mix of policies that will achieve the desired outcomes.  I am aware that some policy choices have been made by the present administration to promote economic diversification, stabilise the foreign exchange market and promote small businesses.  Evidently, there are still some works to be done.  “There is need for regular engagements and communication on policy issues to ensure quality feedback that will enrich the policy making process. “This should cover macroeconomic policies, sectorial policies. These will include foreign exchange policy, trade policy, tax policy, energy policy, transport policy, industrial policy, agricultural policy, ICT policy, among others.  Some of these are cross cutting, while others are sector specific. “The message is that regular engagement with relevant stakeholders in the various sectors will bring a lot of value.  The regulatory environment needs to align with this vision as well.  This policy dialogue is our contribution to this process,” Ruwase said. In another  development, the Tax Leader, PwC, Mr. Taiwo Oyedele, has advised that government should create policies that would enable businesses to grow, rather than over-burdening businesses with taxes in an era when governments elsewhere were reducing taxes to encourage businesses. Oyedele, who spoke at the 2019 Annual Conference of the Finance Correspondents Association of Nigeria (FICAN) in Lagos at the weekend, said Nigeria’s tax system was a serious disincentive to businesses because the government did not seem to appreciate that firms needed to be prosperous to be able to pay tax. The theme of the conference was “Unlocking Opportunities in Nigeria’s Non-Oil Sector.” According to him, all the tiers could collect as much revenue as they are doing currently from just five taxes against the 354 different taxes that currently exist in Nigeria presently. “Nigeria has a tax system that does not allow businesses to thrive whether they are small or big. There is a provision in the Nigerian tax law that taxes a holding company twice. “The company tax rate in Nigeria is one of the highest in the world. We are the top 10 in the world for highest income tax rate. About 40 percent company tax. “It does not make sense. Government has to remove tax disincentives. The business community should ask government to remove disincentives that do not allow them to do business rather than begging for incentives,” Oyedele said. He also stressed that the government was over burdening the informal sector with taxes. “A business earning as low as N5,000 is expected to file  for VAT while in Ghana a business making less than N1 million equivalent is not expected to file for VAT. “In Kenya, it is N17 million equivalents. South Africa is N33 million. All these three economies are smaller than Nigeria. Why is Nigeria different?” he asked He added: “I look at personal income tax, in Ghana if you do not make about N500,000 you will not pay personal income tax at all. It is more than

The Nigerian Economic Summit Group has emphasised the need for the government to reduce the number of taxes levied on businesses in the country. The NESG said out of about 3,000 forms of taxes operational across the country from the federal to the local government level, only four of them generated 96 per cent of government revenue. Ogun State, preparatory to the group’s summit slated for October 7 and 8. Jaiyeola also urged the Federal Government to ensure that modes of finance were prepared together with the budget. He said, “You can spend all the time analysing budget. The question is, to what extent do we take it seriously? Not only that we should have a budget, but also we should also have a finance bill. You don’t talk just about the budget; you also talk about how to get the money to fund the budget. “Part of the work we have done recently is to tell the government that there are so many taxes. There are over 3,000 taxes across Nigeria from federal to state and local government levels. Only four provide 96 per cent of government revenue. Part of the things we are telling the government is to streamline the taxes.” Jaiyeola stated that the theme of the summit, “2050: Shifting Gears,” would examine how the government could prepare for Nigeria’s population projected to be the third biggest in the world by 2050. The NESG CEO said the office of the Minster of Finance, Budget and National Planning had agreed to work with the group, noting that the summit would identify the key things to drive the economy. He explained that after the event, a “green book” which is a summation of all the agreements reached at the summit would be presented to the Federal Executive Council for consideration. “We also distil the conclusion into policy commissions where we have about 45 thematic areas, ranging from health, education, agriculture, infrastructure and even sport. “The policy commission is a collection of public and private sectors. Their role is to constantly engage the government to ensure implementation. “By 2050, it is established that if we go on present trajectory, Nigeria will be the third most populous nation in the world. The question is: how do we embrace that? “Our vision is that Nigeria must be an economy that is competitive, market-driven, innovative and inclusive. Part of our major problems is lack of inclusion.” Jaiyeola commended President Muhammadu Buhari for its new Economic Advisory Council and also urged the government to listen to its recommendations.   Source: Punch