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Tag: Tax

  • Access Bank achieves 100% tax compliance

    Access Bank achieves 100% tax compliance

    Access Bank Plc yesterday, received recognition from the Lagos State Internal Revenue Service (LIRS) for achieving 100 per cent tax compliance. The Lagos State Governor, Babatunde Fashola presented the award to the bank.

    Receiving the award, the Group Managing Director, Mr. Herbert Wigwe, said the lender is grateful to be so recognised as a tax compliant institution.

    “We know of only one way to conduct our business and that’s the socially responsible way. We encourage the LIRS to continue their good work as the quest for a better Lagos is the responsibility of all,” he said.

    Wigwe was represented by the bank’s Chief Financial Officer, Seyi Kumapayi.

    Fashola said tax payment is a social contract between the government and the governed which must be kept. While commending the bank for being a tax compliant organisation, he said revenues from taxation have helped the state to fulfill its developmental roles to the people.

    He said the Lagos State government has built a tax system that works and that it has sustained the state in the face of declining oil price.

    “The price of oil has dropped drastically. The federal allocations to the states have dropped. In spite of those droppings, Lagos State has paid salaries regularly.  We paid 15 per cent bonus in December because we created a model of public finance that works,” he said.

    The governor said that Lagos State will continue to thrive because it implements a robust tax administration which he said should be emulated nationwide.

    Executive Secretary, Manufacturers Association of Nigeria (MAN), Joseph Emoleke agreed that the dwindling state of the nation’s revenue profile is no longer news to discerning Nigerians.

    He said while some governments, especially at the states’ level, have over the years, deliberately tinkered with their revenue mix for funding government operations thereby insulating the operations of government from oil revenue volatility, regretably to a large extent, others have not, he stated.

  • Eight held for ‘tax evasion’

    Eight held for ‘tax evasion’

    Officials of the Federal Inland Revenue Service (FIRS) have arrested eight management staff of companies in Ondo State for the non-payment of  company income tax and Value Added Tax (VAT) to the government.

    Some of the companies are owned by the state government; others are owned by corporate and private individuals.

    FIRS Head of Legal Affairs, Southwest, Daniel Onukun, said the state owes the Federal Government about N100million.

    According to him, the state-owned Owena Motels owed N44million. Other defaulting companies are BOMACK, Integrity Foams, Uwa and Bros and Adelak Hotels.

    Onukun said some of the management staff have signed undertaking to pay their debts installmentally.

    He said those who renege  would be prosecuted.

     

  • Govt urged to promote tax incentives for SMEs

    The Federal Government has been urged to promote tax incentives for small investors seeking to  explore  business  opportunities.

    Addressing the ‘National  Small  Business Week’ organised by the Association of Small Business  Owners of Nigeria (ASBON) in Sango Ota, Ogun State, the  Chairman, Accers Accounting Education and Research Services, Mrs Morenike Babington-Ashaye, said small  businesses are the backbone of growth and employment and so needs  government’s continued support to grow.

    Mrs Babington-Ashaye, a former Chairman, Ogun State Internal Revenue Services, noted  that  the  entrepreneurs need access to affordable capital and policies that do not hurt their ability to grow and create jobs.

    According to her, small businesses face a lot of challenges that weigh on them more heavily than their big counterparts. She said small business owners, who are already putting in long hours to keep their businesses afloat, find themselves with the additional burden of ensuring that their businesses are compliant with various taxes  and  regulations.

    To this end, she urged the government  to  review  taxes  and  regulations  to analyse the impact of regulations on small businesses, adding that if small businesses are less burdened by government rules and taxes, they will be in a better position to grow the local economies and create jobs.

    While access to capital and tax relief remains important, Mrs Ashaye called for support resources to help them to weather tough times.

    A former commissioner for Commerce and Industry, Ogun State, Chief Jide Ojuko, called  for  support  for  youths  to  get  involved  in small businesses and  entrepreneurship – all of which will help create jobs.

    He said small businesses as the engine of job creation and that youths need help to access capital, resources and opportunities to grow and create jobs.

    The  President of ASBON, Dr  Femi Egbesola,  said  the  association  proclaimed the  Small Business Week to  recognise  the role  of  small businesses,  which  employ  a lot  of Nigerians, produce  a substantial  portion  of the  yearly economic output, and contribute to the stability and vibrancy of countless communities.

  • Firms sign secret tax deals with Luxembourg

    More than 300 companies, including PepsiCo Inc (PEP.N), AIG Inc (AIG.N) and Deutsche Bank AG (DBKGn.DE), secured secret deals from Luxembourg to slash their tax bills, the International Consortium of Investigative Journalists (ICIJ) reported, quoting leaked documents.

    The companies appear to have channeled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes, the group of investigative journalists said, based on a review of nearly 28,000 pages of confidential documents.

    The leaked documents reviewed by ICIJ journalists include hundreds of private tax rulings – known as comfort letters – that Luxembourg provides to corporations seeking favorable tax treatment.

    Luxembourg officials denied any “sweetheart deals” in its tax system.

    “The Luxembourg system of taxation is competitive – there is nothing unfair or unethical about it,” ICIJ quoted Nicolas Mackel, chief executive of Luxembourg for Finance, as saying in an interview.

    Pepsi, AIG and Deutsche Bank were not immediately available for comment.

    EU state aid regulators are investigating Amazon’s (AMZN.O) tax deals with Luxembourg, saying the arrangements could have underestimated the U.S. online retailer’s profits and given it an unfair advantage, Reuters reported in October.

  • Mega Plaza shut over tax evasion

    Mega Plaza shut over tax evasion

    Mega Plaza was last Friday shut by officials of the Federal Inland Revenue Service, (FIRS) over tax related offences.

    The owners of the shopping mall on Idowu Martins Street, Victoria Island, allegedly owes tax arrears running into millions of naira, as they have not filled the company’s tax return since 2009, and that several letters written to the company both for demand of returns did not yield any result.

    Following the inability of the company to comply with the FIRS directive, its officials led by the head, special enforcement, FIRS Mr. Nuhu Ibrahim, a Police Superintendent, supported by Innocent Ohagwa, Director, Large Tax Payers Department non – oil, Mr. Kayode Taiwo, Controller, Large Tax Payer, Lagos FIRS and other FIRS officials and police enforcement gang, stormed the popular mall to demand for the payment of the tax areas.

    For about 30 minutes the officials of FIRS shut down all business activities at the Plaza, it took the intervention of one of the company’s tax consultants who followed the team to its Lagos headquarters before the mall was reopened for business.

    The team also visited the ABBNG Limited on Etim Inyang Cresent, Victoria Island, to demand for its outstanding returns for 2011, 2012 and 2013 account.

    The leader of the team, Ohagwa, said the visit to those companies, is to sensitise them and demand for proof of their tax payment which they have failed to remit for a long time, “any attempt for them not to file their returns on time may lead to sealing off of the company and the arrest and prosecution of its management because we have the mandate to prosecute tax evaders.” said Mr. Nuhu Ibrahim

     

  • Luxury tax to boost revenue likely

    Luxury tax to boost revenue likely

    The Debt Management Office (DMO) is seeking the introduction of a special tax on luxury items for more revenue.

    DMO Director-General, DMO, Dr Abraham Nwakwo said that revenue from luxury taxes would be used to provide goods and services for the generality of the people and cater for the unemployed.

    Nwankwo spoke in Uyo during a retreat for members of the Senate Committee on Local and Foreign Debts, organised by his office.

    Speaking on “Implications of rebasing of Gross Domestic Product for public debt Management,” the DG criticised the state of the nation’s dwindling revenue.

    He said although after rebasing Nigeria’s GDP had become higher; the country’s borrowing space was small.

    Nwankwo said rebasing results showed that the country needed to generate more revenue in order that as the GDP was growing, government revenue would also be growing.

    The director-general said for the country to overcome the shortfall in its revenue, the government had to realise more revenue from taxes, fees, penalties and royalties.

    “Special taxes should be introduced on luxury items so that there will be more revenue to provide goods and services for the generality of the people.

    “And to cater for those who are not gainfully employed in terms of making sure that every child in Nigeria attends schools.

    “This means that, both individuals and companies need to make sure that they pay their taxes on time and in full. Measures need to be taken against those who are not paying taxes.

    “If every child in Nigeria has to attend school, it means that governments, at the federal, state, and local levels, will provide the resources to cater for such people.

    “So that no Nigerian child is left out of school and no Nigerian citizen is not in a position to develop themselves to higher level in terms of education and skills.

    “The bottom line is that our debts are sustainable if we use the statistics of the rebased GDP, we will be under illusion that we have more borrowing space.

    “But the emphasis is that we do not have more borrowing space because GDP has increased.

    “We do not service debts with GDP, but with revenue and revenue is suffering some setbacks in terms of its size ability to the GDP,” he said.

    Nwankwo said that regular interactive sessions and retreats with senators on the economy would update their knowledge on the development with regards to the economy and public debts management.

    He said the knowledge would enable them do their jobs effectively in terms of oversight functions on public debts management.

  • NECA gets concession on consumption tax

    NECA gets concession on consumption tax

    The Nigeria Employers’ Consultative Association (NECA) has secured concession from the Lagos State government on uncollected occupancy and consumption taxes/rates for companies in the hospitality business including restaurants and fast food businesses.

    Its Director General, Mr. Olusegun  Oshinowo the waiver of taxes not collected by them at the inception of the Hotel Occupancy and Restaurant Consumption Law 2009 will now in the spirit of fairness  be made for  the account of those who did not collect taxes, but made payments to government in fulfilment of the law.

    He said: “It is therefore a big relief, and a thing of joy to all and sundry when the Lagos State Governor, Mr. Babatunde Raji Fashola,  announced the resolutions at the 4th edition of the Lagos Corporate Assembly. The outcome of this unrelenting peaceful follow up by NECA is an eloquent testimony of good governance that has been the hallmark of the government of Mr. Fashola, which the private sector very much appreciate.”

    According to Oshinowo, the association has already communicated the relief to hoteliers that are its members.

    He said: “NECA is a platform for private sector employers to interact with the government, labour communities and other relevant institutions in and outside Nigeria for the purpose of promoting harmonious business environment that engenders productivity and prosperity for the country.”

    Following the enactment of the Hotel Occupancy and Restaurant Consumption Law 2009, the Hotels and Personal Services Employers’ Association (HOPESEA), an affiliate of NECA, had filed a case on behalf of its members at the Federal High Court to seek clarifications on the appropriateness of the tax.

    While the legal battle subsists, the hoteliers had refused to comply with the law. The ruling of the Court in the case Attorney General of the Federation vs. Attorney General of Lagos State, the Lagos State Board of Internal Revenue Service had come after the hoteliers to collect all outstanding payment arising from the law, a situation that had led to a disagreement between the parties, which eventually led to the intervention of NECA.

  • Delta warns tax defaulters

    Delta warns tax defaulters

    The Delta State Board of Internal Revenue (DBIR) has said it would punish individuals and corporate bodies who default in their tax payment.

    The Chairman, Thomas Joel-Onowakpo,  said this after a three-day stakeholders’ meeting with staff of the board, tax professionals, companies and Internally Generated Revenue (IGR) collecting banks.

    Joel-Onowakpo said the board would soon start  publishing names of defaulting companies and banks that delay remittance of deposited taxes.

    “Now when we held meeting with our staff, the objective is to sensitise them about what we are about to do in Board of Internal Revenue.

    “You remember in 2011, we embarked on a tax professional system.

    “Their duty is to liaise with the public to make sure that every kobo that belongs to the board is returned to the government.”

  • Guidelines on tax exemption for Ngos

    Guidelines on tax exemption for Ngos

    A non-governmental organisation (NGO) is an association of persons registered under Section 590 of the Companies and Allied Matters Act (CAMA) 1990. Upon registration of the association, the body corporate may contract in the same form and manner as an individual in accordance with Section 605 of CAMA 1990. It is to be noted that by virtue of the provisions of Section 23 of the Companies Income Tax Act (CITA) any organisation registered under any law within the federation or any part thereof as a co-operative society shall also be treated as an NGO.

    NGOs include organisations, institutions and companies engaged in ecclesiastical, charitable, benevolent or educational activities of a public character. Many countries, including Nigeria have recognised the significant role being played by these organisations in building a strong, caring and well-functioning society as well as in contributing to its welfare and economic growth. In recognition of this, government grants tax incentives to such organisations in form of exemption of their profits (other than those derived from trade or business carried out by them) from income tax and zero rate of Value Added Tax (VAT) for their humanitarian services.

    The role of the tax authority is to ensure that these tax incentives or benefits are appropriately enjoyed and not abused and that the obligations associated with the tax benefits are complied with by the NGOs. Therefore, these guidelines are to check possible abuse and ensure standardization.

    Legal basis

    Section 23(1) of the CITA Cap C21.LFN 2004 states that the profit of any statutory, charitable, ecclesiastical, educational or other similar associations are exempted from CIT obligations provided such profits are not derived from any trade or business carried on by such an organisation or association.

    Where an NGO engages in any trade or business, the profit derived there from will be subjected to income tax as provided for in the Act. Also, where the NGO invests its assets in any institution, the income derived from such investment shall be subjected to tax. It should be noted that Capital Gains Tax (CGT) shall arise where assets are disposed of by the NGOs at a gain.

    Case Laws

    A relevant  case is that of Arbico Ltd Vs FBIR, (1996) 2 All NLR 303. The plaintiff in the dispute, Arbico, had acquired a plot of land, erected a building and sold the property at a profit. The company was subsequently assessed for tax on the proceeds of the sale of the property. The company objected to the assessment on the basis that the transaction was a one-off and did not constitute “trade”. The case was, ultimately, settled in the Supreme Court.

    In the ruling, the court laid down two important precedents:

    • Firstly, that the word ‘trade’ should be interpreted in its widest sense in accordance with its common everyday meaning;

    • Secondly, that an isolated one-off transaction can still constitute a ‘trade’.

    Tax reliefs available to NGOs

    In addition to the income tax exemption granted to NGOs as noted above, Section 25(3) of CITA provides that any company making donations to such an organisation listed under the fifth Schedule to CITA shall enjoy tax deductible donation not exceeding 10 per cent of the total profits of that company for that year as ascertained before any deduction of such donations is made and must not be of capital nature.

    Goods purchased for use in humanitarian donor funded projects are zero rated under the VAT Act Cap V1 LFN 2004 as amended.

    Registration with FIRS by NGOs

    All NGOs are expected to register with the nearest tax office of FIRS with the following documents:

    • A copy of registration certificate issued by Corporate Affairs Commission.

    • Certified copy of memorandum or constitution, rules and regulations governing the NGO,

    • List and profiles of the trustees/board members nominated; one of the trustees/board member must be a serving government official from relevant government agency responsible for the activity of the NGO;

    • Copy of the Tax Clearance Certificate (TCC) of each of the Trustees and

    Filing of returns by NGOs

    In line with section 55 of CITA, it is mandatory for all NGOs to file a tax return every year and such return shall contain:

    • The audited accounts, tax and capital allowances computations and a true and correct statement in writing containing the amounts of its profits from each and every source computed in accordance with the provisions of CITA;

    • Such particulars as may by such form or return be required for the purpose of the Act and any rules made with respect to such profits, allowances, reliefs, deductions or otherwise as may be material by virtue of the CITA; and

    • A declaration to be signed by a director or secretary of the organization that the information contained in the return is true and correct.

    Responsibilities of the tax office

    • Clarification of tax status: An NGO seeking clarification on its tax exemption status shall direct such enquiries to the tax office  where it was registered and the NGO desk in the relevant office shall process the enquiry and respond to it.

    • Application for TCC: An NGO shall direct its application for  TCC to the tax office where it was registered and file its tax returns. The relevant office shall process the application and issue the  TCC if the NGO is found qualified and if unqualified be given reasons in writing within two weeks of the application.

    • Monitoring : The relevant tax office shall monitor the activities of NGOs within its jurisdiction regularly to ensure compliance with the provisions of the tax laws.

     

    Other statutory obligations of NGOs

    In addition to its obligation to file tax returns at  the appropriate tax office, NGOs are statutorily required to:

    • Maintain accurate record of employees;

    • Maintain proper books of accounts

    • ‘Deduct Pay-As-You-Earn  from employees’ salary and remit same to the appropriate tax authority;

    • Pay VAT on goods and services consumed except those purchased exclusively for its humanitarian projects or activities;

    • Pay tax as and when due on non-exempt activities.

    Failure to comply with the above requirements will attract appropriate the penalty prescribed by law.

    It is to be emphasised that the fact that an NGO is exempted from payment of income tax does not remove the obligation to file returns regularly. It is also to be emphasised that profits derived from business or trading are liable to tax. All NGOs should abide with the tax  regulations to continue to enjoy the tax incentives granted by the government in furtherance of their charitable activities.

     

  • Forte Oil grows pre-tax profit by 152% in six months

    Forte Oil Plc more than doubled its profit in the first half as the energy group continued to drive sales with aggressive consumer marketing and networking.

    Interim report and accounts of Forte Oil for the first half ended June 30, 2014 released at the weekend showed that turnover rose by 33 per cent while pre and post tax profits jumped by 152 per cent and 125 per cent respectively.

    Key extracts of the report showed that profit before tax leapt by 152 per cent to N4.19 billion in first half 2014 compared with N1.66 billion recorded in corresponding period of 2013. Profit after tax also rose by 125 per cent from N1.39 billion in first half of 2013 to N3.13 billion in first half 2014.

    Turnover rose to N79.61 billion compared with N59.96 billion recorded in the same period in 2013. Gross profit rose by 57 per cent from N5.73 billion to N9.0 billion while operating profit doubled by 128 per cent from N1.98 billion in first half 2013 to N4.53 billion in first half 2014. Earnings per share stood at N1.91 in first half 2014 as against N1.29 in first half 2013.

    Group chief executive officer, Forte Oil, Mr. Akin Akinfemiwa said the first half performance showed the resilience of the group’s businesses and a true test of its business transformation strategy despite the adverse impact of petroleum product scarcity experienced in the first quarter of the year.

    “We are very pleased with our audited half-year results for 2014, which exhibits consistent and sustainable growth for both revenue and profits,” Akinfemiwa said.

    According to him, the company benefitted from superior contributions from its power and upstream services divisions, which have continued to strengthen its market dominance as it strives to be the foremost energy solutions provider.

    “As we enter the final phase of our business transformation we are confident of building a long term successful company and making Forte Oil Plc the investment of choice through positive actions that boost investor confidence at all times,” Akinfemiwa said.

    He outlined that the company during the period successfully launch its newly repackaged lubricants while it also engaged in aggressive consumer activities to boost market share.

    According to him, the company continued expansion of its retail network at strategic locations to improve market dominance in addition to aggressive growth and expansion of its industrial and commercial customer base to meet its objective of being the supplier of choice.

    He added that strong performance from Geregu Power Plant also contributed to the company’s performance.

    Group chief financial officer, Forte Oil Plc, Julius Omodayo-Owotuga noted that the 152 per cent growth in profitability in the third year of transformation is a clear indication that the milestones set in the restructure programme are being met earlier than envisaged.

    “Revenue increased by 33 per cent from a growing number of retail outlets and improved commercial customer base, while keeping our costs; distribution, administrative, and finance low. The result is an indication that we are operating efficiently and are focused on our vision of being the foremost energy solutions provider,” Omodayo-Owotuga said.