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Human Rights Lawyer, Femi Falana, has called on the Federal Government to propose a Money Bill to the National Assembly before the implementation of the increase in Value Added Tax. Falana told the News Agency of Nigeria in Abuja that the National Assembly erred by inviting the Minister of Finance and the Executive Chairman of Federal Inland Revenue Service to clarify issues of VAT increment. According to him, provisions of the constitution states that the President ought to have presented a Money Bill to be passed by the NASS before the increment. “It’s illegal. Under a democratic dispensation, you cannot impose tax or increase tax without a law made by the National Assembly or the State Assembly as the case may be.  “In this case, it has to be realised that we are not under a military dictatorship. “By virtue of section 59 of the Nigerian Constitution, any increase, levy or tax will have to be presented to the National Assembly by way of Money Bill by the President, it has to be passed into law. “The Senate erred in law by inviting them to come and clarify. The National Assembly has invited the Minister of Finance and the Federal Inland Revenue Services to come and clarify. “No, the National Assembly must insist on its powers under Section 59 to pass a law to increase VAT or any tax, there can be no taxation without legislation. “The Federal Executive Council has no power under the Constitution to increase VAT or any tax in the country,” Falana said. NAN recalls that the Federal Executive Council had last Wednesday approved the increment of VAT from 5 per cent to 7.5 per cent. The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, had explained that the increase would only begin after the VAT Act was amended by the National Assembly and after consultations with the state and local government areas as well as the Nigerian populace.   Source: Punch

The Federal Inland Revenue Service (FIRS) has issued the Income Tax (Common Reporting Standard) Regulations, 2019 (CRS Regulations). This follows Nigeria’s signing of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC) and the Multilateral Competent Authority Agreement (MCAA) on the Automatic Exchange of Financial Account Information, signed by Nigeria on 17 August 2017. Fundamentally, the CRS Regulations and the various agreements signed by the FIRS will allow it to receive specified information on the bank accounts held by Nigerian tax residents in up to 105 countries. In exchange, the FIRS will be obligated to provide similar information to these other countries.    The CRS Regulations have an effective date of 1 July 2019 and require qualifying Nigerian Financial Institutions to submit an electronic information return (i.e. a return that reports specified financial account information of certain persons) to the FIRS on an annual basis.  The information is to be provided in respect of “reportable accounts”, which subject to certain exemptions, are the Nigerian accounts of persons who are resident for tax purposes in a foreign country with which Nigeria has signed the relevant exchange of information agreement. Other relevant provisions include: First reporting year: starting from 2019 calendar year Filing deadline for information return: 31 May of the year following the calendar year to which the returns relate Penalties for non-compliance: Failure to comply with duty or obligation imposed by the CRS Regulations: ₦10 million in the first instance in addition to ₦1 million/month Failure by Financial Institution to file information return: ₦10 million in the first instance in addition to ₦1 million/month Furnishing false or incorrect information: ₦5 million Failure by Financial Institution or any person to comply with the FIRS’ requirement in the exercise of its powers: ₦1 million in the first instance in addition to ₦100,000/month Failure by Financial Institution to keep records in accordance with the Regulations: ₦1 million in the first instance in addition to ₦100,000/month   Source: Mondaq

Experts have called on the federal government to restructure the finances of the country such that the share of the nation’s revenue that it earns from taxation is judiciously utilised calling for more transparency. The federal government last week proposed an increase in Value Added Tax (VAT) by 44 per cent to 7.2 per cent from five per cent and the introduced the Police Trust Fund levy. This it said was to increase the country’s revenue base. The Nigerian Police Trust Fund Act which was passed by the National Assembly in April 2019, and signed into law by the President on 2 July 2019, imposes a levy of 0.005 per cent of the net profit of companies operating business in the country. According to the president of the Chartered Institute of Taxation of Nigeria (CITN), Dame Olajumoke Simplice, this is important because of the need for government to invest in infrastructure. “Let us see improvements in infrastructure especially power, roads, education good health. When all these are put in place, you will see that Nigerians are good people and good citizens. We only need good leadership, we need to see that government means well for us, we will pay our taxes. “We Nigerians should now start to hold the government responsible, let us see what the money is used for. Let us make sure that money is used to provide the goods and services that the masses of this country needs. Let us ensure that the tax money is working for the stakeholders, the taxpayers.” Commenting on the taxes, Head of Tax and Corporate Advisory Services at PwC Nigeria, Taiwo Oyedele stated the need for government to block leakages as a way of growing its usable revenue noting that imposing more taxes on businesses is counter-productive. He noted that the police trust fund levy which takes N5 from every N100,000 of net profits is a bad move and it is not in the interest of Nigerians. “You say police needs funds, that is a fact and you say let’s levy businesses so that we can fund the police, that is a very wrong move. On his part, partner & chief economist at PwC Nigeria, Andrew Nevin said there is need for government to focus on the top echelon of the Nigerian society and make sure they pay taxes first, instead of imposing new taxes on middle class citizens and creating administrative bottlenecks for businesses.   Source:  Leadership

Chairman,  Tax Appeal Tribunal for the South East zone, Chukwuemeka Eze, has asked people and businesses with issues against tax authorities to approach the tribunal with their cases, assuring they would be adjudicated dispassionately. Eze said the tribunal was established by the Federal Ministry of Finance to deal on matters arising from taxation, and was committed to serving people without bias. Speaking at a stakeholders’ interactive forum on challenges and solutions of tax administration held in Enugu, yesterday, in partnership with the South East Chamber of Commerce, Industry, Mines and agriculture (SECCIMA), Eze warned petitioners that the tribunal was not susceptible to inducements and would continue to treat appeals before it on their merits. He also said that the tribunal was not an extension of the Federal Inland Revenue Service (FIRS). “We don’t take bribes, yes you can’t settle us. There are instances that even the government and their agencies have lost petitions brought to us,” Eze said. He regretted that for several years, Nigeria had relaxed on taxation as a source of revenue, and instead relied more on incomes from the sale of crude oil. Eze, said any serious society desirous of development must be tax conscious as it is major revenue source of income. Chairman of Enugu State Board of Internal Revenue Service, Emeka Odo said the poor hardly pay taxes, and that it is the rich that have businesses, and properties that are captured to pay taxes. “We are looking for how to increase tax net in Enugu so that more people can pay taxes,” said Eze. “If you must enjoy social services in the state, you should pay tax and obtain your Enugu State Benefit Number (ESBN). If you don’t have income, we won’t tax you, but if you have, we will tax you,” he added.   Source: The Sun

In furtherance of its resolve to eradicate illegal tax points in the state the Benue Internal Revenue Service(BIRS), in collaboration with the Nigeria Police vacated the illegal tax point at Mu head bridge in Makurdi. The operation which saw the destruction of the checking point which served as the operation point for the hoodlums, was carried out this afternoon. Although no arrests were made, as the culprits fled on sighting the Tax force, the check point was completely destroyed to ensure the illegal activities of the extortionist is put to an end. BIRS has further enjoined members of the public to report any illegal checking point and tax activities to enable the board sanitize the Tax system in the state, while thanking those who have already volunteered information. Meanwhile the Executive Chairman BIRS, Mr. Andrew Ayabam has reiterated that all taxes Must be recieved via Point of Sales machines or through BIRS recieving accounts aavailable in all commercial banks operating in the state.   Source:   Green box

Lagos State Government has revealed that of the 4.8m registered taxpayers only about 700,000 are paying. It, therefore, implored residents to perform their civil responsibility of paying taxes, alongside actively participating in the governance process. The Commissioner for Economic Planning and Budget, Mr. Samuel Egube stated this at the Year 2020 Budget stakeholders’ meeting for Lagos Central Senatorial district. At the forum were representatives of community and professional associations, traditional rulers and civil societies. Egube stated that government policies and programmes would not make the needed impact if the citizens and those in government failed to interact and engage. According to him, it was the reason the state government felt in preparing the 2020 budget for the state, it should go round the three senatorial districts to get inputs of residents in drawing up the state projects and programmes for the budget. “This forum did not hold for two years but our belief is that we are servants of the people and we get to government through them, reason their opinions and voices must be reflected in the policies of government.” The Special Adviser, Economic Planning and Budget, Mr. Adebayo Sodade said the 2020 budget is being designed to be people-oriented to ensure a Lagos that works for all, irrespective of age, gender, tribe or status.   Source: Guardian

MIXED reactions on Thursday trailed the 7.2 per cent Value Added Tax (VAT) proposed by the Federal Executive Council (FEC). The Chartered Institute of Taxation of Nigeria (CITN) lauded the increase, saying it was long overdue. According to the institute, the proposal will help government to realise its developmental objectives. But, the Manufacturing Association of Nigeria (MAN) faulted the timing, saying it is inappropriate. The association said the step will spur spontaneous increase in price of goods and services. However, the President of the Chartered Institute of Taxation of Nigeria (CITN), Dame Olajumoke Simplice, defended the new rate, urging the government to sustain it. Speaking on Thursday with The Nation, she said despite the increase, Nigeria’s VAT is still one of the lowest in the world, adding that the new rate should be pegged at 7.5 per cent or 10 percent. Noting that the last VAT review was 25 years ago, she said Nigeria has the lowest VAT rate in the ECOWAS sub-region. According to the CITN boss, the VAT review should take place every five years, stressing that it should be tax on consumption. She said: “VAT is a tax on consumption and is only paid when you consume goods or pay for services. Nigeria’s decision to raise VAT is good for its trade relations with other countries. Besides, VAT is very easy to collect and should be utilized for development of the economy.” Simplice said government should also be held accountable for the funds from the VAT are spent. In her view, the funds should be judiciously used for developmental projects. Acknowledging that the new VAT rate will increase prices of goods, she said manufacturers will pass the effects to consumers. Simplice advised tax payers to form pressure groups to monitor tax revenue spending and ensure accountability on the part of government. The International Monetary Fund (IMF) has consistently advised Nigeria to raise its VAT and channel the funds to developmental projects and budget funding. At the conclusion of the IMF 2018 Article IV Consultation with Nigeria , its Executive Board emphasized the need for a growth-friendly fiscal adjustment, which front-loads the non-oil revenue mobilisation and rationalises current expenditure to reduce the ratio of interest payments to revenue to a more sustainable level and create space for priority social and infrastructure spending. The board said: “In addition to ongoing efforts to improve tax administration, directors underlined the need for more ambitious tax policy measures, including reforming the value added tax (VAT), increasing excises, and rationalising tax incentives. Speaking on tax reforms at the Fiscal Monitor Session of the event, IMF Assistant Director, Fiscal Affairs Department, Cathy Pattillo, said tax reform in Nigeria was important. She said IMF’s main recommendation for Nigeria is the need for a comprehensive tax reform that would sustainably increase non-oil revenue. Pattillo added: “The reason why that is needed is that Nigeria has one of the lowest ratios of non-oil revenue to Gross Domestic Product (GDP) at around 3.4 per cent in the world. And the total tax revenue to GDP at six per cent is also very low compared to peers”. She said that the interest to tax ratio is low, adding that the funds realised should be spent on important developmental projects, including infrastructure and human capital. She also advised Nigeria increase excise taxes, and begin aggressive streamlining of tax incentives and exemptions. MAN said although, government should generate more revenue to fund its developmental initiatives, owing to declining revenue from oil, the timing was inappropriate because the minimum wage of N30, 000 has just been agreed upon. MAN Director-General Segun Ajayi-Kadir said in a statement that the increase could send a wrong signal that the government was not sensitive to the plight of the low- and middle-income earners, who are in the majority. He also said it was a case of government taking back what was given with the right hand through the National Minimum Wage with the left hand through the increase in VAT. Ajayi-Kadir said the economy had just recently exited recession, with the fragile growth rate of less than two per cent recorded in 2018, which should be delicately managed. He said Nigeria’s precarious macro-economic condition required palliatives that would improve investment and not higher tax burden. Ajayi-Kadir said: “The prevailing high lending rate, double digit inflation, low per capita income, high unemployment rate and a low 1.91 per cent growth rate amidst 2.6 per cent population growth rate that are already cumulatively limiting competitiveness could be further worsened.” The DG also said the burden of the VAT increase will be shifted to consumers that are already struggling, adding that the economy will experience demand crunch, while inventory of unsold items would soar. He said the profitability of manufacturing concerns will be negatively impacted, while many factories will witness serious downturn or wind down operations. Ajayi-Kadir added: “This will also worsen the already high unemployment position of the country, which is above 23 per cent, as Nigerians currently employed by manufacturing concerns and other businesses may join the reserved army of unemployed and further bloat the unemployment rate in the country.” He advised the government to widen the tax net rather than increase the rate to meet the growing need for more revenue to address the development objective of the country. Ajayi-Kadir added: “There is also the need to harmonize taxes/levies/fees payable by businesses in the country so as to attract more investment that would translate to higher productivity and more tax revenue for the government in the medium and long term,” it counseled. Rejecting the new rate, the People’s Democratic Party (PDP) in a statement by its spokesman Kola Ologbondiyan, said Nigerians cannot bear the burden of the increase, given the prevailing agonising economic situation.   Source: Within Nigeria

Nollywood actress, Iyabo Ojo is almost at the verge of shutting down her shop over excessive Taxation by Sanwo Olu’s goverment in Lagos State. The movie star took to her Instagram account late on Thursday night, September 12, 2019, to lament the tax debt levied on her by the Lagos state tax agency. In a long post on Instagram – which has now been deleted – with a picture of the tax papers, Ojo says she’s currently contemplating shutting down her Fespris chain of businesses. The ‘Arinzo’ star says after struggling to make little or no profit from her businesses, she’s been slammed with the outrageous tax papers. The single mother tagged the Lagos State governor, Babajide Sanwo-Olu in the post where she wondered how the tax officials arrived at the sum for her Personal Income Tax. Iyabo Ojo also revealed that the remuneration from acting is unbelievably poor saying, ‘…or is it from my acting that we are poorly paid.’ She said: “ Well! it’s so sad that I may have to finally close down my business soon ….. because I don’t even know how or where to start this negotiation with Lagos State from, I’m still struggling with making profit, after paying rent, salaries, maintenance, electricity, local & state govt taxes in different categories & levy, I hardly make little or no profit …. My fellow Nigerians I have been asked to pay almost 38m for my Income tax to Lagos state. ALMOST 38M NAIRA ……… Personal income bawo? #Lagosstate how? 2014 – 2017 I was still struggling with my small business in Ikeja like I’m still even doing now or is it from my acting that we are poorly paid or from where now? pls can someone help me explain how they arrive @ this calculations, almost 38m naira, please you people should kuku sell me, my self & I i dont even know where you want me to get this kind of money from ……. E ma gba mi ke @jidesanwoolu ni bo ni mo ti fe ri iru owo to po to yii? seriously I’m not understanding @ all o, I be single mother with plenty bukata oooo, I’m confused ……….. retiring looks like the next option, bcos doing business is very frustrating in Nigeria.” Iyabo launched her business line in 2016 with the name Fespris. The business line had a spa, salon, facials in its kitty. In 2019, a restaurant and lounge were added to the business line.   Source: Pulse

Federal Government has given a 30-day window to high profile tax defaulters to regularise their tax status with the Federal Inland Revenue Service (FIRS), failing which they risk forfeiting the tax equivalent directly from their bank accounts to the Federal Government The FIRS Executive Chairman, Tunde Fowler, dropped the hint on Thursday when he appeared as a guest on the Nigerian Television Authority (NTA) programme – Platform. He said that banks have been instructed to “sweep the accounts of tax defaulters into the Federation Account after 30 days.” According to Fowler, bank accounts of the identified defaulters have been put on lien. The FIRS boss noted that since the bank lien on tax defaulters’ accounts was initiated 60 days ago, the Service has granted an additional 30 days – making it 90 days – for the defaulters to regularise their tax status. He said the FIRS has written 23,000 letters to high-profile tax defaulters, whose names appeared on its list of defaulters. Some of the letters, he said, have not been delivered because the addresses of the defaulters may have changed. “The FIRS is determined because the Service is backed by law to sweep the equivalent of what such tax defaulters owe into the federation account. “At the end of the 90 days, banks will be asked to sweep the tax owed into the Federation Account,” he warned.   Source: Daily post