Very recently, the Federal Inland Revenue Service [FIRS] has turned its focus to enforcement of stamp duties. Some large taxpayers have received letters from the FIRS requesting for evidence of payment of duties on specific transactions (such as leases, property transfer, rent, deeds of assignment, all forms of contracts etc.).
The Federal Executive Council, the highest Executive decision making organ in Nigeria, yesterday approved a new National Tax Policy for the country. The Policy will now be endorsed by the National Economic Council to recognize the Federal System of Government given the application of the Policy to all tiers of government.
The National Tax Policy (NTP) establishes fundamental principles to guide an orderly development of the Nigeria tax system and reinforces the need for tax laws and administrative practices to promote economic development.
When fully implemented, the Policy should address key challenges confronting the Nigeria tax system including:
low tax to GDP ratio
fragmented database of taxpayers and weak structure for exchange of information
multiplicity of taxes and revenue agencies
poor accountability for tax revenue
use of aggressive and unorthodox methods for tax collection
failure by tax authorities to honour refund obligations to taxpayers
the non-regular review of tax legislation, which has led to obsolete laws, that do not reflect
current economic realities
Some of the key recommendations include to address the challenges include:
ensuring that there is only one revenue agency per level of government
establishment of a tax court as an independent body to adjudicate in tax matters
lower tax rate and VAT compliance threshold for SMEs
establishment of an Office of Tax Simplification for continuous improvement to tax legislation and administration and develop Key Performance Indices for Nigeria to attain a top 50 position on the global index of ease of paying taxes by 2020 and consistently improve on the ranking
administrative framework for amnesty and whistle blowing as part of the strategies for curbing evasion and widening the tax net
INEC to mandate political parties to articulate, prepare, provide and make public their tax agenda before and during election campaigns
The approved Policy also contains and appendix of changes required to existing laws, repeals and new enactments.
"It is counter-intuitive that many politicians play politics with revenue generation by placing political considerations ahead of professionalism. Many lawmakers, administrators and policymakers lack proper understanding of the tax system. This coupled with undue political interference and vested interests mean that tax revenue will continue to be disappointingly low." - Taiwo Oyedele
Check out my article today on pg 33, Guardian Newspaper on what to expect in Fiscal 2017. Also provided below is a link to my 2016 predictions which turned out almost entirely as predicted.
The Federal Government of Nigeria recently approved the 2016 Fiscal Policy Measures which allow the implementation of the Supplementary Protection Measures and the ECOWAS Common External Tariff (CET) 2015-2019.
A key feature of this implementation plan is a reduction of import duty rates on specific items on the national list, aimed at promoting the development of sectors deemed critical to the economy.
Read our economic alert below for more and download the new import tariff schedule.
Here is a quick round-up in case you missed any major tax event in 2016.
"Generally, tax authorities across the country became more aggressive with revenue drive including the use of consultants and unconventional methods for tax audits. Business premises of alleged tax defaulters were sealed up with visible non-compliance stickers posted in some cases. Tax prosecution units were set up to prosecute defaulters including holding principal officers personally liable."
Read my article published today on page 33 of the Guardian Newspaper for more.
Nigeria's president Muhammadu Buhari on Wednesday 14 December 2016 presented the 2017 Budget Proposals to a joint session of the National Aseembly. Read below our one-page bulletin for highlights and key messages. Also read the full text of Mr. President's speech in the link below.
Watch this space for further details on the Budget.
The legislature has commenced the process of ratifying three avoidance of double taxation treaties with Spain, South Korea and Sweden signed on 18 November 2004, 6 November 2006 and 23 June 2009 respectively. The treaties generally follow the Organisation for Economic Cooperation and Development [OECD] Model Tax Convention.
Ratification is required by Section 12(1) of the Nigerian Constitution which precludes treaties from having the force of law until they have been enacted into law by the National Assembly.
Below is our tax alert for more details and information on the recent OECD multilateral convention on tax treaties to which Nigeria has subscribed.
The Federal Inland Revenue Service (FIRS) has issued revised transfer pricing (TP) declaration and disclosure forms. Effective from January 2017, taxpayers are required to submit their transfer pricing returns using the revised TP forms which now include new disclosures. Also some of the old disclosures which taxpayers considered to be ambiguous have been made clearer.
Read our tax alert for details and also download copies of the new forms below.
The tax amnesty recently introduced by the Federal Inland Revenue Service came to a close on 24 November 2016. However, the FIRS has extended the window till 31 December 2016 only for members of the National Association of Small and Medium Enterprises (NASME) who are to collate all applications received from their members and forward to the FIRS not later than 31 December 2016.
Below is a copy of the public notice for your information.