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Tag: Tax

  • Govt pushes for 20% tax to GDP ratio, says CITN

    Govt pushes for 20% tax to GDP ratio, says CITN

    The Chartered Institute of Bankers of Nigeria (CITN) has disclosed Federal Government’s plans on achieving a 20 per cent tax to Gross Domestic Product (GDP) ratio for the economy.

    The CITN President, Dr. Olateju Somorin, who disclosed this at the 33rd induction ceremony of the institute, held in Lagos at the weekend, said achieving this would require that tax administrators and professionals to navigate the tax laws on behalf of tax clients to ensure equity and fairness in its application and compliance.

    She said the task falls on professionals who must continually update and display the requisite skill set in order to offer top notch services to their clients and the general public.

    Somorin said the institute on its part, recognises the need for continuous provision of a strong manpower base for the tax system and would contribute its fair share in this regard.

    “It is pertinent to emphasise the place of taxation in national development at this juncture. This has become even more imperative in the face of falling crude oil prices and underperforming budgets as a result of paucity of funds from federal allocations. At the federal and state government level, there have been increased activities geared towards increasing internally generated revenue with different strategies being employed,” she said.

    The CITN boss said while some states have given effect to the institute’s call for autonomy for revenue administration, others attempt to resort to self-help by making summary pronouncements on what tax payers should pay.

    “For the avoidance of doubt, imposition of taxes is based on assessments, as is the convention with tax laws. These assessments provide the basis for arriving at the taxes being demanded. This makes for a better understanding and position of trust between the taxpayer and tax administrator. Let me equally reiterate our call that only tax professionals should head and administer agencies charged with revenue generation, especially at the Federal and States Boards of Internal Revenue,” she said.

    “Only people  possessing the right  skills in taxation should do the job.This has become necessary if government is to be taken seriously in addressing the issue of low tax compliance and increased revenue generation.

    “We recognise that as an institute, we do not possess compulsive powers to make government tow this line. However, we will continue to make our voice heard at every opportunity to drive home the message of professionalism”.

    Dr. Somorin explained that as part of the mandate of the institute to standardise taxation practice in the country, the Nigeria Taxation Standard Board (NTSB) was inaugurated  with the mandate to, amongst others, ensure standardisation of taxation practice and administration in Nigeria by narrowing down areas of differences in the treatment of tax matters.

    “In accordance with our institute’s resolve to carry out its mandate with integrity and service, I find it very useful and appropriate here today to inform you that our institute, as a professional body, does not condone any form of unprofessional behaviour or unethical practice among its members. This is a statutory responsibility to which all of us subscribe. Just as a violation of the law in the larger society always invariably attracts commensurate sanctions, so is non-compliance with the provisions of the institute’s Code of Conduct,” she said.

  • ‘Corruption hampers tax system’

    Nigeria cannot justify increasing taxation without clamping down on corruption in its tax system, President of Trade Union Congress (TUC), Bobboi Kaigama, has said.

    Speaking at a national summit in Abuja, he said companies avoided corporate income tax and privileged Nigerians avoided paying personal income tax, denying Nigeria money that could boost its revenue.

    Kaigama said the only people paying tax is the working class whose taxes are deducted at source before banks deduct transaction charges and never really see the true figure of their salaries.

    President of the Chartered Institute of Taxation of Nigeria, Mac Anthony Dike, said skewed administration of tax policies and laws had reduced burden of direct taxation but stagnated indirect tax.

    He particularly said value added tax had been bastardised because restrictions imposed by VAT were flouted. The restrictions forbid deduction of VAT on fixed assets until they are sold and insist on full consumption.

    Dike said Nigerian needs to continue to assert its tax system to ensure no one is left behind. “I will support an increase in VAT provided we remove these bottlenecks that distort the picture,” he said.

  • Akwa/Ibom governor urges Nigerians to pay tax

    Akwa/Ibom governor urges Nigerians to pay tax

    AKWA  Ibom State Governor Udom Emmanuel has urged Nigerians to pay tax, lamenting that the high rate of tax evasion is a disincentive to economic development.

    Represented by the Commissioner of Finance, Mr. Akan Okon,  at the opening of the Mandatory Professional Training Programme of the Chartered Institute of Taxation of Nigeria (CITN) in Uyo, yesterday, the governor described tax as a major source of government’s revenue in most countries.

    The governor noted that tax was a civic duty of every eligible citizen.

    He however advocated effective tax education in Nigeria with a view to motivating high degree of compliance by the people.

    Emmanuel urged tax administrators to create public awareness to enable Nigerians understand tax-related legislation and procedures.

    He added that the enlightenment was expected to reawaken in people a consciousness to be patriotic and see tax payment  as their social responsibility.

    The governor said: “Tax is a major source of government’s revenue in many countries. In those countries, people see tax as their civic duty and pay it willingly.

    “But here, there is a high degree of tax evasion and avoidance. The little money government gets through taxes is through civil servants as their taxes are deducted from source,” he said.

  • Messi, father to appear in court on tax fraud charges

    Messi, father to appear in court on tax fraud charges

    Argentine forward Lionel Messi and his father Jorge have been ordered to appear in court on charges of defrauding Spanish tax authorities.

    The News Agency of Nigeria (NAN) reports that the amount involved is worth more than four million euros (about $4.5 million; about N990 million).

    Spain’s public prosecutor has recommended a jail sentence totaling 18 months and fines of more than two million euros for Jorge Messi.

    This is for allegedly defrauding the state of 4.2 million euros for the years 2007-2009.

    The prosecutor has however argued that Lionel Messi should not have to answer the charges as his father oversaw his finances.

    But a court document published on Thursday showed the judge in the case had ruled that the FC Barcelona player must still appear as a defendant.

    The hearings will take place at a court in Vilanova i la Geltru, near Barcelona, the document said.

    The court had previously ruled that Messi could have known about it all.

    It also said he could have approved the creation of a web of shell companies which were allegedly used to evade taxes on income from image rights.

    Revenue had been hidden using companies in Uruguay, Belize, Switzerland and the UK, according to the prosecutor’s office.

    Previously, Messi and his father paid five million euros to the tax authorities as a “corrective payment’’ after they were formally charged in June 2013.

    The footballer has been resident in Barcelona since 2000 and gained Spanish citizenship in 2005.

    He is 10th on Forbes Magazine’s list of the world’s highest-earning athletes over the past decade with income of $350 million.

  • ‘A lot of Nigerians are not tax -aware’

    Chief Mark Dike is the immediate past president of the Chartered Institute of Taxation of Nigeria (CITN). In this interview with Ibrahim Apekhade Yusuf he speaks on the challenges and prospects of tax administration in Nigeria

    Would you say tax awareness has increased among Nigerians?

    Saying that tax awareness has increased in Nigeria is neither here nor there. The awareness depends on how you look at it. If you’re looking at it from the perspective of government or from the perspective of the citizenry, especially those who are supposed to pay tax, if you’re looking at it from the perspective of government, then I can say there is this realisation by government that tax is the only way for government to raise sustainable revenue that it can utilise to prosecute government business. And prosecuting government business is not just to pay salaries but more importantly, to provide public goods and services for all citizens, whether you’re in employment of government or not, whether you’re a paid employee or self-employed person.

    If you now look at it from the point of the citizens, the awareness is not adequate. Yes, they know they have a duty to pay tax but people have this attitude that why do I need to pay tax. There is this maxim in taxation, if you talk about tax policy. Qui bono, for what purpose, why am I paying tax because as long as the quid pro quo, you give and you expect something in return, is not there, then there is a problem with such a system.

    No man is under any legal obligation, legal or otherwise for the tax man to use his shovel to come into his shop and scoop after his wealth. Such man will try with all the means possible to guide his wealth jealously from invasion or the tax man.

    Again, I must reiterate that the government has not really helped matters. In a situation when the competition for revenue between oil and tax was such that the government found it easier to get revenue from oil, it neglected its responsibility towards taxes. And since it was getting revenue from oil, it was like sentencing government into some complacency. I recall that our former Head of State in the throes of the oil boom said the country’s problem was how to spend its money.

    Is tax sustainable?

    Of course, tax revenue is a sustainable way of generating income for any government. But the irony, however, is that the level of tax awareness is still poor across the country. Unfortunately, efforts by various governments to evolve viable tax system in the country as a panacea for economic growth and development has failed to truly translate to better living conditions for majority of the citizenry.

    The best use of taxation is to pool our resources together. If people get that particular understanding that this is about you and I, what we can contribute to the pool, then things can work. Once you know that if you pay your tax as and when due, you won’t go to sleep and allow your tax to be frittered away by just anybody.

    For instance, a man cannot fail to give his wife money and come back to start asking for food. It is the same way people pay tax and demand for good service delivery.

    There is a biblical saying out of the abundant of the heart, the mouth speaks. A hungry man does not hear any grammar. A hungry man who does not have enough to take care of himself, you cannot ask him to contribute money for food.

    Many companies rather than pay tax seek tax holiday. What is your take on that?

    I really do not support the whole idea of tax holiday because it has been bastardised by the federal government. Giving tax holiday is not free lunch; there are benefits and agreements attached to it. In fact, there must be quantifiable and verifiable evidence for tax holiday to happen. We feel statutorily obliged to initiate programmes and discussions that would not only help in critically addressing these issues, but would also find solutions to the numerous problems bedeviling our economy.

  • Illegality of Fayose’s flat tax directive

    Illegality of Fayose’s flat tax directive

    The print media was awash on Tuesday, September 1, 2015 with reports of Gov. Ayo Fayose’s threat that no private school in Ekiti State will be allowed to commence school activities this Session unless it pays a tax of N150,000 and that anybody who buys one cow to be slaughtered for any ceremony will pay N1,000. It was further reported that the Governor vowed to shut four banks for ‘tax evasion’. Of all these issues, I intend to anatomise the issue of payment of N150,000 by each private school before the school will be allowed to re-open.

    For private schools with large population of employees, payment of N150,000 may even be a blessing in disguise, especially if the monthly personal income tax remittance is above the N150,000 mark. The opposite will, however, be the lot of small and medium schools with low staff population. Each of such schools is now being compelled to cough out N150,000 without regard to what the actual remittance should be or ought to be. The implication of the Governor’s Proclamation is that a private school with, for example, 10 members of staff, at salaries varying from N10,000 to N50,000 must pay the same N150,000 in the manner of another school with 30 members of staff with salaries ranging from N15,000 to N80,000.

    Flat tax has been defined by Tejutax at page 794 of her book, Tejutax Reference Book, Vol. 1, as a tax applied at the same rate to all levels of income. Flat tax means that everyone has to pay tax at just one and only one rate. In such a system, in place of a complex set of income tax brackets, a State declares a threshold above which all parties pay a fixed rate on all their income.

    As at today, the Federal Government of Nigeria and its federating States apply the progressive system of taxation and not the flat tax system. This is why the system is classified as Pay-As-You-Earn (P.A.Y.E.). Paragraph 7 of Part II of the Second Schedule to the 1999 Constitution provides that:

    In the exercise of its powers to impose any tax or duty on – (a) capital gains, incomes or profits of persons other than companies; and  (b) documents or transactions by way of stamp duties the National Assembly may, subject to such conditions as it may prescribe, provide that the collection of any such tax or duty or the administration of the law imposing it shall be carried out by the Government of a State or other authority of a state.

    It was pursuant to this provision that the National Assembly made the Personal Income Tax (Amendment) Act, 2011 whose principal Act is the Personal Income Tax Act, Cap. P8, Laws of the Federation of Nigeria, 2004 (otherwise called “PITA”). PITA was actually enacted in 1993 and it is an existing law pursuant to Section 315(1)(a) of the 1999 Constitution.

    Of equal relevance is Paragraph 8 of Part II of the Second Schedule to the 1999 Constitution, which provides that:

    Where an Act of the National Assembly provides for the collection of tax or duty on capital gains, incomes or profits or the administration of any law by an authority of a state in accordance with paragraph 7 hereof, it shall regulate the liability of persons to such tax or duty in such manner as to ensure that such tax or duty is not levied on the same person by more than one state.

    This provision makes it clear that the Act made by the National Assembly shall regulate the liability of the residents of a state to such tax in such a manner as to ensure that such tax is not levied on the same person by more than one state. This provision is intended to prevent multiplicity of taxes but much more than that.

    Item 59, Part 1, Second Schedule to the 1999 Constitution, (which contains the Exclusive Legislative List) gives the National Assembly exclusive powers to legislate on taxation of incomes, profits and capital gains except as otherwise prescribed by this Constitution. The purport of these constitutional provisions is that the states are to enforce laws made by the National Assembly in relation to taxation of incomes, profits and capital gains.

    A state is required to impose tax or levy with respect to any of the 25 taxes and levies contained in the Taxes and Levies (Approved List for Collection) Act (Amendment Order), 2015.

    With respect to these 25 taxes and levies, Fayose’s proclamation is only related to income tax. Yours sincerely has shown that income tax cannot be charged arbitrarily; it can only be charged according to the relevant Act. I know as a fact that there is no law in Ekiti State, which makes it compulsory for each private school to pay N150,000 before resumption in a new session. Even if there is such a law, it will be unconstitutional because Section 1(3) of the 1999 Constitution provides that:

    If any other law is inconsistent with the provisions of this constitution, this constitution shall prevail, and that other law shall to the extent of the inconsistency be void.

    Taxes and levies cannot be charged by a rule of the thumb or by a Governor’s proclamation. There are guiding principles to taxation, which the State Governors and the Federal Government must imbibe if we want to have an equitable tax system. Let us consider the words of wisdom in the cases below:

    “It is the law that the language of a statute imposing a tax, duty or charge must receive a strict construction in the sense that there is no room for any intendment and regard must be had to the clear meaning of the words. If the state claims a tax under a statute it must show that the tax is imposed by clear and unambiguous words, and where the statute is in doubt it must be construed in favour of the subject, however much within the spirit of the law the case might otherwise be, but a fair and reasonable construction must be given to the language used without leaning to one side or the order” statement of law by Lord Atkinson in Ordmond Investment Co. v. Betts [1928] AC 143 at 162, adopted: per Ikpeazu J. in Aderawos Trading Co. Ltd. v. F.B.I.R. [1966] L.L.R. 196 at 200.”

    “It is a general principle of fiscal legislation that to be liable to tax the subject must fall clearly within the words of the charge imposing the tax, otherwise he goes free. It is also for the State to establish that the charge prima facie extends to the subject matter sought to be charged: per Lord Halsbury L.C. in Tennant v. Smith (Surveyor of Taxes) [1892] A.C. 150 at 154, HL.”

    A good tax system, therefore, should be part of the so-called democracy dividends. Ade Ipaye has outlined the essentials of a good tax system, in his book, Nigerian Tax, Law & Administration: A Critical Review, to include equity, certainty, convenience and administrative efficiency. Certainly, Gov. Fayose’s imposition of a new tax regime specifically for some citizens is not only discriminatory but uncertain.

    According to the National Tax Policy, governors are expected to play a similar role to that of the Presidency at state level. They would be responsible for the development of state Tax Policy which shall be complementary to the National Tax Policy. In addition, they are responsible for the enforcement of Federal and State tax laws in the States and carry out general oversight functions on tax and revenue authorities at the State and Local Government level. State Governors would be required to provide guidance and direction to the State Ministries of Finance, the State Boards of Internal Revenue Service and other relevant revenue generating agencies involved in tax administration in the States. They should also ensure adequate funding and autonomy is provided to these agencies in the discharge of their functions.

    State Governors, as stakeholders in the Tax System, have roles and responsibilities, among which are: (a) adherence to Constitutional Federalism and the Rule of Law at all times; (b) strict adherence to Constitutional provisions relating to fiscal matters; (c) strict adherence to the provisions to tax legislation in the administration of taxes; (d) commitment to the enforcement of tax laws in a legal Constitutional manner; (e) commitment to the creation and sustainable development of a stable, secure and workable tax system for Nigeria.

    The intendment of this piece is, therefore, not to encourage tax evasion or to avoid tax remittance, but to discourage State Governors from making tax laws – whether discriminatory or not – by executive fiat. This is my little contribution to tax law jurisprudence and I hope it will be useful to not only Ekiti people but to Nigerians as a whole.

     

     

     

     

     

  • Fed Govt bars consultants from tax collection

    Fed Govt bars consultants from tax collection

    Tax consultants have been barred from assessing and collecting tax revenue on behalf of the Federal Government.

    This clarification was given yesterday by the new Acting Chairman of the Federal Inland Revenue Service (FIRS) Mr. Babatunde Fowler in Abuja when he met with members of the Joint Tax Board (JTB).

    Fowler admitted that consultants will be engaged by the FIRS to gather data only. He said the FIRS has under 1,000 staff in audit function. “So, you can imagine 1,000 staff trying to review or audit the books of 450,000 companies, it just won’t work, to improve the levels of transparency and accountability these consultants will only gather data, the law does not allow them to do assessment or collect revenue on behalf of government they’re just to assist our staff to collect data,’’ he said.

    The FIRS he said will do the assessment with the States Board of Internal Revenues (SBIRs) and issue the demand notices for the tax due.

    Some state members of the JTB had complained that many consultants come to make huge claims so that they can get huge commissions, but they don’t have the capacity to actually collect the huge revenue they claim to have collected in some states.”

    On recent calls for an upward review of the Value Added Tax (VAT) collected by the federal government, Fowler noted that “it is the responsibility of the federal government and the federal ministry of finance to decide wether that (VAT) will change.

    Fowler agreed that five per cent VAT charge was low when other countries that charge VAT both in West Africa and in Europe but those other countries have reached  the maximum level when it comes to paying taxes or public tax. “Those countries have 99 per cent tax compliance so I think we should first of all get there before we consider increasing VAT, when everyone is paying their taxes then we can look else where,” he said.

    In order to build on the achievements of his predecessors, Fowler said he would reach out to SBIRs for collaboration stressing that “there are many stones left unturned as far as our current tax administration processes are concerned. For example, it is common knowledge that administration of VAT is greatly hindered by many factors, ranging from inadequate coverage of vatable persons to non-remittances of VAT deductions, tax revenue loss in this aspect can only be imagined.”

    Speaking to reporters on how the FIRS will operate under his watch, Fowler said his strategy is going to change a bit.

    He said: “Our objective is to have 99.9 per cent level of compliance meaning that everyone and corporate entities that are taxable are captured in the tax net and pay the appropriate tax.

    “ FIRS will exchange information with states boards of internal revenue so that we have all the information on their own data base, we’ve given them ours already meaning that if there is any company that they don’t have in their data base they can capture such company so immediately we will have a growth in the number of tax payers at both the federal and state levels within one week.”

    The FIRS Chairman said the agency has identified and located taxpayers through sharing and exchange of information as much as possible, addng that it will conduct joint audit exercises by FIRS and SBIRs; carry out joint tax enlightenment and enforcement exercises.

  • Infrastructure Bank announces N973m profit before tax

    Infrastructure Bank announces N973m profit before tax

    The Infrastructure Bank Plc (TIB) has announced N973 million as profit before tax for its 2014 financial year.

    Its Chairman, Alhaji Lamis Dikko, stated this in his Annual Report at the bank’s Annual General Meeting at Transcorp Hotels, Calabar.

    He said the figure showed a marginal improvement over its 2013 profit of N875 million.

    He said a strong set of results posted by TIB last year fostered what he called a trend of positive performance by the bank.

    Dikko said the performance of the economy last year  also determined the bank’s profit in the financial year.

    He said: “In 2014 the Nigerian economy faced several challenges some of which were heightened by the fall in oil prices.

    “Conversely our pipelines of opportunities increased, a function of the bank’s increasing stature in the market and the significant latent demand for infrastructure assets development nationwide.”

     

  • FG bars consultants from collecting tax

    FG bars consultants from collecting tax

    Tax consultants have been shut out of assessing and collecting tax revenue on behalf of the federal government.

    This clarification was given Monday by the new Acting Chairman of the Federal Inland Revenue Service (FIRS) Mr. Babatunde Fowler in Abuja when he met with members of the Joint Tax Board (JTB).

    Fowler admitted that consultants will be engaged by the FIRS to gather data only.

    He said the FIRS has “under 1,000 staff in audit function so you can imagine 1,000 staff trying to review or audit the books of 450,000 companies, it just won’t work, to improve the levels of transparency and accountability these consultants will only gather data, the law does not allow them to do assessment or collect revenue on behalf of government they’re just to assist our staff to collect data.”

    The FIRS he said; “will do the assessment with the States Board of Internal Revenue and issue the demand notices for the tax due.”

    Some state members of the JTB had complained that “many consultants come to make huge claims so that they can get huge commissions, but they don’t have the capacity to actually collect the huge revenue they claim to have collected in some states.”

    On recent calls for an upward review of the Value Added Tax (VAT) collected by the federal government, Fowler noted that “it is the responsibility of the federal government and the federal ministry of finance to decide whether that (VAT) will change.”

    Fowler agreed that 5 percent VAT charge was low “when you consider other countries who charge VAT both in West Africa and in Europe but those other countries have reached what I will call the maximum level when it comes to paying taxes or public tax. Those countries have 99 percent tax compliance so I think we should first of all get there before we consider increasing VAT, when everyone is paying their taxes then we can look elsewhere.”

    In order to build on the achievements of his predecessors Fowler said he would reached out to States Board of Internal Revenue for collaboration stressing that “there are many stones left unturned as far as our current tax administration processes are concerned. For example it is common knowledge that administration of VAT is greatly hindered by many factors, ranging from inadequate coverage of vatable persons to non-remittances of VAT deductions, tax revenue loss in this aspect can only be imagined,” he said.

    Speaking to journalists on how the FIRS will operate under his watch, Fowler said his “strategy is going to change a bit, our objective is to have 99.9 percent level of compliance meaning that everyone and corporate entities that are taxable are captured in the tax net and pay the appropriate tax.”

    The FIRS he said will “exchange information with states boards of internal revenue so that we have all the information on their own data base, we’ve given them ours already meaning that if there is any company that they don’t have in their data base they can capture such company so immediately we will have a growth in the number of tax payers at both the federal and state levels within one week.”

  • Tax collection in Africa rising

    Tax collection in Africa rising

    PRELIMINARY statistics on the 2015 African Capacity Report (ACR) released yesterday in Addis Ababa, Ethiopia showed that there were significant improvements in revenue collection over the last decade (2006-2015) in Nigeria and 44 other African countries.

    But despite the cheering news, the report said effective mobilisation of domestic resources in the 45 countries under review faced significant challenges.

     Executive Secretary of African Capacity Building Foundation Prof. Emmanuel Nnadozie, who led discussions on the preliminary report at the 24th Annual Meeting of ACBF Board of Governors in the Ethiopian capital, said the challenges included high capacity constraints and low tax collection efforts.

    Nnadozie stressed that between 45 per cent and 50 per cent of the 45 countries surveyed required “very high needs in building institutional and human capacity in almost all areas critical to ensuring effective and sustainable domestic resource mobilisation (DRM)”.

    He said the affected countries must train experts and workers in tackling illicit financial flows, revenue collection, fiscal sustainability, strengthening of the financial sector, fighting against corruption as well as social security and safety nets.

    The report showed that in 27 of the 45 countries covered by ACR 2015, DRM between 1996 and 2010 was low.

    This, it said, was due to a narrow tax base; tax erosion due to high levels of capital flight, weak capacity within the tax administration and the inability to deal with illicit financial flows.

    Preliminary findings also showed that the level of taxpayers’ trust in the tax system was low in 89 per cent of the countries surveyed.

    The high proportion of fiscal exemptions extended to investors contributed to tax erosion – 97 per cent of the countries surveyed had tax exemptions dedicated to investors, according to ACR.

    The African countries surveyed, the report said, also failed to see the value of adhering to platforms as the African Tax Administration Forum – the first platform for exchange between tax authorities, launched in 2009 or the Collaborative African Budget Reform Initiatives (72 per cent of surveyed countries are non- members).

    The report said a key element for successful DRM must start with “an effective and visionary, committed and accountable leadership that sets the right tone at the top”.

    “Governments must be in the forefront in developing requisite capacities. In the short term, capacity building initiatives should focus on the ways and means to broaden the tax base by, for example, removing unnecessary tax preferences, dealing with transfer pricing abuses and taxing extractive industries fairly and transparently;  the conduct of training to develop or improve the skills of workers involved in DRM-related issues.

    “There is need to mobilise internal resources to implement the Sustainable Development Goals (SDGs) and Agenda 2063, although this does not mean that Africa should not mobilise external resources as well.”