By Collins Nweze
The review of the Finance Act excluding companies with less than N25 million yearly turnover from paying taxes does not apply to individuals, Oludayo Adeosun, a retired staff member of Federal Inland Revenue Service (FIRS), has said.
Speaking on the newly signed Finance Act, he said the tax market remains huge, but compliance remains low.
Adeosun, the Lead Consultant, Dshield & Buckler, tax and management consultancy firm, based in Lagos, said the corporate segmentation of taxpayers by the FIRS would boost tax compliance.
He said: “There are low, medium and large tax payers. There is need for appropriate segmentation of tax payers, and there will be an improvement for tax collection for the nation.
Tax segmentation in connivance with the new Finance Bill, where companies with less than N25 million turnover are now being exempted from payment of taxes.
It is a new dimension, that never happened before. Everyone had actually been on the tax net, and they have been paying.
But this new revision, allows companies that are coming up to have time to find their feet, while those that have been in business will now be faced by the tax offices to ensure that adequate and correct taxes are paid”.
According to him, there are ways the tax office can confirm, whether the information one provided to them is right or wrong.
He said that the laws of the state has a programme for anybody who is in employment to be taxed, but there is a criteria that if you do not earn more than that, the issue of N25 million will not fly in terms of an individual.
“It has do with the company, because the individual law in the internal revenue clearly states that if what you are earning is extremely low, you only pay the minimum tax.
That is the Company Income Tax for the Federal Government, the Valued Added Tax and the withholding tax, petroleum taxation,” he added.
He explained that the issue of the commencement role has been addressed by the new Finance Act. “Even if you have a company that was resisted for over 20 years, but has not been in operation, you can still argue your case as long as it is that you are not actually operating.
There are people that register a company, planning to use it after retirement and you cannot tax them,” he said.
Continuing, he said that the mere fact that a company is operating under N25 million turnover does not mean that the company should not register with the tax office. “It simply means that the company belongs to the group of companies that they are nurturing to come up.
So, every right of any tax payer, you have it, except that you are not being taxed. For an individual, it is going to be in the state internal revenue, but if it is a company, it is going to be with the Federal Inland Revenue Service,” he said.
Dshield & Buckler, lead consultant, said taxation is the Act of the payment of dues to the government. He said the management aspect of it to be able to understand the law, so that people can pay the tax due to the government without suffering any inconvenience.
“My experience has spanned over 30 years, reason being that I was with the Federal Tax Office, over 30 years and getting to the level of the directorate, before I retired.
The vision is to help people to pay their taxes accurately and help government in the area of compliance. By the time you help tax payers to file their returns, it helps government in the area of compliance,” he said.
He called for sensitisation to let the people know that payment of their taxes, is a civic responsibility.
He said: “With the regime of Federal Revenue Service, with the reconstruction of the service now, it will be very very hard, for someone to evade tax,” he said.
He described tax as the law that guides what one should pay, how it should be paid.
He explained that tax administration is how the laws will be administered. “The tax law is that you should pay, but for a quick taxation, one of the incidents of taxation is the convenience of the taxpayer.
So, when the taxpayer comes to you, he drops his returns, and said, ‘I am owing N1 million, but I have N500,000. I am going to settle the remaining on. Administration says you should ask how the balance will be paid in installment basis”.
“So, the law allows the taxpayer to pay in instalment basis. But the administration is to team that the installment basis that is to be paid, must not pass a specific period of that assessment year.
‘’We have been on that side before, and had administered taxation. We are now practising it. We understand the two sides of it, both the administration and practice.”
He said tax is a compulsory levy, imposed on the citizenry of a nation, of which they many not have a direct benefit.
“If we all think that because we provide our own infrastructure and so we will not be paying, there will be problem. Not every tax you pay will benefit you directly. The tax may be used at the teaching hospitals, Army, and it out of this money they use to provide security.
There is no reason not to pay taxes, tax is a civic responsibility. What we should say is that there should be a better management of the tax resources.
“Under the law, without the government asking you to come and pay your tax, you have a civic responsibility, if you are an individual, you go to the internal revenue to submit your returns.
But if you are a limited liability company, the law says upon your commencement, you must go and register, but you will only submit your returns, if it is Federal, 18 months after you have started business”.
