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Tag: taxation

  •  Religious bodies and taxation

    SIR: Despite initial misgivings concerning the real intentions of the promoters of on-going National Conference, it has since kicked off with some very interesting issues already on its front burner. One of such issues is the one that deals with subjecting religious bodies to taxation.

    Some have argued that since some religious institutions make more money than most corporate organisations, they should be brought into the tax net. Others are of the view that the extreme flambouyant lifestyle of some religious leaders in the country is indicative of the excessive wealth at their disposal and as such the organisations which they preside over, which generate such excessive fund in the first place, must be subjected to taxation. Others have equally argued that the business ventures of  most of these religious bodies should be subjected to taxation since they are strictly profit making undertakings.

    Those who are against the move have argued that since the income of religious bodies are largely made up of voluntary gifts, donations, offerings and contributions from willing members, who have already paid taxes on their income, taxing them would only amount to double taxation. Another argument that has been put forward by those opposed to taxation of religious bodies is that what they bring to the table in terms of  providing spiritual coverage for the country is invaluable. Consequently, subjecting them to taxation would be considered an act of ingratitude by the government.

    For one, the current debate on taxation of religious bodies should be seen as a wake- up call by religious leaders in the country, a reflection of the mood of some Nigerians in respect of the ungodly activities of some of them . It is generally believed that some of the religious organisations in the country have become business empires of their leaders who have become cult –figures being worshipped as gods by their followers. Some of them have been accused of subjecting their followers to lives of penury and distress while they continue to live in unbelievable opulence and extravagance.

    The call for taxation of religious bodies should, therefore, be seen as a manifestation of current thinking in the land that some of them are mere business conglomerates established to oil the insatiable thirst of their leaders for material acquisition. It is, indeed, paradoxical that some religious leaders, who preach the transient nature of the world to their followers, now go to any length to acquire worldly opulence. Years ago, calling for religious bodies and their leaders to be taxed, would have been regarded by many as a blasphemous move.  However, current trend within our religious organizations has shown that lots of them have sacrificed piety on the altar of mundane pursuit.

    It is, for instance, immoral and unjustifiable for religious bodies to establish institutions of learning that charge fees that are beyond the reach of majority of their members. In the pre-colonial and colonial periods, when European missionaries introduced western education into the country, what they offered was fee education. Their ultimate goal was to massively educate the people. Indeed, most modern day religious leaders benefited from the free education programme of the early missionaries. It is, thus, ironic that same people could preside over organisations that are taking education beyond the reach of the ordinary folks.

    By and large, the lesson to take away from the controversial issue of taxation of religious organisations is that religious bodies and their leaders should focus more on re-building the collapse spiritual fabric of the society. It is ethically wrong for some of our religious leaders to display extreme affluence in the face of so much poverty, hunger, frustration and impoverishment in the society. Instead of encouraging pointless display of materialism, they need to work hard to ensure the regeneration of waning divine principles such as contentment, selflessness, discipline, integrity and love within their organisations, and the society at large.

    • Tayo Ogunbiyi ,

    Alausa-Ikeja, Lagos

  • The CGT: An untapped goldmine

    The CGT: An untapped goldmine

    Taxation is arguably as old as mankind. In his book, Income Tax Law and Practice in Nigeria, Ola, C. S. said apart from revenue to the government, taxation is important to everyone and taxes collected come back to the taxpayers in the form of social amenities.

    Almost everything we own and use for personal or investment purposes is a capital asset. Examples include a home, personal-use items like household furnishings, and stocks or bonds held as investments. Capital gains are the profits realized from the sale of assets at a price that is higher than the purchase price. When a capital asset is sold, the difference between the cost sale and the sales price is a capital gain or a capital loss. You have a capital gain if sales price is higher than cost of sale. The reverse is the case for a capital loss.

    Capital Gains Tax (CGT) is a type of tax levied on capital gains accruing to individuals and corporations. The Federal Inland Revenue Service (FIRS) and State Boards of Internal Revenue are responsible for the administration of the CGT in Nigeria. It is a tax applicable to capital gains accruing to any person (company or individual) on the disposal of a chargeable asset. Capital gains taxes are triggered when an asset is realized, not while it is held by an investor. An investor can own shares that appreciate every year, but the investor does not incur capital gains tax on the shares until they are sold.

    Not all disposals are subject to CGT; only chargeable assets are. Chargeable assets are all forms of property, including options, debts and any form of property created or acquired by the person disposing it, or otherwise coming to be owned without being acquired. Landed properties and buildings are the main income yielding assets in Nigeria.

    Most countries’ tax laws provide for some form of capital gains taxes on investors’ and individuals’ capital gains, although CGT laws vary from country to country. In Nigeria, CGT was originally introduced by the Capital Gains Tax Act of 1967 with a rate of 20 per cent but effective from 1998, the CGT rate was revised down wards  to 10 per cent. The legislation currently governing taxation of capital gains is the Capital Gains Tax Act CAP C1 LFN 2004.

    Capital gains are excluded from taxation under the Companies Income Tax Act (CITA) to avoid double taxation since such gains are subject to tax under the CGT Act. Assets situated outside Nigeria are chargeable to CGT on the amount received in or brought into Nigeria.  In the case of a non-resident, CGT is charged on any part of the gains received or brought into Nigeria.

     

    Disposal to a connected person

     

    When a taxpayer transfers his capital asset to say, his wife, this is seen as a transaction between ‘connected persons’. In this case, the chargeable gains will be calculated on the basis of the market value of the asset at the date of transfer. Section 24 of the CGT Act, 2004 provides that a person is ‘connected’ if:

    a.That person is the individual’s spouse.

    b.A trustee of a settlement with any individual who in relation of the settlement is a settler.

    c.A person is connected with any person with whom he is in partnership and with any person the spouse or relative of any person with whom he is in partnership.

    A company is connected with another company if:

    a.The same person has control of both or he and persons connected with him has control of the other.

    b.Where a group of two or more person has control of each company and the group either consists of the same persons or could be regarded as consisting of the same persons by treating a member of either group as replaced by a person with whom he is connected.

    c.A company is connected with another person if that person has control of it or if it and that person connected with it together have control of it.

    d. Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with another and so will any person on the directions of any of them to secure or exercise control of the company.

    Capital gains is the net consideration accruing to a person on the disposal of capital assets after the sum of the total consideration and expenses for acquiring the asset has been deducted. It is arrived at by deducting from the proceeds accruing to any person on disposal the following:

    a) The amount or value of the consideration (in money or money’s worth) given wholly, exclusively and necessarily incurred in providing the asset.

    b) Expenses wholly, exclusively and necessarily incurred on the asset for the purposes of enhancing its value being expenditure reflected in the state or nature of the asset at the time of disposal.

    c) Expenses wholly, exclusively and necessarily incurred on the asset in establishing, preserving or defending the title or right over the asset.

    d) The incidental cost of making the disposal, incidental costs of the acquisition of the asset or of its disposal includes fees, commissions or remuneration paid for  professional services of any surveyor or valuer or auctioneer or accountant or agent or legal adviser and cost of transfer or conveyance, including cost of advertising.

     

    Expenses allowable and computation of CGT

     

    Expenses allowable as a deduction in computing the gains or losses of a trade, business, profession or vocation for income tax purposes are not to be deducted in the course of determining the applicable CGT. So also are premiums or other payments made under a policy of insurance against the risk of any kind of damage or injury to lose or depreciation of any asset. This does not prevent the deduction of expenses allowable in the computation of capital gains under the CGT if the assets have qualified for capital allowances.

    According to Ayua, I. A. in his book, The Nigerian Tax Law, the above position on deductions is to the effect that capital gains are liberally calculated for the purpose of the CGT law. In practice, capital gains are calculated by deducting the  total cost of acquisition from net sales proceeds.

    Example: Ola sold his  property for N150,000 on June 2, 2005. He incurred the following expenses in the course of the sale:

    Adverts (online and print):                             N  8,000

    Legal service charge:                                       N15,000

     

    He bought the property on 13th December, 1981 at N60,000 and incurred the following expenses:

     

    Agency:                                                                              N10, 000

    Renovation        :                                                               N 10, 000

    .

    Here is a computation of the amount of CGT due from Ola:

     

    N                                                N

    Proceeds from sale:                                                          150,000

    Less expense:

    Adverts:                                              8,000

    Legal service charge:       15,000

    Agency:                                              10,000

    Renovation:                       10,000

    (43,000)

     

    Net sales proceeds:                                                           107,000

    Less cost of acquisition:                                                   (60,000)

     

    Gains                                                                                   47,000

     

    Capital Gains Tax = 10% of N 47,000

    = N 4,700

     

    Exemptions

     

    The CGT Act exempts gains accruing to the following:

    a) Ecclesiastical, charitable or educational institutions of public character.

    b) Any statutory or registered friendly society.

    c) Any co-operative society registered under the Trade Union Act, in so far as the gain is not derived from any disposal of any asset acquired in connection with any trade or business carried on by the institution or society and the gain is applied purely for the purpose of the institution or society as the case may be.

    d) Gains accruing from any local government council.

    e) Companies being purchasing authorities established under any law in Nigeria empowered to acquire any commodity in Nigeria for export.

    f) Superannuation funds (pension provident or other retirement benefits fund, society or scheme approved by the Joint Tax Board under Section 20 (1) (f) of the Personal Income Tax).

    g) Decorations, stocks and shares (the Act provides that where a person disposes a decoration awarded for valour or gallant conduct which he acquires otherwise than for consideration in money or money’s worth, such is not a chargeable gain. The Act also recognizes disposal of Nigerian government securities, stocks and shares as non-chargeable gains).

     

    Reliefs

     

    To prevent double tax relief on disposed assets, the Act provides that relief would be given in respect of replacement of business assets, compensation for assets lost and destroyed and in respect of delayed remittances from abroad. The relief would be in the form of tax deferred.

     

    Offences and penalties

     

    With regards to the FIRS’ jurisdiction, offences and penalties under CGT is as provided for by Part VI of the FIRS Establishment Act 2007. On failure to deduct or remit taxes, Section 40 of the FIRSEA 2007 provides that “any person who being obliged to deduct any tax under this Act or the laws listed in the First Schedule of this Act but fails to deduct or having deducted fails to pay to the Service within 30 days from the date the amount was deducted or the time the duty to pay arose, commits an offence and shall upon conviction be liable to pay the tax withheld or not remitted in addition to a penalty of 10 per cent  of the tax deducted or not remitted per annum and interest at the prevailing Central Bank of Nigeria  minimum re-discount rate and imprisonment for a period not more than three years”.

    On penalty, Section 49 (1) stipulates that “any person who contravenes any provisions of this Act for which no specific penalty was provided, commits an offence and shall be liable on conviction to a fine not exceeding N 50,000 or imprisonment for a term not exceeding six months or to both fine and imprisonment”.

     

  • Group protests alleged multiple taxation

    Members of the Edo State Wood Buyers and Sellers Association yesterday renewed their street protests over alleged multiple taxation.

    They said their earlier protest have not reduced their tax burden but rather increased it through the introduction of ‘Community Ticket’ by a traditional ruler.

    The protesters alleged that groups and agencies of government approved to collect taxes and levies from them have upped the stipulated approved rates.

    In a save our soul (SoS) letter to the Speaker of the House of Assembly, Hon Uyi Igbe, the protesters said they pay N19,000 to the state Internal Revenue Services for a lorry load going outside the state and N4,500 for lorry load within the state.

    The letter signed its chairman, Prince Osahon Edohen listed other taxes to include local government officials who they alleged usually hijacked their trucks on the highway, thugs who collect N3,000 and community leaders in the name of community development.

    The letter reads: “We wish to state that thus burdens and unregulated over taxation is taking its toll on our businesses and self struggling efforts, thereby plunging us into poverty.

    “We are begging for a reduction of the necessary dues we ought to pay to government and a total removal of the wrong collectors on the road.”

    In his reaction, Chairman of Edo Internal Revenue Service, Chief Oseni Elamah challenged the protesters to show evidence of payment for prompt action.

    He said the state government has abolished all forms of cash payment in terms of revenue collection and urged the protesters to report any harrassment to security agencies.

  • Taxation Institute, EFCC, FRC, others to fight corruption

    Taxation Institute, EFCC, FRC, others to fight corruption

    The Chartered Institute of Taxation of Nigeria (CITN) is working out modalities with the Economic and Financial Crimes Commission (EFCC), National Financial Intelligence Unit and Financial Reporting Council (FRC) to tackle corruption and economic crimes in the country.

    In a statement, the institute said it has taken proactive steps to educate stakeholders, particularly tax practitioners, on various statutory requirements stipulated in the Money Laundering (Prohibition) Act, 2011 (as amended), the Financial Reporting Council Act of 2011, the EFCC Act of 2004, and the Terrorism (Prevention) Act, 2011 (as amended).

    CITN’s Acting Registrar/Chief Executive of the Institute, Mr. Adefisayo Awogbade, the steps are in line with the institute’s strict compliance to the statutory requirements of the regulatory bodies designated, by the Money Laundering (Prohibition) Act 2011 (as amended), as Non-Financial Institutions for the purpose of registration, reporting and conduct of customer due diligence.

    Awogbade described the rate of corruption in the country as alarming, adding that more often than not, many of the acts of corruption were facilitated by professionals for culprits. That is why the institute, in conjunction with these anti-corruption agencies, is facilitating an avenue to inculcate in its rank and file the various statutory provisions that are obligatory on them in the process of performing their professional callings.

    According to Awogbade, “The taxman plays a dual role, to the government, on one hand, and to the taxpayer on the other. It is, therefore, expedient to ensure that tax practitioners perform their duties professionally within the ambit and dictates of the laws of the land. We need to ensure that whatever we do as professionals are in tandem with the Charter of our Institute, as well as other statutory provisions.”

    He explained further that the Council of CITN was now better positioned than before to monitor all practitioners carrying the practising licence of the Institute.

    He said: “It is not enough for members to have practising licence to practice once and for all.

    “The Institute will continue to monitor each practitioner to the extent that re-certification would be done as regularly as practicable.”

  • Federalism and taxation 2

    Federalism and taxation 2

    Payment of tax by citizens has over the centuries cemented the social contract between government and the citizenry.

    There are options for the reform of the tax system which could both finance increases in benefits and leave the tax system itself more progressive and more logical in structure. Furthermore, the transition to such a system could be one from which the overwhelming majority of the population would gain-John Halls in Changing Tax: how the system works and how to change it.

    Just as we observed last week, the idea of the federal minister of finance on reforming the system of multiple taxation in the country is still more atmospheric than specific. But as we move closer to a position paper from her, it is necessary for the states to prepare themselves philosophically and strategically to address the issue of taxation in a federation, more so that taxation all over the world is a central political issue for citizens and their governments.

    Among political conservatives who believe that the government should have little or no role in solving the problems of individual citizens, taxation is looked at with disdain. Similarly, in polities like Nigeria that thrive on the mentality of manna from nature as the source of public finance, tax may be considered a burden that the government should not be saddled with while it spends its energy to allocate funds from non-renewable resources that appear infinite to myopic individuals in charge of government. Correspondingly, many citizens in such societies with access to funds from non-renewable resource are generally opposed to tax, more so to progressive tax that they consider to diminish their savings. But among social democrats who think that the role of government is to facilitate the transformation of the government into a caring agency with concern for the welfare of citizens, taxation is crucial to the creation of a welfare state.

    If there is any human creation that has helped to fuel development of democratic states in the last three centuries, it is the fact that citizens pay tax to fund government projects that improve the life of citizens: road, education, healthcare, and even social security for the needy. Payment of tax by citizens has over the centuries cemented the social contract between government and the citizenry. More than vote, tax makes it possible for citizens to own their governments, assist them to create socially beneficial benefits, and even provide funds to fight enemies, if and when they exist.

    Given the claim that Nigeria is a federal republic and the recent announcement by President Jonathan that there is a need to have a national conference at which citizens dialogue on how to improve their federal system, it is important for those leading the debate on reforming the country’s system of multiple taxation to recognize that multiple tax systems is a sine qua non of federalism, be it territorial as in the case of the United States and the United Arab Emirates, or ethnic as in the case of Belgium and Ethiopia.

    The first area to mark down for reform is Nigeria’s Indirect tax system. This area includes all forms of consumption tax: Sales Tax, Value Added Tax, Rates, Excise Duties, Car Tax, Stamp Duties, Driver’s License Tax, etc. At present, the federal government collects most of these taxes. The result of federalization of what should be a subnational tax is that states and local governments in which citizens consume such services and in the process add to the responsibility of the government of such states is that such states induce and collect consumption tax for other states to benefit from.

    For example, when I was growing up in colonial Nigeria and even up to pre-military era, it was the subnational government that collected tax on car registration, issuance of driver’s license, and all rates. Even up till the time of General Sani Abacha, collection of sales tax in Lagos was a state responsibility. Replacing sales tax with VAT, the proceeds of which states send to the federal government for allocation to states in the fashion of revenue from petroleum should be the first area to reform in favour of states and local governments. There is no federal system in the world in which sales tax is collected by central governments, the way federal agencies now collect funds for driver’s license and vehicle registration.

    It is fiscal federalist thinking that encourages true federations around the world to leave indirect taxes to subnational governments. It is subnational governments that provide infrastructure, education, and healthcare to most citizens in federal systems of government. Such governments need funds to provide such services to citizens making such contributions to governance. By paying tax, such citizens are also empowered, thus strengthening their voice in the way they are governed. At present, there are a few states that provide some form of social security for senior citizens while most of the country’s states do not consider such a policy important for their citizens. For example, Osun and Ekiti States provide monthly social security allowances for citizens over 65 years of age. Such states have services they need to fund from indirect taxes. If Lagos State had been allowed to exercise its rights in a federal system to collect Port charges, there would have been no basis for the state to be looking longingly for a special status for the state from the federal government.

    By having a tax system that requires states to send revenue collected from indirect tax to the central government, the federal government carries to a ridiculous extent the weird philosophy of government imposed on the country by military autocracies in the name of national unity and even development. In order to mask the exploitation of petroleum producing states under military rule after changing the principle of derivation from 50% of revenue to zero and later to 13%, military dictators created the policy and decrees to centralize all forms of revenue, which they also created agencies to mobilize and allocate or distribute to states.

    With respect to Direct Taxes, there is nothing in the books that prevents a system in which states collect all forms of direct taxes and send to the federal government whatever percentage is agreed upon for funding projects of central governments. Just as John Halls once said: “The argument that a local income tax would be ‘administratively impossible’ is hard to sustain when Belgium, Canada, Denmark, Finland, Norway, Sweden and the United States of America already have one,” the central government will not lose anything but its unnecessary power to subordinate states that should have been coordinate with it, should all forms of income tax be collected by states with the option of sending some percentage of collected revenue to fund central government’s programmes. Taking this option will remove what the minister of finance refers to as multiple taxation. Until a few years ago, I worked at Lincoln University in Pennsylvania and lived in the State of Maryland. I paid federal income tax, income tax to Oxford, the city that houses Lincoln University, and to the State of Maryland where I lived. This is a good illustration of diversity in a federal system. If this is what is called multiple taxation, it is the only way for different states to offer different levels of social services to its citizens in a federal system.

    The issue that matters most to citizens is not the number of states to which a citizen pays taxes but the use to which such tax revenue is put by those in power, for as long as such tax is progressive. If Lagos State, for example, had not been able to tax individuals and citizens within the state in the last sixteen years, the state would have been uninhabitable by now, given the meagre funds allocated to it by the central government and the exodus of citizens that move to Lagos State from other parts of the country on a daily basis. What must not be missed in the debate about reform of our tax system is the need to insist on progressive taxation, to ensure equity and fair distribution of income. What must be avoided is any reform that takes the power to tax away from states that provide services to their citizens.

    Concluded

  • •Lagos pledges to stop multiple taxation

    But for private schools, education in Nigeria would be in dire straits, many proprietors of private schools have said.
    In interviews with The Nation during the National Association of Proprietors of Private Schools (NAPPS) Day at Victory Grammar School, many said the involvement of the private sector in the management of schools, especially at the primary and secondary school levels, has contributed greatly to improving quality in those levels.
    Left to the government alone, Mrs Adenrele Dimla, Proprietress of Cuteland Montessori School, Oko-Oba, Agege, said it would have been impossible for all citizens to gain access to quality education.
    “NAPPS has been effective and has come to be reckoned with. I don’t think the government would have been able to sustain education without private participation,” she said.
    Apart from providing better quality education than is available in many public schools, Mr Imonina Duke, proprietor of Duke and Duchess School, Ajegunle, said private schools are also contributing to the economy by providing employment.
    “Private schools are doing a wonderful thing as far as education in Nigeria is concerned. If there were no private schools, what we would have had is confusion because government wont be able to meet the needs because of population growth. They are filling an important gap and churning out good products; creating jobs and providing employment. And it is something the government ought to appreciate,” he said.
    Proprietress of Rahmah Private School, Agege, Alhaja Rahmatallah Ogunmuyiwa added that private schools are reaching out to even more pupils than public schools.
    However, Mrs Bolajoko Efunniyi, proprietress of Ebenezer Montessori School, Abule-Egba lamented that they don’t get enough recognition for their contributions.
    “Today is to give cognizance to the work being done by private school proprietors. Though the government does not recognize us, we will recognise ourselves,” she said.
    While acknowledging the important role of private education providers, Mrs Bolajoko Falore, Education Director of Mind Builders School, Ikeja, however urged the government to play its role as regulator well to check activities of unscrupulous private school owners.
    “Government gives approval to all sorts of schools and it should not be so. Many schools do window dressing when inspectors come. But after giving the approval, the inspectors do not go back to check what they are doing,” she said.
    On his part, the Lagos State NAPPS President, Chief Yomi Otubela said that private schools are complementing the government’s efforts at increasing the number and quality of educational institutions in Nigeria.
    He said NAPPS Day was set aside to celebrate their achievements.
    “NAPPS Day has been set aside to celebrate our association. We are celebrating our partnership, our coming together and comradeship. We are also celebrating the fact that we believe that there is hope for our future and that is what we do every year, where each local government will be represented by our members,” he said.
    He charged private schools owners to be more committed in developing their teachers and equiping their schools with modern facilities.
    At the event, the Chairman, House Committee on Health, Lagos State House of Assembly, Hon Suru Avoseh, pledged the commitment of the Lagos State government in resolving the multiple tax experience by school owners in the state.
    Avoseh said the state government was ready to listen to the school proprietors on the challenges they faced with multiple taxation being levied on them.
    Although he noted that the local government officials in the state compound taxation, which affect, the various businesses, he said NAPPS and other business owners have the window of opportunity to make their complaints known to Governor Babatunde Fashola and it will be attended to in due course.
    On the multiple taxation, Otubela said the association has opened channels of communication with the state government.
    Awards were presented to various people for their contribution to the growth of education in Nigeria.

  • Joint Tax Board moves to tackle multiple taxation

    Joint Tax Board moves to tackle multiple taxation

    The Joint Tax Board (JTB) has said multiple taxation is adversely affecting Nigeria’s level of competitiveness and makes the tax system inefficient.

    The practice entails levying of tax by two or more authorities on the same declared income, asset, or financial transaction, the board said, would soon be addressed.

    Established by Section 86(1) of the Personal Income Tax Act, 2004, JTB is the umbrella body for revenue agencies in the country. It has over the years contributed to the advancement of tax administration in the country especially harmonisation of personal income tax administration.

    The body explained that collection of taxes by all the tiers or any tier of government does not constitute multiple taxation. However, if the tax being collected is not in the approved list of taxes or not backed by any other law at the state or local government levels respectively, it is regarded as multiple taxations either for individuals or companies.

    It said the Tax Identification Number (TIN) introduced by the board, is one of the strategic pillars aimed at bringing to an end the issue of multiple taxation in Nigeria, and also bringing as many Nigerians as possible into the tax bracket.

    “There is a list of approved taxes and levies, containing 39 different taxes and levies applicable to all sections of the Nigerian economy. Out of these, eight are reserved for the Federal Government to collect, 11 for states and 20 for local governments. Unfortunately, the Federal, States and Local Governments have all gone out of this list resulting to multiplicity of taxes,” the JTB explained in a statement.

    According to the body, revenues collected as taxes by states and local government are not sufficient for them to run the states, forcing them to seek alternative sources of revenues in the form of Internally Generated Revenue (IGR) and multiplicity of taxes. It said that in most cases, a tier of government looks into the approved list, selects one of the taxes it is supposed to collect and creates additional taxes and levies under the same heading. These different new taxes are subsequently put on the taxpayers.

    For an individual who pays personal income tax on either his salaries or wages, if he is in a state or local government where he has to pay other taxes that are imposed or collected by the states or local governments, these other taxes apart from his income tax are multiple taxations on the part of that individual.

    Equally, where a local government subjects individual taxpayers to different kinds of levies like radio levy, wagon levy, generator levy, among others; all these levies that are imposed on individuals can be termed as multiple taxations.

    Manufacturers have also complained about levies that are paid apart from companies’ income tax, tertiary education tax, capital gains tax, and others in the approved taxes and levies list but if they are not backed by relevant laws, they are seen as multiple taxation.

    It said environmental levy and other levies being collected for the purpose of the environment by state governments amount to multiple taxations.

    “There ought to be only one levy to cover the environment but whereby you allow the Federal Government to take levies on the environment, the states take levies on environment, that amounts to multiple taxations. Also, there is the Value Added Tax (VAT), which is a consumption tax but some tiers of government have gone ahead to introduce other consumption taxes. Some states collect hotel consumption tax, restaurant tax, wine tax, eating tax, food tax or levies, they are all on consumption and amount to multiple taxation,” it said.

    It said multiple taxation has attracted criticisms from the Manufacturers Association of Nigeria, the Institute of Chartered Accountants, the Institute of Directors, various Chambers of Commerce and many other industry groups. The bodies have repeatedly called for a harmonisation of Nigeria’s tax regime.

    The Acting Chairman of the JTB, Kabir Muhammad Mashi pointed out that “The Taxpayer Identification Number (TIN) is a platform which will harmonize taxpayers’ identification and registration in Nigeria. It will create closer linkages between the various tax authorities in Nigeria, which is a cheaper and more convenient means of creating an efficient and effective tax system for the entire country.

     

  • Insurers blame FIRS for excessive taxation

    Insurance operators have cried out over excessive taxation they are being forced to pay by the Federal Inland Revenue Services (FIRS), lamenting that the development was crippling the insurance business.

    The Nigeria Insurance Association (NIA) said FIRS imposes heavy taxes on premiums paid by the public, forgetting that when the unforseen happens, the insurance companies would pay claims.

    Spokesman of the association, Mr Davies Iyasere told The Nation that officials of the FIRS are ignorant of how insurance business operates.

    “Our claims are that they do not understand fully how insurance works. The tax they are charging insurance operators is (too) heavy. They tax all premiums we receive not minding the fact that we have to pay claim.

    “We have to invest the money paid as premium so that we can pay claims. Sometimes the claim occurs immediately or in the future. We have to make valuation and projections for 10 years and this is why we are saying they cannot tax on every premium collected. They are looking at premium and not claim and we believe this is not fair on insurers. We have reached the Inland Revenue and the channel of communication has been opened,” he added.

    To find solution to the problem, he said the NIA and the National Insurance Commission (NAICOM), the supervisory authority, are engaging the FIRS, adding that the association has also been speaking with the Consumer Protection Unit (CPU).

    He lamented that no progress has been made on finding solution to the problem.

     

  • Angola plans simple taxation

    Angola, Africa’s second-biggest oil producer, plans to simplify taxation and more than double revenue from sources other than petroleum to curb the government’s reliance on crude.

    Bloomberg said the target is to pass three tax codes this year that will cut fees and modernise laws, some which date from 1948, Gilberto Luther, director of the reform project, said.

    The changes will increase receipts from industries, including manufacturing and retail to about 20 per cent of gross domestic product by 2017 from eight per cent in 2011, he said.

    In Nigeria, Africa’s largest crude producer, non-oil tax was 6.3 per cent of Gross Domestic Product (GDP) in 2011.

     

     

  • ‘ Multiple taxation killing hospitality industry’

    The hospitality sub-sector is currently faced with an avalanche of taxes: Registration of Hospitality Premises, Stamp Duty, Nigerian Social Insurance Trust Fund (NSIT), Industrial Training Fund [ITF] National Pension Commission (PENCOM), Nigerian Tourism Development Corporation (NTDC), Value Added Tax (VAT), Pay As You Earn (PAYE), Company Income Tax, Withholding Tax, Liquor License, Food Handlers and Health Certificate; Others are Visual Advert, Waste Disposal, Bill Board, Sign Post, Operation Permit, Vehicle Emission Fee, Contravention Charges, Business Premises, Administrative Charges for Environmental, Audit, Copyright Society of Nigeria (COSON), Water Supply, Electricity Supply, copious levies by the local government councils as well as other fees charged by regulatory agencies across the sectors at the state and federal levels has pushed the sector to the brink.

    The reality is that the current burden of taxes and levies is heavy, especially when situated within the context of the high operating cost for business. The sector wants to be very clear and certain of its tax obligations, the number of taxes, the rates, period of payment, mode of payment and so on.

    Enginner Onofiok Ekong, President, Hotel Owners Forum of Abuja (HOFA) said: “The local governments are the main culprits here

    “We crave for a tax regime that is fair and flexible enough to respond to changing circumstances; tax regime that takes into account the prevailing economic conditions and the harsh investment climate with attributes that could promote an investment friendly tax regime,” he said.