The Nation Newspaper

Tag: Tax

  • FIRS shuts Meditarian over N4b tax debt

    FIRS shuts Meditarian over N4b tax debt

    • Seals HFP Engineering, others

    The Federal Inland Revenue Service (FIRS) yesterday shut Meditarian Nigeria Limited located at 243, Kofo Abayomi Street, Victoria Island, over a tax debt of over N4billion spanning 2008 – 2013.

    An officer of the firm, Mr Raja, an Indian, said he was not aware of the debt. He called on one Mr. Kola to attend to the FIRS team. Kola admitted that the firm owed the debt and pleaded for time to pay it. “We have been in discussions with your office in Abuja over the matter.” he said. The FIRS officials were not persuaded and sealed the company’s office at at 2:30pm.

    Also, the operational headquarters of H.F.P Engineering Nigeria Limited over the company’s tax liabilities o N536million.

    Employees of the firm were ordered out of the office located at Globe House, Plot 0-17B, Road 8, Victoria Garden City, Lagos.

    The FIRS enforcement unit was led by Anita Erinne.

    Also affected was Dimension Data at Block 235 Muri Okunola Street, Victoria Island, Lagos. The firm has tax liabilities in excess of N540 million. Its top officials were said to be unavailable when the office was sealed at 1:30pm.

    The same fate befell Sirius Energy Resources, located at 209 Muri Okunola Street. The firm owed N11million in taxes. Holding  a Warrant of Distraint letter, Erinne told a female employee in the firm’s administrative department to inform workers to vacate the premises within 10 minutes.

    The enforcement team visited NICON Hotel at the Victoria Garden City after it was informed that Global Fleet, a tax-defaulting firm owned by Mr. Jimoh Ibrahim, was operating from there. But the hotel was not sealed. This was after Ibrahim came out to explain to  the team, which wanted to lock up its premises, that Global Fleet is currently being managed by the Assets Management Corporation of Nigeria (AMCON).

    “AMCON has taken over for now and there is a court order on that. As soon as it is waived, after we have resolved with AMCON, we will call you concerning liabilities,” Ibrahim told the FIRS team. Ibrahim also insisted that Global Fleet operates from its Marina headquarters and not the NICON Hotel. At TSL Logistics Limited, located at 1 Coker Road, Ilupeju,  a worker of the firm put up a spirited effort to persuade the team not to seal the office. The man, who identified himself as Mr. Wale, said the firm was not owing the N724million ascribed to it by the FIRS, given that it submitted a credit note of N211million to the FIRS office yesterday. Erinne, however, insisted that the document from her office indicated a tax debt of N724million and ordered the office sealed at 4.25pm.

  • Stakeholders kick against tax bills in Rivers

    Stakeholders kick against tax bills in Rivers

    The two different tax bills introduced to the Rivers State House of Assembly by the executive has drawn the ire of stakeholders in the state.

    At a Public Hearing on the two bills in Port Harcourt yesterday, the stakeholders kicked against the bills,  saying it will amount to double taxation in the midst of current economic hardship.

    The bills titled: “Rivers State Taxes and Levies (Miscellaneous Provision) And Hotel Occupancy and Restaurant Consumption Bills” are intended to generate revenue through taxation of both small and big businesses in the state including event centres.

    Speaking on behalf of the Nigerian Hotels Association, Dr Felix O. Felix, stated that presently, hotels in Rivers State pay 19 different taxes and levies to the state government; about nine different taxes to local governments, while VAT is paid to the Federal Government.

    The Chairman of Civil Liberties Organisation (CLO) in Rivers State, Mr. Sotonye George, in his submission, asked that the bill should not see the light of the day, as it is going to cripple the micro economy of the state.

    George suggested that government should come up with one tax head to avoid double taxation, adding that “it is not friendly with the people, and it will kill our business environment and make some few persons, not government, rich.”

    He added: “The greatest mistake that the Internal Revenue will do, is to pitch the people against the governor. For the sake of the present government, this bill should stand down.”

    Also, the Institute of Human Rights and Humanitarian Law, represented by Courage Nsirim-Ovu, called for accountability, saying that the tax is targeted on the consumer who are the ordinary citizens, and that “the law is coming at a wrong time”.

    The Trade Union Congress, (TUC), Chairman, Comrade Chika Onuegbu on his part, kicked against the bill, saying it is a reintroduction of the Social Contributory Law, which was introduced by the Amaechi- led administration.

    But the Rivers State Board of Internal Revenue (BIR) officials argued that the bills are not necessarily introducing new taxes.

    The BIR officials also explained that Rivers State is only trying to domesticate federal laws in line with taxing.

    “It already exists as order of the Federal Government and if there are issues, we will address them to accommodate everybody,” they argued.

    Speaking earlier, the Speaker of RSHA, Rt Hon Adams Dabotoru Dima, represented by the House Leader, Hon Martins Amaewhule, said, the State Assembly will continue to be responsive to the yearnings and aspirations of the people.

  • Govt loses $2bn to tax evasion by oil firms

    The Federal Government has lost about $2bn to oil companies  avoiding payment of compulsory fees, the House of Representatives ad hoc committee mandated to investigate all oil prospecting licenses (OPLs) and Oil Mining Leases (OMLs) granted by the Federal Government said yesterday.

    Chairman of the Ad Hoc committee,  Gideon Gwani, said the oil companies are owing the government hundreds of millions of dollars thus compounding the problem, when they should have been the ones helping to salvage the situation of the country by prompt payment of their taxes.

    He said the situation is alarming and worrisome, adding that “this is a dangerous trend that cannot be allowed to continue.”

  • Ekiti varsity workers ready for showdown over ‘oppressive’ tax

    Ekiti varsity workers ready for showdown over ‘oppressive’ tax

    Tertiary institution workers in Ekiti State are spoiling for a showdown with Governor Ayo Fayose over the alleged 100 per cent tax deduction from their pay.

    They described the new tax regime as “burdensome, oppressive, obnoxious and draconian”, saying it will impede to the well-being of their members.

    The workers are drawn from the Ekiti State University (EKSU), Ado Ekiti, College of Education, Ikere-Ekiti, Federal University, Oye Ekiti (FUOYE), The Crown Polytechnic, Ado Ekiti and College of Science and Health Technology, Ijero Ekiti.

    A communiqué by the Joint Action Committee, read by the Chairman, Academic Staff Union of Universities (ASUU), EKSU chapter, Prof. Olufayo Olu-Olu, after a meeting held at the Federal Polytechnic, Ado Ekiti, described the new tax regime as “totally unacceptable”.

    It said the timing for the implementation of the policy was wrong as the workers were battling with irregular salaries.

    The workers recommended the creation of a standing committee, to include the representative of the government and the unions, as well as heads of tertiary institutions, to discuss modalities for a possible reduction and ensure uniformity across board.

    Olu-Olu said: “A meeting of April 14 between the government, heads of the tertiary institutions, and the unions discussed tax deduction vis-a-viz the existing disparity and the need to renegotiate. It was on that basis that we requested the governor to suspend the 100 per cent tax deduction.

    “We negotiated under Governor Kayode Fayemi; EKSU and the College of Education got 50 per cent reduction, FUOYE got 65 per cent reduction, while the College of Health Technology, Ijero is paying 100 per cent tax.

    “The government should stop the planned deduction of the arbitrary tax from the subvention/grant of the state-owned institutions and stop harassing any institutions pending the outcome of the negotiation with the body.

    “The failure of the government and the management of institutions to comply with these resolutions would be resisted.”

  • CITN’s annual tax confab to focus on economic devt

    CITN’s annual tax confab to focus on economic devt

    The President/Chairman of Council, Chartered Institute of Taxation of Nigeria (CITN), Dr. Olateju Somorin has said this year’s institute’s annual tax conference will focus on ways of growing the economy and maintaining effective fiscal policy.

    Speaking ahead of the conference holding in Abuja next week with the theme: “Fiscal Challenges and opportunities of the Nigerian Economy,” Somorin said Nigeria’s economic activity had always been concentrated in the oil and gas sector.

    She said the uncertainties about the oil price looming very large on the global scene is translating to a daunting fiscal challenge for the government.

    She said the manufacturing sub-sectors have not been spared as they have not been capable of meeting local demand or compete on the global export market, having been weakened by the rising scarcity of the forex, the absence of domestic cargo rail transportation in particular and disruptions in energy supply in general.

    “Having considered all these challenges, it became imperatively clear that there is need for the Institute to use the platform of the 18th Annual Tax Conference to address and attempt to proffer empirical solutions to these challenges,” she said.

    She said Nigeria has grown to a level that it does not need to wait for any organisation or country to assist in solving its fiscal and monetary challenges.

    “Doing this would not only amount to exposing our government as a weakling with no direction, but would impact negatively on the country and the people. We align with President Mohammadu Buhari when he said his administration will enforce greater fiscal discipline, probity and accountability in all revenue generating agencies of the Federal Government, adding that government would take deliberate steps to enforce regulations that would stop financial leakages in generating more revenue to mitigate the effect of dwindling oil prices on the Nigerian economy,” she said.

  • ‘Excessive tax regimes stifle businesses’

    ‘Excessive tax regimes stifle businesses’

    Dhiman Anurag is the Managing Director of Allied Atlantic Distilleries Ltd (AADL), the first and only company that produces Extra Neutral Alcohol (ENA) through cassava tubers in Africa. In an interactive chat with newsmen on factory tour of AADL, Anurag reveals the plight of a pioneer company. Daniel Adeleye was there

    It’s a long story for AADL, coming to this stage. We started thinking of this project in 1999. Something happened during that time; people started producing fuel ethanol to mix with petrol. Sadly, 100 percent of the country’s ethanol was imported.

    The major source of producing ethanol is Molasses, a by-product of sugar, and since it is only a by-product, we anticipated a time when there will be limitations of producing sugar and so on the availability of molasses for ethanol production. We then identified that ethanol scarcity was imminent, if the trend continued.

    Stemming from this, we recognised the business opportunity the situation presented us. We started thinking of doing a backward integration to start producing ethanol locally. So we made the decision to set up our own Extra Neutral Alcohol (ENA) plant and that was how it all started.

    Immediately after, challenges sprung up. Our first challenge was informed by the fact that there was no manufacturer of sugar in Nigeria at the time. We started looking for what we could use for production.

    All over the world, molasses a byproduct of sugar mills is the major raw material for ethanol production. Hence, our first option was sugar but there were no sugar factories in Nigeria at the time.

    The next we thought of a starch based plant which is the second source for producing ethanol in the world but we soon discovered the challenge of inadequate quantities of starch based raw materials like corn, rice, wheat etc. If the United States uses corn, other countries use wheat, rice or sorghum; we decided to look at other “non-conventional” raw materials. At the time, we came to understand that it may take us a very long time to get the right raw material for ethanol production.

    Thinking in this line, we were keen on studying the concepts used for ethanol production. We divided the project into two stages. First was the installation of redistillation plant of 30,000 litres daily capacity to produce ENA from imported crude ethanol. This equates to 9 million litres annually. In the second phase, we sought to identify the best raw material to use, considering what was available in the country. That was how we started.

    We commissioned our first redistillation plant in 2002. After that we started searching for best available raw materials in Nigeria to produce ethanol. We looked at sorghum, but there was a lot of competition for sorghum at the time because the breweries were also using sorghum. Then suddenly the Government banned importation of sorghum to promote locally sourced sorghum. All these made the sorghum not ideal for us. We continued our search, and finally we found cassava which has high starch content. There was nobody in the world using the cassava as a raw material for ethanol. We started our agric division in 2005 and started educating the farmers on how to increase their yields. We taught them the best practices to be done to boost their productivity.

    We did this because when we studied the market conditions in Nigeria, we found that the farmers here only produce 12-14 metric tonnes of cassava tubers per hectare as compared to farmers in countries like Thailand produced 50-60 metric tonnes per hectare. You would agree that the practice by the farmers in the country was clearly wrong. So we taught them how to utilise their farmlands optimally, and increase their production capacity, while reducing production cost.

    In 2007, our agric development expert with a very strong experience in out growers scheme & development  Mr. Rajasekarr came in and  started developing our supply chain & logistic for cassava. We also started developing our contract farming models and finally, we went into a partnership with IITA to advice us a suitable varieties to suite our plant.

    Our rigorous work in educating farmers for best practices continued between 2006 -2007, and in 2008, we had gone for 2000 hectares contract farming to try contract farming module. We decided that before jumping into the real project, we would solidify our contract farming. We entered an agreement with the farmers where they would sell all the cassava they produced to us. We had this agreement with about 4,000 farmers. They produced for us, while we provide the seedlings, fertilizers, herbicides & other technical support.

    Their yields improved and their production capacity was on the upward swing. It went up to about 20 – 24 metric tonnes from existing 12 to 14 metric tonne per hectare. Fortunately, the price of cassava went up in the market at the time. The farmers were happy. They asked if they could sell their surplus yields outside and we agreed. At this point, we were certain that availability of cassava will not be an issue.  We started erection activities in mid 2010 and commissioned the plant in January 2014.

    Short and long term goals of the company

    Since the concept we use is a new concept and being the first and only distillery using cassava tubers for producing ethanol in Africa, we started with a small capacity. We started very small so we don’t face the challenge of large quantity of cassava requirement. We were also particular about sustaining a high quality of ethanol. In the last 2-3 years we have been consistent, we have succeeded in getting the quantity needed. In 2014, we achieved a good capacity utilisation of 60 percent. In 2015, we attained 70 percent of utilisation, and this year, our target is between 80-90 percent.

    Quality wise, we provide the best quality of ENA. Our customers have attested to our high quality, making it effortless to retain them. So as far as we are concerned, we have been successful over the years. Though the gestation period seems longer, we are still very much on track.

    Now we are ready to expand the project and we will be leveraging on our unique concept and technical know-how. We are targeting an immediate expansion that would see an increment in the capacity by 13.5 million litres per annum of ENA. This will increase our existing plant capacity to 22.5 million litres per annum. We are looking to meet at least 20-22 percent of the nation’s demand by 2021 / 2022.

    Our consumers mainly constitute alcoholic beverages and pharmaceutical companies. They include Nigerian Distilleries, Supreme distilleries, Intercontinental distillery etc. All of these companies patronise us. We are only producing 9 million litres from this plant, which is too small as compared to the Nigerian market. In fact, we need to expand very quickly to meet some demand. Going by the recent happenings in Nigeria, we know for sure that importing ethanol will become difficult with time and the cost will keep soaring, especially as a result of the exchange rate increase.

    Allied Atlantic Distilleries Limited, the only manufacturers of ethanol in Africa, targets an expansion of their plants which will see its production capacity of Extra Neutral Alcohol (ENA) surge to 22 million litres before 2025.

    The country’s demand for ethanol hovers around 300 million litres, and AADL currently produces an infinitesimal 9 million litres. This represents a whopping 291 million litre deficit which incurs the nation over $250 million in importation costs.

    The huge tax burdens AADL is saddled with is quite challenging. We need government’s commitment to slash the heavy tax rates.

    We need encouragement from Government in areas of tax reliefs and low interest rates on loans obtained from Deposit Money Banks (DMB). In advanced countries, when you have a pioneer status as the only manufacturer of a product, the Government supports you with these incentives to trigger expansion.

    The aim of the expansion is to consolidate on the success achieved so far in reducing the nation’s dependence on imported ENA with resultant savings in foreign exchange, production of jobs in the industrial sector and improvement in the country’s farmer’s income; at a time where the nation’s diversification efforts have been intensified.

    Assessment of government’s economic diversification drive

    For this type of project to be successful, the basic thing you need is the agricultural commodity as well as land. So we need the government to help us in developing cassava farm land in term of clearing allocated lands. We also need government in helping farmers with financial supports by launching various short term agric funding schemes for the farmers.

    Industries like ours also need a lot of government encouragement in areas of tax relief and low interest rates. In advanced countries, when you have a pioneer status like we do, you are very well encouraged by the government. This is because you play a key role in forex earnings and job creation. In China, for instance, you don’t pay tax as a pioneer company. Government should also fast track their infrastructure development program. This will reduce various problems faced by farmers in moving their produce.

    If government supports us, they will save close to 50 percent on ethanol importation. $250 million is spent annually by government to import ENA, so saving 50 percent of that will go a long way in preserving forex at a time where it has been significantly affected by the dip in crude prices.

    Operating climate under forex scarcity

    We are affected no doubt. The importation of plant and machinery and spares for our existing facility has become difficult due to scarcity of forex. We want CBN to give priority to import substitution industry.

  • Catholic Church sues Ekiti govt over education tax

    Catholic Church sues Ekiti govt over education tax

    The Catholic Diocese of Ekiti has filed a suit against the imposition of levies on pupils in its primary and secondary schools by the Ekiti State government.

    The church urged an Ekiti State High Court to declare that the defendants could not impose education development levy or tax on pupils and schools.

    The court is to restrain the defendants from further demand of the levy.

    According to the originating summons, the Incorporated Trustees of Catholic Diocese of Ekiti are the claimants. The defendants are the Attorney General, Commissioner for Education and the government.

    The Church wants the court to determine “if every child of primary school and junior secondary school age in Ekiti State is not entitled to free and compulsory basic education.

    It also wants the court to determine if “the imposition of education development levy or any tax or levy on pupils and schools in Ekiti State, including the claimants’ schools, by the defendants, does not violate Section 2 of Compulsory Free Universal Basic Education Act 2004 and Section 19 of the State Universal Basic Education Board (SUBEB) Law”.

    The Catholic Church also wants the court to determine if the defendants could impose education development levy or tax on pupils and schools “without a law validly passed by the House of Assembly”.

    The Church is seeking an order of mandatory injunction directing the defendants to endorse and approve the applications of  pupils of its schools for the National Examinations Council (NECO) examination, pending the determination of the substantive case.

    Diocesan Bishop Most Rev. Felix Ajakaye said he was “concerned about the propriety of imposing any development levy on pupils in Catholic mission schools in Ekiti State, moreover when our schools are paying various levies and taxes demanded by both the local and state governments”.

    Addressing a briefing at the weekend, Ajakaye expressed dismay at the closure of seven Catholic schools even as some of them are preparing for their NECO examinations.

    The closure, according to him, followed the breakdown of negotiations between the Diocese and government representatives.

    The cleric said as a law abiding body, the Church was taking steps to seek judicial resolution of the matter.

    “The affected pupils are writing exams and government is closing down their schools. That is insensitivity.”

  • LIRS hires tax experts from ICAN, CITN

    LIRS hires tax experts from ICAN, CITN

    The Lagos State Internal Revenue Service ((LIRS) has engaged 1,200 members of the Chartered Institute of Taxation of Nigeria (CITN) and the Institute of Chartered Accountants of Nigeria (ICAN) as Tax Audit Monitoring Agents (TAMAs).

    The TAMAs are authorised to act as agents of LIRS for tax audit and assurance purposes. The LIRS carried out a review of the appointment and operational procedure of the TAMAs in order to enhance efficiency in its audit exercise.

    In a statement, the LIRS said their duty would be to collect requisite information during tax audit field exercises, collate, prepare and submit tax audit reports based on the facts gathered for use by the LIRS.

    Executive Chairman of LIRS, Olufolarin Ogunsanwo, implored the TAMAs to demonstrate the highest level of professionalism.

    “We believe you will demonstrate a high sense of responsibility and integrity in this noble assignment in line with international best practices as we hope to improve the internally generated revenue of the state and ultimately engender a sustained culture of voluntary compliance amongst tax payers in Lagos. I have no doubt in my mind that your professionalism will be of tremendous value during this year’s exercise and beyond,” he said.

    The revised tax audit manual was also presented formally. It highlights the systematic steps of auditing, ethical standards and codes in line with international best practices.

    “The TAMAs at the Training undoubtedly emerged to be the best in the stock of applications that we received.

    The selection process was quite painstaking and took into consideration a number of preconditions, professionalism and track records in the most vital areas,” LIRS’ Board Secretary, Jimi Aina said.

    Advising the TAMAs at the workshop, Director, Tax Audit, Bolaji Akintola, said.

    “The Image and reputation of LIRS is key in tax audit, therefore we charge you to stand for what LIRS stands for, by avoiding any form of compromise, illegality, unprofessional conducts and shunning all under the table transactions.

  • No going back on tax on pupils, Ekiti Govt replies Catholic Church

    The battle line appears drawn between the Ekiti State government and the Catholic Church over tax imposed on pupils in schools owned by the Mission.

    The Ayo Fayose-led administration has insisted that the N1,000 and N500 Development Levy imposed on pupils in private and public primary and secondary schools has come to stay.

    The government maintained that mission schools will not be given preference treatment over other schools and that “no other body besides the Federal and state government has power to make policies concerning the operation of both private and public schools in the country.”

    Catholic Bishop of Ekiti Diocese, the Most Rev. Felix Ajakaye, had declared the intent of the church to file a court action to stop the imposition of the levy on pupils in its schools which he said are paying various taxes to government coffers.

    The Commissioner for Education, Science and Technology, Jide Egunjobi, who said this in a statement yesterday, claimed that seven schools owned by the Catholic Diocese of Ekiti State had already complied with the government policy by paying the development levy, dismissing the threat to sue the government by the Catholic Diocese.

    He said:  ”It is wrong for any organisation to claim that it has its own education policy that is different from that of the state and that no law empowers the government to impose education development levy on pupils of mission schools in Ekiti State.

    ”Christ The King Catholic College, Ire; St. Theresa‘s Catholic School, Ikole ;Ave Maria International College, Osun; St. Joseph‘s Nursery/Primary School, Ado; Immaculate Nursery/Primary School, Ilupeju; St. Philip Catholic Nursery/Primary School, Otun and St. Louis Nursery/Primary School, Ikere have all complied with the government directive on the development levy,” he said.

    The commissioner also disclosed that mission schools owned by the Anglican Diocesan, Christ Apostolic Church, Apostolic Faith, Baptist Church, Deeper Life and Muslim Societies have paid the levy.

    “It has become necessary that we correct the impression the press conference addressed by the Bishop of the Catholic Diocese of Ekiti, Most Rev. Felix Ajakaye, on the payment of Education Development Levy in Ekiti State was meant to create.

    “In some states, crèche fee, back duty levy, entertainment or merriment levy and others levies are collected from schools and mission schools are not exempted.

    “Whether or not mission schools should be treated differently does not even arise because other most of the mission schools in the State have paid the development levy. Even the Catholic Diocese that is threatening legal action, seven of its schools have paid.”

  • Ogun reassures SMEs on tax

    Small and Medium Scale Enterprises (SMEs) in Ogun State have been assured of government’s continuous collaboration in the area of levies and taxation.

     This will affect entrepreneurs positively and enhance the state’s economic growth.

    Commissioner for Finance Adewale Oshinowo gave this assurance when members of the state chapter of the Nigerian Association of Small Scale Industrialists (NASSI) visited his office in Abeokuta.

    Oshinowo said when entrepreneurs pay levies and taxes according to their capabilities, businesses would grow and this would affect the economy positively.

     “Economy will grow when SMEs grow, the government will continue to collaborate with this association to ensure its growth,” he said.

    NASSI Chairman Olusegun Dada, who led the team, pledged the association’s continuous support for government’s policies and programmes and called for more interactive platforms with government agencies where policies that can enhance economic growth could be discussed.