Nigeria: 'Multiple Taxation, Bane of Nigeria's Tax System'

24th August 2008 (Allafrica.com)
Chairman, Technical Committee on National Tax Policy (TCNTP), Mrs. Ifeko Omogui-Okauru has said multiple taxation is the bane of Nigeria's tax system.

Nigeria: Citizens Should Pay Taxes - Board Chairman

1 August 2008 (Allafrica.com)
The newly appointed Executive Chairman of Kaduna State Board of Internal Revenue, Alhaji Ahmed Jibril, has urged Nigerians to imbibe the habit of paying taxes, as another way of assisting the constituted authorities to serve them better

Nigeria: FG Seeks Input Into Tax Policy Document

28 July 2008 (Allafrica.com)
The Federal Government has commenced the process of sensitization and mobilization of the Nigerian populace, in order to collate ideas and perspectives towards fashioning a National Tax Policy that would support the dream of Nigeria becoming one of the top economies by the year 2020

Nigeria: NNPC Rejects Tax Exemption for NLNG Contractors

18th July 2008 (Leadership Nigeria)
The House of Representatives Committee on Gas has expressed deep concern over the attitude of Nigerian Agip Oil Company Limited (NAOC) for its poor response to the efforts to amend the Nigeria Liquefied Natural Gas (NLNG) fiscal incentives, guarantees and assurances Act by the House

Nigeria: Citizens to Pay More Tax

17th July 2008 (Allafrica.com)
If the proposed National Tax Policy scales through, Nigerians are to pay more of Value Added Tax and Customs Duties. A highlight of the draft document made available to Daily Trust suggests a low Companies Income Tax and Personal Income Tax, while jerking up the Value Added Tax (VAT).

To discerning Nigerians, the grim reality of the country's sole dependence on income generated from oil revenue is a matter for serious concern. This

9 June 2008 (Allafrica.com)
A row is brewing over the circumstances under which the Ministry of Infrastructure Development directed the Tanzania Ports Authority (TPA) to pay millions of shillings to a UK-based consultancy firm for services it rendered to third parties. The British firm, DLA Piper, was paid for services it had rendered to the Tanzania Airports Authority, which -although also falling under the ministry - is a totally different entity. DLA Piper was asked to carry out a consultancy at the Tanzania Ports Authority (TPA) on two worn-out Single Buoy Mooring (SBM) and Single Point Mooring (SPM) systems at the Dar es Salaam port as well as a consultancy on construction works at the Kilimanjaro and Mwanza airports for the Tanzania Airports Authority (TAA

Nigeria: Good News from the Tax Sector

8 June 2008 (Allafrica.com)
To discerning Nigerians, the grim reality of the country's sole dependence on income generated from oil revenue is a matter for serious concern. This virtual mono-cultural economic tendency is dangerous as it ties the nation's fortunes to the vagaries of global oil market and the unpredictable socio-political situations in the country's oil producing belt. This is why the country's economy was so badly affected by the international oil glut of the early 1980s. It is currently losing substantial revenue due to the extant volatile situation in the Niger Delta.

Nigeria: Taxation And Justice

No nation can prosper economically without an effective and efficient tax law.
Taxation is a legal method of raising funds by the government. It has transmitted into a civic responsibility of the citizens, who often may not have any choice in its payment due to the system fund point of deduction. Taxation could be likened to a duty of the citizenry towards the government and the nation. It could also be described as levy, toll, dues or assessment placed on the citizens by law.
Justice on the other hand connotes fairness, impartiality, righteousness, evenhandedness, fair dealing, honesty, integrity. The opposite of this is injustices, unfairness, dishonesty, etc.
Every nation including Nigeria makes plans and budget for the smooth governance of the nation.
Our laws provides for a system of taxation under a specific agency called Federal Inland Revenue service. It's legal to impose and collect taxes from the citizens in whatever form and must be fairly and proportionately collected. It must be fairly distributed and higher income earners should pay more and vice versa. This is an ideal scenario and must be constitutionally made operationally so.
The law is a system of rule and principle that guides the people living within a geographical location called country.
The Nigerian experience in taxation is disgraceful and condemnable. Taxation is only properly so called in relation to public school teachers and civil servants who have taxes deducted from their salaries at source.
How much tax do we collect from the businesses operating in our nation? The law of taxation is not a bluechip area of concentration in Nigeria. Its concentration seems only at the point of salary to accommodate the PAYE system. It has evolved to adequately handle issues of taxation on the privileged many who are confronted with taxation squarely and deduction from their meager salaries.
*Points To Note In Taxation*
1. The law must make it mandatory that the basic needs of the people, especially the poor and vulnerable are addressed as a matter of priority before any taxation could be justified.
2. The law must make the collection of taxes an important and justifiable role of government. Taxes are an individual and corporation contribution to the common good. In any society, the common good should be varied of greater importance than the good of any individual, corporation or special interest group. Paying taxes, is one way individuals and corporations give something back to the society.
3. The law must make it obligatory on the nation to seek and maintain revenues sufficient to meet basic needs of all, especially the poor and vulnerable. Taxation in any form should be based on ones ability to pay. The tax law operating in Nigeria, must be reviewed to ensure that the system collects taxes according to ones ability to pay. Hence, a more progressive tax system must evolve to the extent that our contribution to the common good must reflects our blessing. Hence to whom much has been given, much should be expected. Those who make the most profit from our economic system benefit most from the structures and infrastructures that makes economic enterprise possible. Tax exemptions and tax incentives should not change the fundamental requirement that taxes should be based on one's ability to pay.
Any form of taxation that is not fair and just in the treatment of the poor and the less privileged is fundamentally defective. Taxation must exist to be used as an economic strategy to level income distribution in a society. Tax advantage should not be granted on the basis of power and politics, but on moral principle as prescribed by law. The poor should not pay a disproportionate amount of income in taxes.
Who eventually pay any given tax and who will be the ultimate sufferers, both in respect for the money paid and in relation between their income and in the cost of the commodities they have to consume. The total amount of tax paid by each individual, will comprise not only the obvious items of money paid and the goods the money has purchased, but puts more money in the pockets of other individuals.
When a new tax or increased tax is levied on goods already in the hands of manufacturers or dealers, the market value of the goods may suddenly increase by the whole amount of tax without any effort, whatever, on the part of the holder. In such a case the consumer will be the sufferer at first. Hence taxes could be levied on personnel or on production.
Taxation is in the exclusive legislative list of the government. Hence only one system of taxation can be evolved for the entire nation. This means that the nation can survive or be crippled under the weight of the tax system in operation.
The nation's economic base can be affected when tax fails to correct the imbalance between the rich and the poor.

Nigerian -opposition to increase of VAT.

(This Day-Lagos)
By most accounts, the last has not been heard of the federal government's plan to impose on Nigerians stiffer consumption tax, otherwise known as the value added tax (VAT).
The last time the government made moves to raise the tax from five per cent to 10 per cent, Nigerians, including this newspaper, opposed it. We did so not because we did not believe in the right of government to tax people to fund development or welfare programmes aimed at improving the people's standard of living. Rather, most of the opposition stemmed from the apparent disconnection between high taxation in Nigeria and the people's welfare.
By almost every index of the social contract principle, successive Nigerian governments have failed substantially to account for the huge income that accrues to the nation from taxation and other sources. There is a mismatch between revenue collection and performance.
As it is, few Nigerians are therefore convinced that the government has any moral right to levy higher taxes on its people in the face of the incredible fiscal irresponsibility so rampant in public spending. Besides, not many people are convinced that the consumption tax is the first place to start if taxes must be raised at all. They believe that there are yet many loopholes in our income tax systems which make tax evasion, especially by the rich and super rich, quite rampant. A government that is determined to improve tax revenue ought therefore to start from there. By plugging the existing loopholes, a lot more income will be realized from personal and corporate income taxes.
However, it would appear that this thinking cuts no ice with the Federal Inland Revenue Services (FIRS) which has instead come up with a plan to raise the VAT by a whopping 200 per cent by the year 2009. In effect, Nigerians are expected to start paying 15 per cent VAT by then if this proposal is endorsed by the Senate. FIRS's justification for this proposal is that it would eliminate multiple taxation and reduce personal income tax.
Although it certainly makes sense to reduce multiple taxation and personal income tax, such promises had, however, not always been kept in the past. It is for this reason then that Nigerians tend to be skeptical about such plans. Many now see taxation in the country as a mere exaction where as taxes are supposed to be a means of improving social services. It is this disconnect between taxation and the people's welfare that makes any talks about increasing the tax level paid by Nigerians controversial. Few Nigerians are convinced that paying a higher VAT will necessarily lead to improved services.
In this instance, we think the government should not raise the VAT unless and until it has fully articulated how it would spend revenue accruing from it. In other countries, because of the sensitive nature of taxes, every planned increase in taxation, especially consumption tax, is usually preceded by government's elaborate explanation of how it will spend the revenue for the people's benefit. We expect no less from the Nigerian government.
The plan should therefore be shelved for now. What we expect the government do is to throw the issue open for public debate. It must not allow the FIRS to stampede it into imposing greater burden on Nigerians at a time when consumer prices are going through the roof. The challenge of the government for now should be to ensure the prudent use of existing revenues.

Nigeria: FG to Cut Company Income Tax

10th October 2007(Vanguard-Lagos)
The Federal Government may drastically cut Companies Income Tax as from the 2008 Fiscal Year, as part of a basket of tax incentives geared towards attracting more investors to Nigeria and voluntary compliance, expected to boost tax revenue in the country.
Part of the plan of the government would be a deliberate policy shift towards indirect taxation, in line with international best practices.
These were part of the new National Tax Policy draft which the Executive Chairman of the Federal Inland Revenue Service (FIRS) Ms. Ifueko Omoigui presented to the Minister of Finance, Dr. Shamsuddeen Usman, in Abuja, yesterday.
The new rate being proposed in the draft would see companies operating in the country paying 20 per cent as Income Tax, rather than the current standard rate of 30 per cent.
"*If Nigeria decides to lower its rates of income tax in order to attract investment into the country, it would be nearly impossible for countries like Kenya, South Africa or any of the ECOWAS countries to compete, in view of the fact that dependence on income taxes for these countries is much higher. It is therefore possible that Nigeria can achieve competitive advantage in its tax system through lower rates adjustment", the policy draft said*.
The draft crafted by a Technical Sub-Committee of the Presidential Committee on National Tax Policy, the focus would be to achieve the objective of creating a good business environment through the provision of massive infrastructure for both existing and potential foreign and local industries.
"In a short to medium term, where it may not be possible for the government to provide the quality of infrastructure on the scale needed, it should seek to achieve the objective by making good use of the tax system. This can be done by decreasing the burden of taxation on companies and enterprises", the draft said.

Nigeria: Property Tax as Tool for Poverty Eradication

8th October 2007 (Vanguard-Lagos)
THEY craved for the opportunity and when it came, grabbed it with both hands.
That apparently explains why the banquet halls of Golden Gate Restaurant, Ikoyi was filled to capacity despite the early morning downpour and the attendant flooding and traffic snarl in the area and other parts of the metropolis. Estate Surveyors and Valuers, known for their very busy schedules defied all the odds to brainstorm on how to use property taxation to eradicate poverty in the country.
Setting the tone for the day-long programme, Chairman of the Lagos State branch of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Dr. B.J Patunola-Ajayi said it would afford government functionaries and professionals the avenue to "share information, ideas and opinions on a major issue that affects us all, the society we live in and how we contribute to the development and prosperity of our society as individuals, professionals, government functionaries and citizens as a whole through the tax system with emphasis on property taxes".
Describing the theme of the Continuing Professional Development Programme (CPD) as very apt, Dr. Patunola-Ajayi stated that both the Federal and State governments would benefit from it as they strive to "grow greater social wealth for the transformation of our society from a poverty infused one into an evolving socially prosperous one and lay a solid foundation of better wealth distribution for future administration through appropriate legislations as backup".
The Lagos NIESV Chairman identified property tax as those derivable from interests either in ownership or usage of landed properties and similar assets. They include: probates tax, capital gains tax, capital transfer tax, tenement rate, ground rate and withholding tax among others.
"We at the Lagos State branch of NIESV see the great need for the process of achieving poverty eradication through a proper tax system and effective administration to commence now, with the involvement of the State governments, especially Lagos State," he said.
It was the view of Dr. Patunola-Ajayi that if properly packaged with inputs from relevant stakeholders, property taxes would gradually reduce corruption and the current wave to illegally amass wealth. It will also lead to wealth re-distribution and the eventual eradication of poverty in the land.
But what is the role of estate surveyors and valuers in tax system and administration? Dr. Patunola-Ajayi had this to say. "Estate Surveyors and Valuers and its counterpart professional colleagues play a pivotal role in tax systems and administrations, especially in the developed world, which greatly forms the backbone of the prosperity and strength of these world economies. In Nigeria, the case should be the same. Property taxes should not be based on assumptions, mere conclusion of property value by individuals, old records and non-professional opinions among other means but it should be based on property values obtained from registered Estate Surveyor and Valuer's certificate of valuation".
Leading the discussions, two frontline Estate Surveyors, Mr. Mondiu Adebayo Belo stated that suggesting property tax as an addition to the tax regime in the country might sound foolhardy but explained that Estate Surveyors and Valuers would not shy away from making the recommendation because of the importance of property in the assessment of a person's well-being.
"If we as a country are serious about eradicating poverty and its side effects, we must consider redistribution of wealth through such medium as property taxation as has been done successfully in most advanced countries of the world," he said.
Mr. Belo who uses every forum he addresses to kick against the involvement of engineers in plant and machinery valuation did not disappoint this audience. He maintained that the properly qualified professional known all over the world as a valuer is the Estate Surveyor and Valuer.
"The effect of property tax must be reviewed with regard to the wider economy and must be viewed beyond the property market because the aim of the tax is raising of revenue for essential social welfare services. The important point in the review will be to identify any distortions caused by the tax and to recommend remedies in the light of the economy, the need to raise needed revenue and political realities. Whatever distortions may be thrown up, it must be borne in mind that property can play an important role in developing sustainable social welfare benefits which will help in tackling the debilitating poverty facing most of our population", he said.
Both Belo and another frontline Estate Surveyor and Valuer, Chief Richard Okafor explained that apart from oil revenue, taxation is the most important source of government revenue.
Speaking specifically on property tax, the duo described it as "transparent, cheap to administer, efficient in its collection, easy to understand by the tax paying public and feasible in administration in most circumstances".
"It is suitable as a source of locally generated revenue for the local and state governments throughout the country. It will consequently enable these governments to provide for locally determined needs geared towards poverty eradication. These needs could come in form of the provision of rural infrastructure", they noted.
Continuing, Chief Okafor explained that progressive property taxation in Nigeria could become a veritable tool for poverty eradication. But how? Hear him: " Progressive taxation is a system when the tax burden lies more on those with higher incomes than those whose incomes are lower. The affluent own properties in prime locations and property tax assessment should be such that they pay higher than the poor who earn less and own virtually no properties".
In their opinion, both Mr. Belo and Chief Okafor are of the view that religious and charitable organisations should continue to enjoy tax exemptions to enable the less privileged have access to the use and ownership of properties. They also canvassed strengthening and encouraging property rates because it is a veritable source of revenue for local government councils.
Explaining that the operation of Capital Gains tax and Capital Transfer tax in Nigeria is not clear, Messrs Belo and Okafor who noted that most property transfers and sales are done by the rich, stated that many of these sales and transfers have not been subjected to this tax. They attributed this to the dearth of property sales/transfer database.
"The tax could be better administered if there exists record of sales/transfers of properties. The beneficiaries of these sales and transfers are mainly the rich. Their tax returns can then be applied to poverty eradication programmes that benefit the poor better such as building of public schools, hospitals and provision of rural infrastructure," they posited.
In his contribution, Chief Oye Afolabi dwelt on the challenges of probate valuation practice in the country and called on the National Assembly to make laws on Estate duty and the rates payable. The House should also review or amend the Capital Transfer tax Act to reflect the current economic trends and care of the needy.
Other recommendations canvassed by Chief Afolabi include: Making the registration of death compulsory by law; enacting a law that would make it mandatory for medical practitioners to make returns of death certificates issued on a prescribed form and ensuring proper registration of Will made by the deceased in the Probate Registry of each state. Chief Afolabi would also want the publication of the assets in such Will to enable members of the public ascertain that all properties of the deceased are filed at Executor's expense. "As a condition for the issuance of a Letter of Administration, a valuation report from any registered Estate Surveyor and Valuer practicing in the country must be attached to such application. Each probate Registry must as a matter of necessity employ a Valuer who will vet such valuation to ensure that such values in the Valuer's certificate is the true open market value of the assets, he said, adding that penalty must be levied on false assets declaration and late submission of application for Letter of Administration from executors.
Chief Afolabi who claimed that the present practice makes government lose billions of Naira which should have been used to fund major projects, advised that the valuation of deceased assets must be made compulsory as an avenue for arriving at accurate charges on such assets.

Nigeria: Yar'Adua Suspends Waivers, Tax Exemptions

This Day (Lagos)
24 August 2007
President Umaru Musa Yar'Adua has directed that the issuance of waivers, exemptions from taxes, duties and tariffs to individuals, companies or organisations, be suspended with effect from yesterday. The Federal Government also said it would submit the draft 2008 Budget to the National Assembly by October 8, 2007 and came out with a new approach to fast track the budget process. Also yesterday, the Finance Minister, Dr. Shamsuddeen Usman, and his junior colleague at the ministry, Mr. Remi Babalola, made their asset declarations public, blazing the trail for the other ministers. Speaking at a Ministerial Press Briefing tagged "The New Road Map to Economic Reforms", Usman said the suspension became necessary to plug a number of revenue leakages through which corruption was perpetrated in the last three years. Noting that the amount of waivers given so far was alarming, he pointed out that "the Comptroller-General of Customs told us that one particular waiver was granted ten times over." He added that "a lot of state governments, private sector operators and churches were being granted indiscriminately. Somebody was organising a game and was asking for waivers to import 600 cars." THISDAY gathered that about N235billion that should have accrued to the Federal Government was lost to duty waivers alone in the last five years. According to information from the Ministry of Finance, the losses from waivers and exemptions from import duty, Ecowas Trade Liberalisation Scheme (ETLS), Negotiable Duty Credit Certificates (NDCC), Manufacturing-In-Bond-Scheme and special incentive granted to importers and exporters. About N194.3 billion was lost between 2003 and 2006 with additional N40 billion granted as duty waivers between January and August 2007 A breakdown revealed that, the Federal Government lost N12.394 billion to duty waivers and concessions in 2003, N55.796 billion in 2004, N71.244billion in 2005, and N54.921 in 2006. Going forward, he said, the Yar'Adua has approved the appointment of accounting firms to audit all the existing waivers and exemptions with a view to ascertain their validity and the level of compliance with the rules guiding the granting of such waivers. He urged all beneficiaries of the waivers and exemptions to respond promptly to the call by the appointed accounting firms, when the public announcement is made soon. Efforts, he added, would also be made to improve tax collections. Stressing that "there will be continued reform of the Nigerian tax system in order to ensure that it is at par with the best in the world," Usman said "a number of specific and general reform measures will be adopted. Efforts will continue also, to get the National Assembly to encapsulate such reforms by reviewing existing legislation or enacting new ones, where such legislation is not existent." He further stated that steps were being taken also to improve the coordination between the FIRS and the relevant Departments of the Ministry, especially the Revenue and Fiscal Departments. "This will help to avoid the seeming confusion where one arm of the Ministry is taking some fundamental action that has great potential to embarrass, not only the Ministry alone but the Federal Government as a whole, without the other arm even knowing about it. Such recent, uncoordinated actions include the increase in the VAT, from 5% to 10%, which had to be reversed, and the frequent waivers and tax exemptions being granted, of which we say more below," he said. Other important strategic issues, according to him, included, "the need for a central agency for tax collection; improving the structure and administration of the property tax in Nigeria; review of the VAT, in line with Ecowas protocols and the need for an overall, simpler tax structure for Nigeria." Also, Usman said the NCS would receive great attention, in order to reform it for greater efficiency and accountability, assuring that, the reform agenda currently being pursued by the NCS will be reviewed and overhauled. In addition, Usman stated that another critical area that required urgent attention was the submission of both 2007 Revised Budget and the proposed 2008 Budget to the National assembly Recalling that the 2007 Budget had to be reviewed mainly because of the implementation of the consolidated salary structure by the executive by the Executive, the Judiciary and the legislature. He said two bills namely the 2007 Budget Amendment Bill and 2007 Supplementary Appropriation Bill, have been forwarded by Yar'Adua for consideration and approval by the National Assembly. The finance minister added, as these were being submitted, work on the 2008 Federal Government Budget was at an advanced stage. This, he said, was in spite of the fact that the work on the budget started five months behind that of the 2007 Budget, "due to the change of administration and the late appointment of ministers."