The Nation Newspaper

Tag: Tax

  • New Tax law: Enyeama, others go on strike

    New Tax law: Enyeama, others go on strike

    Super Eagles and Lille of France goal keeper Vincent Enyeama and other players in the French Lique 1 and 2 have been directed to go off action for one weekend in protest at the French government’s plans for a new “super tax” on wealth.

    The nation’s Professional Clubs’ Union (UCPF) announced on Thursday there would be no matches staged on the weekend of 29 November – 2 December.

    The bone of contention leading to the planned strike has to do with the new proposal that wants companies, rather than individuals to be liable to pay the 75% rate for the part of employees’ annual salaries that exceed €1m.

    Paris St Germain, who are owned by Qatar, will be the hardest hit, while Monaco, backed by a Russian billionaire, will be exempt as they do not fall under French tax laws.

    The clubs had initially hoped they would be exempt, but the sports minister Valerie Fourneyron confirmed last month that that would not be the case.

    A statement on the official LFP website said: “This day ‘football in danger, all together!’ is unprecedented in the history of French football, as a first initiative from football to protest against the introduction of exceptional tax on high salaries paid by employees under the draft budget law for 2014.

    “This tax is unfair and discriminatory. The economic crisis has not spared the clubs who have had their ticket sales and television rights decrease for three consecutive years.”

    Jean-Pierre Louvel, the UCPF president is to meet with President Francois Hollande to discuss the situation.

  • Change in accounting date: Tax implication

    Different and sometimes challenging business decisions can force companies to change their accounting dates. Sometimes regulatory pronouncements such as that issued to banks post consolidation to have a uniform year end was anevent which saw all banks in one fell swoop change their different accounting dates to December. While some companies have adopted calendar years, some others use fiscal years, which method is adopted is subject to tax implications. Whereas in the US the Internal Revenue Service (IRS) must give permission for companies to change their accounting dates especially to tackle tax avoidance, and may take as much as 10 years to effect another change in some cases,it is not yet so in Nigeria, an area which should be addressed.

    However, a lot of companies still do not know that there are tax implications to change of dates in their accounting period beyond the approval they get from their shareholders to do so. The FIRS being aware of different methods applied by tax consultants and tax officers in the treatment of changes in accounting dates, with each method yielding different results in under-assessment or incorrect assessments levied on taxpayersissued a circular in February 2006 as a guide to officers who have responsibility for filing and assessment duties, and those who may be required, as a matter of duty to carry out preliminary reviews on tax returns submitted by companies as well as officers vested with audit responsibilities, who from time to time will come across cases of change in accounting dates in the course of their audit assignment.

     

    Changes in Accounting Dates

     

    There are a number of reasons why a business may wish to change its accounting date and these reasons may include:

    i) The need to synchronise the accounting date of a subsidiary with that of the holding company.

    ii) The convenience of stock taking at a particular period of the year.

    iii) A business may take over the operation of another and as a result wish to change the accounting date of the company taken over to that of its own.

    Where a change in accounting date takes place, be it a sole trader, partnership or a limited liability company, the provisions of section 29(4) of the CAP 21 LFN of 2004 will apply. The Act provides that the Tax Authorities have the power to decide the basis of computing the tax liability for the year in which the change occurs and the two following years of assessment.

    As should be expected, the tax official will base his decision on the best advantage to the tax authority. It is important to note that the three relevant years to be considered are:

    i) The assessment year in which the accounting date becomes different from the date of the earlier years. This is known as the year when the change occurred.

    ii) The next two years of assessment following that in which the change occurred.

    In practice, calculations are made on both the old and new dates. The greater of these two aggregates will be the likely choice of the revenue authority.

     

    Years involved in Tax Computations

    Whenever a request for a change of accounting date has been approved, the company making the change shall be assessed to tax through a special process of determining the basis of assessment. This process requires computations for three relevant years. Where the year of cessation is involved (ultimate year) in these three relevant years, the request for a change shall not be approved. However, where the year immediately before the year of cessation (penultimate year) is involved in these three relevant years, the request may be approved by the FIRS, depending on other evidences before it.

     

    Assessment Procedure on Change of

    Accounting Date

     

    For an on-going business, current assessment is based on preceding year basis. But whenever there is a change of accounting date, a normal accounting period may not have ended in the year of change. This is so because when there is a change of accounting date, it is either that an account is prepared for more than twelve months to the new accounting date or even less than twelve months to the new accounting year end. The FIRS will often adopt the following procedures to determine the assessments for the three relevant years:

    i) Identifying the first year in which the business has failed to make up the accounts to its usual accounting date.

    ii) Identifying the two years immediately following the year of failure.

    iii) Computing assessable profit for the three relevant years based on the old accounting date (on preceding year basis).

    iv) Computing assessable profit for the three relevant years based on the new accounting date (on preceding year basis).

    v) Adding up the assessable profits for the three years in (iii) and (iv) above separately.

    vi) Selecting the higher of the two profits added up in (v) above.

     

    Illustrations

    Example 1

    Julius Blake Nigeria Limited has been in business for many years. It has for a long time prepared its annual accounts up to April 30. In 1996, it decided to change its accounting date to 31st October. Available figures showed its adjusted profits as follows:

    N (No. of Months)

     

    Year ended 30/4/1995 450,000 12

    Period ended 31/10/1996 830,000 18

    Year ended 31/10/1997 590,000 12

    Year ended 31/10/1998 600,000 12

     

    You are required to compute the correct assessments for all the relevant years in the light of the change in accounting date.

     

    Solution

     

    Julius Blake Nigeria Limited

    Computation of Assessment

     

     

    Note: The last account submitted before the change was April 30, 1995. Therefore, the year of change is 1996. The three relevant years are therefore 1996, 1997 and 1998.

     

    a) Original Assessments (Based on old Accounting date of April 30)

     

    Year of Assessment Basis Period Assessment

    1996 P:Y.B(1/5/94-30/4/95) N450,000

    1997 1/5/95 – 30/4/9512/

    18 x 830,000 N553,333

    1998 1/5/96 – 30/4/97

    (6/18 x 830,000) +

    (6/12 x 590,000) N571,667

    b) Assessment Based on October 31

     

    Year of Assessment.Basis Period Assessment

    1996 1/11/94 – 31/10/95 (1/11/94-30/4/95) + (1/5/95-31/10/95) (6/12 x 450,000) + 6/ 18 x 830,000) N501,667

    1997 P.Y.B. to 31/10/961/11/95 – 31/10/96 12/18 x 830,000 N553,333

    1998 P.Y.B. to 31/10/97 N590,000

     

    c) Summary of Assessments

    Year Old date of new date of

    April 30 October 31

    N N

    1996 450,000 501,667

    1997 553,333 553,333

    1998 571,667 590,000

    1,575,000 1,645,000

     

    Conclusion

    The revenue will choose to raise assessments on the basis of the new accounting date as it results in greater assessment.

     

     

  • Essentials of Capital Gains Tax (CGT)

    Essentials of Capital Gains Tax (CGT)

    Capital Gain may be defined as gains arising from increases in the market value of capital assets to a person or corporate body, who does not habitually offer them for sale and in whose hands they do not constitute stock-in-Trade. Therefore, it is a tax chargeable at the rate of 10 per cent on capital gains arising from the disposal of capital assets. Capital gains mainly represent the excess of disposal proceeds realised over the cost of the particular asset.

    Administration of Capital Gains Tax

    The CGT is under the management of the Board of The Federal Inland Revenue Service (FIRS) and it is administered by the FIRS in respect of corporate bodies and individuals resident in the Federal Capital Territory including members of armed forces, police and foreign serving officers. The tax is also administered by the State Internal Revenue Service in respect of individuals based on the rules of residence. Under the provisions of the Act, tax liability will arise on Actual Year Basis (AYB) when a chargeable asset is disposed. An aggrieved taxpayer or the respective tax authority can appeal against the decision of the tax authority to a conventional court or to the Tax Appeal Tribunal (TAT) as the case may be.

     

    Some Highlights of the Provisions of the CGT ACT

    • CGT is chargeable at 10 per cent on capital gains from the sale of capital assets.

    • Capital loss on disposal of any asset is not deductible from capital gains on disposal of any other asset even if both are of the same type.

    • Where consideration is payable by installments over18 months, the chargeable gain shall be apportioned to the affected assessment years in proportion to the amount of the installments payable in each of the years.

    • Chargeable gains are assessed on current year basis,

    • Roll-over relief is available to any company acquiring a new asset to be used for the purposes of the trade in replacement of an old one.

    • Gains arising from disposal of shares and stocks are currently exempted from CGT.

     

    Chargeable Persons and Chargeable Assets

    Chargeable Persons

    A chargeable person is one who deals in a chargeable asset.

    A chargeable person may be:

    • A limited liability company,

    • An individual

    A limited liability company will remit its tax liability to FIRS while an individual will remit to the SIRS, with the exception of individuals resident in the FCT.

     

    Chargeable Assets

    Examples of chargeable assets are:

    • Options, debts and incorporeal properties. Incorporeal properties are assets that have values but are not tangible, e.g. goodwill, copyrights and patent rights.

    • Disposal of currencies other than Nigerian currency.

    • All qualifying capital expenditure under CITA, PITA, • Chattels sold for more than N1, 000 in any tax year.

     

    Persons / Institutions Exempted

    By law, any ecclesiastical, charitable, or educational institution of a public character, statutory or registered Friendly Society and co-operative society registered under the co-operative Societies Act are exempted. Same also applies to Local Government Council, purchasing Authority Company and corporation established for fostering economic development of any part of Nigeria. Also included in the the exemption list are, Trade Union registered under the Trade Unions Act, provided, The gain is not derived from the disposal of any assets acquired in connection with any trading or business activity carried on by such Institution or Society. The gain or profit is applied solely for the purpose of the Institution or Society.

    Other items on the list are the main or only private residence of an individual (including the gardens), Chattels disposed for not more than N1000 in a Year of Assessment, motor cars suitable for private use or a mechanically propelled road vehicle constructed or adopted for the carriage of passengers, life assurance policy, benefits from superannuation funds approved by the Joint Tax Board, gifts, government securities, including treasury bonds, savings certificates and premium bonds, Nigerian currency, disposal of Stocks and Shares (effective 1/1/98), disposal of Investments in Statutory Provident Fund, or Retirement Benefits Scheme, acquisition of the Shares of a Company either merged with, or taken over or absorbed by another Company, as a result of which the acquired Company loses its identity as a Limited Liability Company, provided no cash payment is made in respect of the Shares acquired, gains accruing to Diplomatic bodies and gains from disposal of Securities in a Unit Trust provided the proceeds are re-invested.

     

    The Principle of Disposal

    For the purpose of CGT, disposal arises where any capital sum is derived from a sale, lease, transfer, an assignment, a compulsory acquisition or any other disposition of assets. The disposal is deemed to have taken place even where no asset was acquired by the person paying such capital sums. Thus, specifically, disposal is deemed to have taken place where:

    i. Any capital sum is derived by way of a compensation for loss of office or employment.

    ii. Receipt of capital sum under a policy of insurance;

    iii. On receipt of capital sum in return for forfeiture or surrender of rights or for refraining from exercising such rights

    iv. Any capital sum is received as consideration for use or exploitation of an asset.

    v. Any capital sum is received in connection with or arises by virtue of any trade, business, profession or vocation.

     

    Non-Allowable Expenses for the Purpose of CGT

    • Any allowable expenses under the provision of PITA, CITA and PPTA.

    • Any insurance premium or other payments made under a policy of insurance against the risks of any kind of damage or injury to, loss or depreciation of any asset.

     

    Computation Of Capital Gains Tax

    • In the computation of capital gains that will be charged to CGT, the following steps should be followed:

    • Identify the sales proceeds on the disposal of the chargeable asset

    • Deduct allowable expenses from the sales proceed to obtain Net Sales Proceed.

    • Deduct cost of acquisition and other capital costs from the Net Sales Proceed to obtain the Capital Gains

    • Compute the capital gains tax liability by applying the applicable rate of 10 per cent on the Capital Gains obtained above.

    The above steps can be placed in a better format as follows: N N

    • Sales Proceeds xx

    • Less: Allowable Expenses (xx)

    • Net Sales Proceed xx

    • Deduct: Cost of Acquisition (xx)

    • Capital Gains/(Losses) xx

    Capital Gains Tax @ 10 per cent

     

    Connected Persons

    Where in a transaction, one person has control over the other, a connected person transaction is said to have taken place. In such a situation, where transaction is not done at arm’s length, market value is used. Connected persons for this purpose include:

    1. An individual wife or husband;

    2. A trustee in settlement is deemed connected with the settler as well as any person connected with the settler;

    3. Partners of a firm are deemed connected with one another as well as with the spouse of each partner; 4. A company is connected with another person if that person has control of it or if that person and persons connected with him together have control of it.

     

    Roll Over Relief

    • This arises where a sole trader, partnership or limited liability company carrying on a trade, dispose of one eligible business asset and replaces it with a new asset of the same class as that sold. The seller will be entitled to deduct the capital gain arising on disposal from the cost of the new asset thereby postponing the payment of CGT on such a gain.

    • Roll over relief can be full, partial or no roll over relief.

    • The effect of this roll-over relief is to reduce the cost of acquisition of a new asset with resultant increase in the capital gain arising on eventual disposal.

     

    Classes Of Assets Eligible For Roll-over Relief:

    Class I:

    a) Any building or part of a building and any permanent and semi-permanent structure in the nature of a building, occupied and used only for trading;

    b) Any land occupied and used only for trading.

    c) Fixed plant and machinery which does not form part of the building

    Class II – ships

    Class III – Aircraft

    Class IV – Goodwill.

    However, the consideration arising on the disposal must be re-invested within Twelve months before or after the disposal before the rollover relief can be granted.

     

    Some Special Circumstances in CGT

    1. Assets acquired by gift and later sold: the imputed cost is:

    i. The amount at which the asset was last disposed in a transaction at arm’s length if known, or if that is not known

    ii. The market value of the asset at the date of transfer.

    2. Assets devolving on death and later sold, Shall for CGT purposes be deemed to be disposed of by him at the date of his death and acquired by the personal representative or other persons on whom the assets devolve for a consideration equal to:

    i. Where ascertained, price of the asset as at date of purchase; or

    ii. Where unascertained, market value of the asset as at that date.

     

  • Tax Tribunal orders hotelier to pay N19.7m to fir

    Tax Tribunal orders hotelier to pay N19.7m to fir

    The North East Zone Tax Appeal Tribunal sitting in Bauchi has ordered the Maiduguri International Hotel to pay the Federal Inland Revenue Services (FIRS) N19,706,459 being the revenue owed the government from 2005 and 2006.

    The Tribunal,chaired by Hon. Suleman Audu, gave the order in its judgment yesterday in an appeal, No. TAT/NEZ/002/12, filed before it by the FIRS through its counsel, Ali Alhashim, claiming the hotel failed to file returns of company income tax, education tax and value added tax for the period under review despite service on it of assessment notices and demand notes, saying that by the virtue of the provisions of Section 8 of the FIRS Establishment Act 2007, it was empowered to recover revenue accruing to the coffers of the Federal Government.

    While the matter was being heard, counsel for the hotel, Yakubu Mamza, had argued that the FIRS could not assess his client during the period because the hotel was gutted by fire and urged the tribunal to dismiss the appeal

    Delivering his judgment, the chairman of the tribunal, Alhaji Suleiman Audu, stated that it was clear to the tribunal based on the evidence before it as presented by FIRS that the respondent had not been remitting the taxes for the period under review, adding that it was not moved by the claim by the hotel that it was gutted by fire.

    He said: “It is evident from paragraph 3 of the respondent witness statement on oath that the hotel was gutted by fire on April 8, 2011. This was more than four years after all the taxes in question was long over due which is the subject matter of this suit, four years is long enough for him to pay these taxes.

  • Fresh campaign against tax evasion

    Fresh campaign against tax evasion

    Imagine this scenario:a young graduate, who lives off the wealthy sister, gets arrested for a traffic violation. The sister, a chief executive officer of a firm secures his release from custody. The young man abandons the sister’s home after helping himself to some of her hard currency.

    He then engages the services of a tout to secure a fake tax clearance certificate on the sister’s firm to bid for a contract in a Federal Government agency. Wondering why a company that has been compliant in tax payments would suddenly apply for a contract with a fake TCC, the FIRS investigates. The CEO of the firm is invited by the FIRS enforcement unit after the young man had been apprehended by the police.

    This captures the thrust of Born To Win, one of the 13 episodes in Binding Duty, produced by Ohi Alegbe and directed by Ihria Enakimio for the Federal Inland Revenue Services. The production of the TV drama is one of the new approaches to enlighten on the need for voluntary compliance among tax payers. Also, it must have been spurred by the low level of voluntary compliance by tax payers and the dire need by the services to shore up federal government’s dwindling revenue through taxation.

    One of the episodes, Short Cut, which focuses on how touts obtain fake tax clearance certificate from roadside printing press, shows how the FIRS is undergoing an in house cleansing exercise that identifies, investigates and sacks some staff members who connive with touts to subvert the system.

    Speaking at the screening of some of the episodes in Lagos, coordinating producers of the drama and an Assistant Director at FIRS, Mr Wahab Gbadamosi, said the project which started in 2008 is one of the subtle ways the services is adopting to cleanse the system while shoring up the revenue base of Federal Government.

    “The behavioural change is being pursued in the house and our clients are being focused for synergy. It is also an education platform that cuts across all strata of the society,” he said.

    According to another coordinating producer, Nneka Ifekwuna, the drama is preceded by in-house cleansing at the FIRS in order to effectively confront the challenges of enforcing compliance among tax payers. “We have to clean our table otherwise we will not be able to clean the nation,” she added.

    Other episodes of the drama include Burrowed time (focuses on unremitted VAT funds), To Have and to Hold (focuses on Withholding Tax proceeds), Ostrich Syndrome (focuses on tax arrears), and Double Jeopardy (focuses on personal income tax).

    According to Alegbe, the casts are returning to camp for shooting soon while the 13 episodes will run for 26 weeks.

    The efforts of the FIRS in this direction are worthwhile because no doubt, tax revenue collection remains critical to the growth and development of the country, as government alone cannot provide all the social amenities without contributions from the public. Also, it is high time the economy’s growth shifted from revenues from oil.

    Tina Mba, acted as Doorshima Jang; (FIRS Director). Other actors are Eric Obinna, Langley Evru and Tony Afokhai. Executive producers are Ifueko Omoigui-Okauru and Kabir M Mashi. Coordinating producers are Emmanuel Obeta, Wahab Gbadamosi and Nneka Ifekwuna. Director of photography is Abraham Adetutu while the Artistic director is Austin Awulonu.

  • Imposition of tax: Traders petition Obi, Speaker

    •Threaten court action

    PEEVED over what they described as the arbitrary imposition of taxes and the outright closure of their community market, women traders at Eke Awka market have filed a petition against the Anambra State Governor, Mr. Peter Obi and a traditional ruler of Awka, Obi Gibson Nwosu.

    Others also petitioned include the Speaker of the State House of Assembly, Hon. Chinwe Nwebili, member representing Awka North and South Federal Constituency, Emeke Nwogbo and the Commissioner for Commerce and Industry, Robert Okonkwo.

    The women numbering over 600 are threatening to take their case to court, if within seven days the state government fails to retrace its footsteps on the closure of the market.

    The petition was written on behalf of the women traders by their counsel, U.F.O. Nnaemeka, dated 12th June, 2013 and made available to The Nation yesterday in Awka.

    The petition was also copied to the President General of Awka Development Union of Nigeria (A.D.U.N).

    It may be recalled that over 600 women traders had last Tuesday protested against imposition of tax on them at Eke Awka Market by the state government.

    They took their protest to the state House of Assembly, where they barricaded the assembly complex before they were addressed by the member representing Awka South Constituency, Kenechukwu Chukwuemeka.

    He assured them that their issue would be looked into by the lawmakers within two weeks, describing the action of the government as unfair.

     

  • Tax default: Govt to close markets

    The Anambra State Government has warned markets and cooperative organisations that they would be shutdown, if they default in their tax payments.

    The Chairman, State Internal Revenue Services Board, Nwanne Ejikeme, stated this in an interview with reporters yesterday.

    Ejikeme said: “We’re also in the process of charging those who have refused to pay their taxes.

    “Very soon, you will see that it is not just markets that will be closed, but also business centres, chambers, banks and corporate organisations.

    “Even residents, who refuse to pay their taxes, will not be spared. The public ought to know that governance is not free of charge.”

    He said of the N12 billion projected earnings from taxes, only about N2 billion had been generated in the first quarter.

    “Failure to pay their taxes has resulted in the closure of some stalls at Ose-Okwodu Market in Onitsha.

    “These defaulters think they can operate without contributing to the ongoing development of the state,” Ejikeme said.

  • Benefits of tax revenues, by CITN boss

    Benefits of tax revenues, by CITN boss

    An economy that is able to sustain its citizens must leverage on tax revenues, as the most reliable source of fund for national development and transformation, President, Chartered Institute of Taxation of Nigeria (CITN) John Jegede has said.

    Speaking at the institute’s induction in Lagos, he told the inductees that their role is to assist the government and taxpayers to plug loopholes and bring into the tax net more individuals.

    He said a situation where negligible percentage of taxable persons pays taxes is very disheartening, stressing that professionals must rise up to the challenge to ensure Nigeria’s economy is diversified through taxation.

    Jegede said the institute is determined to collaborate with various stakeholders on training of tax practitioners in various organisations and agencies. He said: “While commending stakeholders for their unalloyed support to the Institute, it is my hope that the existing mutual co-operation between governments at all levels and the Institute would go a long way to improving the effectiveness of the various states’ revenue agencies while at the same time strengthening the confidence of taxpayers in the Nigerian tax system,” he said.

    He said in realisation of the need for the institute to be visible in the league of professional bodies, the institute has positioned as a force to be reckoned with, locally and internationally.  “We have a good working relationship with Taxation Institutes in Ghana, South Africa, Senegal, Sierra Leone, Liberia, Mali and Burkina Faso through the auspices of West Africa Union of Tax Institutes (WAUTI) and Association of African Tax Institutes (AATI),” he said.

    However, Igho Dafinone, a tax expert, said a good tax system should be as efficient as possible to collect in terms of cost per collection. It should also be as neutral as possible so that all those in similar situations are subject to the same incidence. He said a sound tax system should also be as simple as possible to comprehend and comply.

     

  • FIRS non-oil tax collection hits N5tr

    FIRS non-oil tax collection hits N5tr

    The Federal Inland Revenue Service (FIRS) has generated over N5 trillion from non-oil tax revenue windows.

    FIRS Eastern Regional Co-ordinator, C. P. Igweh, disclosed this yesterday in a paper he presented at a one-day conference on ‘Tax Regulations and Socio-Economic Development in an Industrializing Nation.’ He said this amount was far beyond the N1trillion generated in 2004 before the FIRS Establishment Act, No. 13 of April, 2007.

    Igweh whose paper, entitled: “Industrialization of Nigerian Economy: The Role of FIRS as an apex tax Regulatory Agency,” said taxes were collected from company income tax, value added tax, education tax, personal income tax, petroleum profit tax, capital gains tax and national information technology development fund levy, amongst others.

    He said the goal of FIRS is to continually surpass the nation’s revenue target in all taxes and achieve a ratio of non-oil tax collection to non-oil Gross Domestic Product (GDP) of at least seven percent in the nearest future.

    In his own paper on ‘Tax Laws and Socio-Economic Development in Nigeria – Anambra State as a focal point”, Meshach Umenweke, an Associate Professor of Law and former Head, Department of International Law and Jurisprudence, Nnamdi Azikiwe University (UNIZIK), Awka, identified multiplicity of taxes as a major constraint militating against the Nigerian tax regime, saying it makes tax assessment and collection very difficult.

    Umenweke, who spoke at the event organised by the Faculty of Law, Anambra State University (ANSU), Igbariam Campus, regretted that the people of the Southeast goe-political zone, were being subjected to various types of taxes in their various communities.

    He alledged that while their northern and western counterparts enjoy government funded projects as part of social services and infrastructural delivery, their Southeastern counterparts are made to pay for the execution of certain communal projects, like construction of roads and gutters, erosion control, water bore-holes, security levies for vigilante services and rural electrification, among others,

    Also in his own paper, entitled: “Examination of Contentious Provisions of the FIRS (Establishment) Act 2007 as Harbinger of Constitutional Crisis: a call for amendment,’ William Amechi Chukwuma, a Doctoral student in Law of Taxation at UNIZIK, Awka, urged various tiers of government to justify tax payers’ money, by giving them quality services which are commensurate to the taxes they paid.

    Chukwuma blamed the Federal Government for not abolishing sales tax throughout the federation when Value Added Tax (VAT) was introduced, because the perceived inequity in the VAT sharing formula has forced some states to introduce sales tax on certain goods and services.

     

     

     

     

     

     

     

     

     

     

     

     

     

  • Reps to investigate banks for tax evasion

    Reps to investigate banks for tax evasion

    •Committee to meet CBN, FIRS, bank chiefs next week

    The House of Representatives’ Committee on Finance has said it will probe tax evasion by commercial banks.

    It has invited the Federal Inland Revenue Service (FIRS), banks’ chief executive officers and the Central Bank of Nigeria (CBN). The apex bank will be at the event as an observer.

    The Chairman of the House Committee on Finance, Abdulmumin Jibrin, told The Nation that the N1 trillion deficit in the 2013 budget “is unacceptable” and that if the legislature looked inwards, it would find it.

    His words: “The determination to go all out and look at the remittance records of government agencies and other business organisations was borne out of the fact that the over N1 trillion budget deficit is unacceptable.

    “It is the belief of this Committee that if we look inward, we will find this money hidden somewhere, and that is why we started with the internally generated revenue (IGR) of government agencies and we have all seen the positive result we got so far, except for few, like the Nigerian National Corporation of Nigeria (NNPC) that are proving difficult.

    “The issue that will occupy the Committee’s attention in the next two weeks, is the issue of bank compliance, there is no exception.

    “Now we have resolved in a week or two, the exercise will commence with a meeting with FIRS, of course we have notified the CBN to pick interest in the matter even though they do not have any special role to play, theirs is just to observe,” he said, adding that thereafter, the bank chiefs would be invited to Abuja.

    “We have a knowledge of what is involved in terms of how much, but we want to avoid unnecessary debate. We want those directly involved to present the figures with their own hands.

    “We are going to invite the Federal Inland Revenue Service to make presentation on projections and receipts, actual collections and remittances from banks, that will help us now to see if the banks have been meeting the targets set out for them by the FIRS.”

    He said the Committee had been gathering data on the issue since last year, and was armed with information that would enable the House to take decision.

    Jibrin explained that the Committee has developed a template that will be attached to the letters being sent to the banks so that all figures would emanate from the real sources, adding that the Committee’s desire is for transparency to be a watchword in private and public transactions in the country.

    He said when the forms sent to the banks are filled, the Committee will do the computation and compare with figures presented by the FIRS and other data at the lawmakers’disposal.

    “It is from there that Nigerians would start to know the situation of things. This is important because the banking sector is critical to the economy because every day, they announce huge amount of money on their balance sheet. So, we need to know how they are contributing to the revenue of the country in terms of tax remittances,” said.

    Jibrin, however, regretted that the Committee and its members have been under pressure since the idea was broached.

    “Well, we are coming under severe pressure from the banks already just like during the government agencies’IGR probe, like many people said then that we couldn’t push it through but we did it.

    “Already, there is pressure and panic everywhere in the industry, but we are not out to embarrass anyone. We are just doing our work and we just have to do it.

    “We are prepared going by past events, which we have learned from and we have the capacity to work and surmount the pressure.

    “The other aspect of the pressure is that some people would want to put it in the mind of Nigerians that what we are about to do is targeted at the government and aimed at collapsing the economy, which is not true,” he added.