MAN explores tax compliance for business operators

Issues of tax compliance were explored by the Manufacturers Association of Nigeria (MAN) in Lagos recently. This is to ensure that business operators understand fully the reason they must pay tax and how to go about.

The issues explored at this one-day symposium on tax compliance include areas of conflict between tax administrators and business operators, issues of auditing in tax compliance, the purpose of taxation, those expected to pay tax and the basis for tax payment.

Excerpt from an address delivered by Akeem A. Kazeem, chairman, Trade Union Congress (TUC), Lagos State Council recently, described tax as compulsory (though not penal) financial charge or levy, imposed by a state on its subjects at regular intervals to yield public revenue for the maintenance of government and the provision of public infrastructure and services.

Throughout the world, tax is commonly charged by governmental authority upon properties, individuals or transactions, primarily to raise money for public purposes.

The keynote speaker, Niyi Orebajo, deputy director, Federal Inland Revenue Service (FIRS), said the different focus of tax were Value Added Tax – VAT, Companies Income Tax – CIT, Withholding Taxes – WHT, Education Tax – EDT,

Capital Gains Act – CGT. “CIT allows registration within 18 months, but VAT states within six months,” he said, adding, “The old practice was separate registration for Companies Income Tax and for VAT with separate letters and registration numbers. Current practice going forward is one single registration with a unique TIN, note: not TIN number.”

He further said: “Every business organisation is an unpaid agent of government for the collection of VAT and WHT. Tax (VAT) Invoice is compulsory.

VAT is collected on all goods and services except for those on exempt list or those on the zero rated list. WHT is collected on interest (other than bank interest), rent, dividends, contracts (construction and supplies).”

To file returns and payment, he said, “Self assessment, returns and payments are intertwined, VAT deadline is 21 days after month end. WHT is within one month. CIT/EDT is within six months from accounting year end.

CGT is same as for CIT.”

If a company needs an extension for filing of the returns on income tax, Orebajo said it might be possible if application was submitted before date, there was a good reason, heath of tax payer, death of principal officer – chairman, MD, company secretary, natural disaster such fire, etc.

He pointed out that the payment period would however not be changed by filing the extension.

Going further, he said collections made on behalf of government must be paid in the currency of collection and instalments payments were allowed, for Income Tax only.

He highlighted incentives by government for tax compliance to include Investment Allowance, Rural Investment Allowance, Export Expansion Grant

EPZ Allowance, Mining of solid minerals, Replacement of obsolete Plant and Machinery opportunity, comparatively low tax rates.

He also highlighted punitive measures for non-compliance such as late registration penalty – N25,000 in first month of failure and N5,000 for each subsequent month.

Late returns/failure to deduct or to remit tax (VAT & WHT) – 10 percent penalty plus interest at prevailing CBN MRR plus maximum three years imprisonment.

False declaration – on conviction N200,000 fine/not more than three years imprisonment, payment of outstanding with interest, late payment attracts penalties and interests.

By: OLUYINKA ALAWODE