(FILES) Akshata Murty, embattled British finance minister Rishi Sunak’s Indian wife, is richer than the queen, the daughter of a self-made tech billionaire and a no-less-formidable engineer and philanthropist mother. (Photo by Tristan Fewings / POOL / AFP)
Akshata Murty, wife of Britain’s finance minister Rishi Sunak, announced Friday she will start paying UK tax on “all worldwide income,” amid controversy over her non-domiciled status.
Sunak has accused critics of mounting a “smear” campaign against his wealthy Indian wife, whose substantial foreign earnings have been shielded from UK taxes.
The Labour opposition has accused Sunak of “breathtaking hypocrisy” after he raised taxes on ordinary Britons in the middle of a cost-of-living crisis.
In a statement, Murty, daughter of Indian billionaire N. R. Narayana Murthy, said she did not want her non-domiciled status to be a “distraction” for her husband.
“This means I will now pay UK tax on an arising basis on all my worldwide income, including dividends and capital gains, wherever in the world that income arises”.
Murty stressed that she was making the change “because I want to, not because the rules require me to”, adding that the new arrangements will begin “immediately”.
The Guardian neswspaper estimated that Murty has received 54.5 million pounds ($71 million) in dividends from the family company Infosys since 2015. Her status allowed her to avoid paying 20 million pounds of tax to the British exchequer, the paper said.
Earlier her husband, the chancellor of the exchequer, told Friday’s edition of The Sun newspaper that “to smear my wife to get at me is awful”.
Sunak, once a leading contender to succeed Prime Minister Boris Johnson, has seen his popularity plummet in recent weeks as consumer prices surge across the board.
– ‘She loves her country’ – The Independent revealed that Sunak was listed among the beneficiaries of trusts in the British Virgin Islands and the Cayman Islands, two tax havens.
This has fuelled criticism from the opposition that the Conservatives are taking advantage of the system for their own convenience, ignoring the rules imposed on others.
Speaking before his wife’s announcement Sunak told The Sun “it would not be reasonable or fair to ask her to sever ties with her country because she happens to be married to me”.
“She loves her country. Like I love mine,” he said, adding that “every single penny she earns in the UK she pays UK taxes on”.
A person’s domicile is usually the country which their father considered his permanent home when the person was born, although this can change if the person plans to permanently live in Britain.
Murty is legally entitled to claim the status, but she had ultimately declaring that the UK — the country in which her husband holds the second-most important political office — is not her permanent home.
And contradicting Sunak, tax lawyers had noted that Murty could still pay taxes in Britain on her global income without renouncing her Indian citizenship.
Allies of the finance minister told the Daily Telegraph newspaper that they believed Johnson’s office was behind damaging recent leaks.
They said the prime minister believed Sunak had not backed him strongly enough during an ongoing scandal into Downing Street lockdown parties.
Johnson denied knowledge of any briefing operation against Sunak, and told reporters that his chancellor was doing an “absolutely outstanding job”.
“And I don’t think people’s families should be dragged into things,” he said.
A recent YouGov poll showed Sunak’s rating falling by 24 percentage points over the past two weeks, following a budget statement that was criticised for ignoring the plight of struggling Britons.
The Chairman of the Nigerian Governors Forum (NGF) and Ekiti State Governor, Mr Kayode Fayemi
The Nigeria Governors’ Forum led by Governor Kayode Fayemi, has pledged to expand the country’s aggregate tax revenue by up to 200%.
The governors said this during their second meeting of the year which held on Wednesday in Abuja while deliberating on several matters of national importance.
They said members received a presentation from the Executive Chairman of the Federal Inland Service (FIRS) and Chairman of the Joint Tax Board (JTB), Mr. Muhammad M. Nami, on the national Data for Tax Initiative.
According to the governors, the Data for Tax (D4T) initiative envisages an ecosystem where financial and non-financial data on all individuals and economic transactions will be collated into a central National Tax Data Bank with the National Identification Number (NIN) as the primary unifying code.
“Members pledged their support for the project which is aimed at expanding the country’s tax net to at least 90% of all eligible taxable persons and committed to collaborating with the JTB to increase the country’s aggregate tax revenue by up to 200% as envisaged,” a communique released at the end of the meeting read in part.
They also deliberated on the establishment of farm settlement estates for groups of smallholder producers to increase the supply of farm inputs as well as access to produce at the markets.
See the full communique below.
Communiqué Issued At The End Of The 2nd Meeting Of The Nigeria Governors’ Forum Held
We, the members of the Nigeria Governors’ Forum at our second meeting of the year 2022, deliberated on several matters of national importance and concluded as follows:
1. Members received a presentation from the Executive Chairman of the Federal Inland Service (FIRS) and Chairman of the Joint Tax Board (JTB), Mr. Muhammad M. Nami, on the national Data for Tax Initiative.
The Data for Tax (D4T) initiative envisages an ecosystem where financial and non-financial data on all individuals and economic transactions will be collated into a central National Tax Data Bank with the National Identification Number (NIN) as the primary unifying code. Members pledged their support for the project which is aimed at expanding the country’s tax net to at least 90% of all eligible taxable persons and committed to collaborating with the JTB to increase the country’s aggregate tax revenue by up to 200% as envisaged.
2. The National Convenor of the UN Food Systems and Permanent Secretary of Budget and National Planning, Mrs. Olusola Idowu, delivered a presentation on the National Pathway to Food Systems Transformation.
The role of Governors in the plan is to prioritize the establishment of farm settlement estates for groups of smallholder producers, including women and youths, to increase the supply of farm inputs, the use of machinery, access to extension services, and market access.
The Forum affirmed its commitment to the ideals of the programme which many states are already pursuing and committed to working with the Federal Government to expand the development of these settlements across the country.
3. Mr Alex Okoh, Director General of the Bureau of Public Enterprises (BPE), briefed the State governors on the proposed sale of five (5) power plants under the Niger Delta Power Holding Company (NDPHC). The presentation was part of the consultative process with State governments who are shareholders of the plants.
4. The Forum also received a presentation on the status of the country’s digital identification programme from Engr. Aliyu A. Aziz, Director General/Chief Executive Officer of the National Identity Management Commission (NIMC).
To strengthen the national enrolment exercise which has so far seen the issuance of over 74 million national identification numbers (NIN) to Nigerians across the country, Governors pledged to support the programme through a string of measures, including support for sensitization activities, integration of NIN in state services and collaboration with telecoms providers to improve network infrastructure for sustained identity registration and authentication. Governors re-echoed the need to complete the harmonization and integration of databases, to reduce the carriage of multiple identifications (IDs) by citizens noting that being able to uniquely identify persons is extremely important for social security and cross-state border management. NIMC is to liaise with State Governments through its various State Coordinators in addition to working with the NGF Secretariat.
5. A programme update on NG-CARES was delivered by the NGF Secretariat’s Programme Manager, Mrs. Firo Elhassan Kaka, on the Nigeria COVID-19 Action Recovery and Economic Stimulus (NG-CARES) programme. All 36 States of the federation have already received letters of eligibility for the programme, and all results achieved by the States with effect from June 2020 are eligible for verification as prior results. These will be assessed for re- imbursement at the next verification exercise.
6. The NGF Secretariat’s Health Adviser, Dr. Ahmad Abdulwahab also delivered an update on the country’s health security interventions, particularly on the COVID-19 Preparedness and Response Project (COPREP) and the Basic Healthcare Provision Fund (BHPF). Members also discussed the status of the COVID-19 pandemic, the Lassa fever outbreak, the need to improve the quality of Polio campaigns, as well as the setup of State Emergency Medical Services and Ambulance Services (SEMSA) with accredited health facilities and requisite personnel.
7. From the 23rd – 25th February 2022, State governors will be joined by a delegation from Gavi, The Vaccine Alliance, with the aim of deepening the government’s engagement on routine immunization, health system strengthening and COVID19 vaccination in the country.
8. Finally, the Forum congratulated the outgoing Governor of Anambra State Mr. Willie Obiano who joined the NGF meeting for the last time before he hands over to his successor Professor Charles Chukwuma Soludo on 17th March 2022. Governor Obiano was applauded by his colleagues for his impressive performance in Anambra State and his contributions to the growth of the Nigeria Governorsa’ Forum, and particularly for significantly enhancing governance outcomes for the people of Anambra State and for overseeing a smooth transition to the incoming governor.
FILE: President of the Nigeria Labour Congress, Ayuba Wabba, spoke to reporters in Abuja on December 17, 2021.
The Nigeria Labour Congress (NLC) is rejecting plans by the Federal Government to increase taxes on non-alcoholic and carbonated drinks.
NLC’s position is contained in a statement signed by its President, Mr Ayuba Wabba, which was circulated to journalists in Abuja.
The government had announced the increased taxes as a way of discouraging over-consumption of sugar, checking obesity, and also generating more money to fund the 2022 budget.
But the union believes implementing increased taxes on non-alcoholic and carbonated drinks, which is one of the provisions in the 2021 Finance Act, will impose more hardship on the citizens.
The NLC, therefore, asked the National Assembly to urgently amend the sections of the Finance Act which re-introduced excise duties on non-alcoholic and carbonated drinks.
Read the full statement below:
On the 31st of December 2021, President Muhammadu Buhari signed into law the Finance Act. Some of the provisions of the Finance Act includes the imposition of excise duties on locally produced non-alcoholic, carbonated, and sugary drinks.
The reason offered by government for this decision was to discourage the consumption of sugar by Nigerians as it has led to upsurge in obesity and diabetes. In a letter dated 27th November 2021, the Nigeria Labour Congress wrote to the President and Commander-in-Chief of the Armed Forces of Nigeria, President Muhammadu Buhari, GCFR and the leadership of the two chambers of the National Assembly pleading that government should suspend the implementation of the excise duties on non-alcoholic, carbonated and sugary drinks.
The Congress provided a number of very cogent reasons why government should not go ahead with the decision to impose fresh taxes on soft drinks. One of the reasons we advanced was that the re-introduction of excise duties on non-alcoholic, carbonated and sugary drinks will impose immense hardship on ordinary Nigerians who easily keep hunger at bay with a bottle of soft drink and maybe a loaf of bread.
Our concern is the mass hunger that would result from the slightest increase in the retail price of soft drinks owing to imposition of excise duties as it would be priced beyond the reach of many Nigerians. Congress was also alerted by the complaint of manufacturers of soft drinks in Nigeria that the re-introduction of excise duties would lead to very sharp decline in sales, forced reduction in production capacity, and a certain roll back in investments with the certainty of job losses and possibly shut down of manufacturing plants.
Nigerians would recall that this was also the complaint of tyre manufacturing companies such as Dunlop and Michelin which was overlooked by government until the two companies relocated to neighbouring Ghana. A similar situation is playing out with the soft drinks manufacturing sub-sector. Government should pay attention.
With 38% of the entire manufacturing output in Nigeria and 22.5% share representation of the entire manufacturing sector in Nigeria, the food and beverage industry is the largest industrial sub sector in our country. The food and beverage sub-sector has generated to the coffers of government N202 billion as VAT in the past five years, N7.3 billion as Corporate Social Responsibility and has created 1.5 million decent jobs both directly and indirectly.
There is thus no gainsaying the fact that the industry is a golden goose that must be kept alive. The health reason proffered by government as reason for the reintroduction of the excise duties seems altruistic. Yet, we are amiss why the government did not place the excise duties on sugar itself as a commodity rather than on carbonated drinks.
The truth of the matter is that an additional increase in the retail price of carbonated drinks would put more Nigerians at risk of serious health challenges as many people would resort to consuming sub-standard and unhygienic drinks as substitutes for carbonated drinks.
The appeal to rescind the re-introduction of excise duties on non-alcoholic drinks becomes even more compelling when the projected immediate revenue expected from the policy is weighed against the potential long-term loss to both manufacturers and government. The beverage sub-sector will lose 40% of its current sales revenue.
This translates to a loss of N1.9 trillion. While the government will only make total projected receipts of N81 billion from the proposed reintroduction of the excise duties. Government also stands to will lose N197 billion in VAT, Company Income Tax and Tertiary Education Tax as a consequence of expected downturn in overall industry performance should the excise duties be effected as being planned.
In light of the foregoing, we ask the National Assembly to quickly amend the sections of the Finance Act that re-introduced excise duties on non-alcoholic and carbonated drinks. We also ask government to extend COVID-19 palliatives and support incentives to the Food and Beverages industry to cushion the shock and haemorrhage that the industry is trying to recover from.
Finally, we demand that Government should engage Employers in the subsector and Organized Labour in sincere discussions on other options that can deliver a mutually satisfying win-win solution to this issue. We hope that the current situation will not be allowed to degenerate into a breakdown in industrial relations in the sector and generally in the country.
FILE: Secretary-General of the Organization for Economic Cooperation and Development (OECD) Mathias Cormann (R) and US Secretary of State Anthony Blinken hold a closing press conference at the 60th OECD Ministerial Council Meeting on October 6, 2021, in Paris. Ian LANGSDON / POOL / AFP
A global push to enact a minimum international tax on big corporations moved closer to reality on Friday as one of the last holdouts, Hungary, agreed to join a reform that now counts 136 countries.
The OECD-brokered deal, which sets a global tax of 15 percent, is aimed at stopping international corporations from slashing tax bills by registering in nations with low rates.
“Today’s agreement will make our international tax arrangements fairer and work better,” said OECD Secretary-General Mathias Cormann. “This is a major victory for effective and balanced multilateralism.”
Hungary’s announcement came a day after another key opponent, Ireland — whose low tax rate has attracted the likes of Apple and Google — relented and agreed to join the global effort.
With Hungary, 136 countries representing 90 percent of global gross domestic product have now signed up, the Paris-based Organisation for Economic Co-operation and Development said. Estonia also joined the reform on Thursday.
The OECD said Kenya, Nigeria, Sri Lanka and Pakistan are the last holdouts among 140 countries that have negotiated the tax. Pakistan had been on a previous list of signatories.
The organisation said countries are aiming to sign a multilateral convention in 2022, with an eye on implementing the reform in 2023.
‘Historic moment’
The years-long talks received a boost earlier this year when the administration of US President Joe Biden backed a global minimum tax rate of at least 15 percent.
The coronavirus pandemic added urgency to the reforms as countries need new sources of revenue to pay for huge stimulus programmes that were deployed during last year’s global recession.
“Today’s agreement represents a once-in-a-generation accomplishment for economic diplomacy,” US Treasury Secretary Janet Yellen said in a statement.
“As of this morning, virtually the entire global economy has decided to end the race to the bottom on corporate taxation,” Yellen said.
European Commission President Ursula von der Leyen called it a “historic moment”, saying “all companies have to pay their fair share”.
The Brussels-based Computer and Communications Industry Association welcomed the deal.
It was a step “to ensure that the international tax rules reflect today’s global economy,” the CCIA’s vice president Christian Borggreen said in a statement.
“This is an important step towards more fairness and certainty in the global tax system.”
Facebook said it was “pleased to see an emerging international consensus.”
‘Shameful’
The social media platform “has long called for reform of the global tax rules, and we recognise this could mean paying more tax, and in different places,” said Facebook vice president for global affairs, Nick Clegg.
But the charity Oxfam was scathing.
“Today’s tax deal was meant to end tax havens for good. Instead it was written by them,” said Oxfam’s tax policy expert, Susana Ruiz.
“This deal is a shameful and dangerous capitulation to the low-tax model of nations like Ireland.”
The Hungarian government said in a statement that it agreed to join the global tax after securing concessions including a transitional period of 10 years for a special rate to remain in place.
Hungary has a nine percent tax rate, even lower than Ireland’s 12.5 percent.
“A compromise has come about that we are able to join wholeheartedly,” Hungarian Finance Minister Mihaly Varga said. “Hungary will be able to collect the global tax using a targeted solution.”
$150 billion for governments
The OECD said in July that 130 countries had agreed to a tax of “at least” 15 percent.
Ireland finally backed down after the phrase “at least” was removed from the reform as it feared that it could have led to future increases of the rate.
Ireland’s low levy has attracted an outsized number of pharma and tech firms but also drawn accusations that the nation acts as a tax haven.
The OECD says a global minimum corporate tax rate of 15 percent could add $150 billion to government coffers annually.
The rate will apply to companies with revenue exceeding 750 million euros ($867 million).
In addition to the minimum rate, the 136 countries also agreed to reallocate more than $125 billion of profits from around 100 of the world’s most profitable multinationals to countries worldwide.
This means companies will have to pay taxes in countries where they have business activities and earn profits, regardless of whether they have a physical presence here — a change that would affect big US tech firms such as Facebook.
G20 leaders are expected to sign off on the deal at a summit in Rome in late October.
“It is a far-reaching agreement which ensures our international tax system is fit for purpose in a digitalised and globalised world economy,” Cormann said.
“We must now work swiftly and diligently to ensure the effective implementation of this major reform.”
Justice Stephen Dalyop Pam of the Federal High Court in Port Harcourt, Rivers State on Monday refused an application by the Federal Inland Revenue Service (FIRS), seeking to stop the Rivers State Government from collecting Value Added Tax (VAT).
The Federal Inland Revenue Service filed the application in mid-August against the judgment of the same court which had on August 9 ruled that the Rivers State Government, and not the Federal Inland Revenue Service, is entitled to collect Value Added Tax and Personal Income Tax in Rivers State’s territory.
The judgment was delivered in a suit filed by the Attorney General of Rivers State against the Federal Inland Revenue Service and the Attorney General of the Federation.
Not satisfied with the judgment, the FIRS approached an Appeal Court to challenge the ruling.
While the appeal was yet to begin, the revenue collection agency returned to the same Federal High Court in Port Harcourt to seek a stay of execution on the court’s decision, pending the determination of their appeal.
In delivering his ruling on the application by the FIRS, Justice Stephen Dalyop Pam says FIRS failed to file an application to set aside the Rivers State Tax Law of 2021 which was recently enacted by the Rivers State House of Assembly and assented to by Governor Nyesom Wike on August 19, therefore the state law on Value Added Tax is valid and subsisting.
The judge also ruled that the Federal Government already has a huge liability arising from the many years it has collected the tax on behalf of Rivers State, therefore it may be a difficult task for the Federal Government to refund the state if his judgment authorizing the state to collect the tax is upheld at the appellate courts.
The judge believes that Rivers State can easily remit whatever amount it may have received within the litigation period to the Federal Government if it loses at the Appeal Court.
While the Counsel to the Rivers State Government hailed the ruling, the lawyer to the Federal Inland Revenue Service is hoping to get favourable judgment at the Appeal Court.
A file photo of Rivers State Governor, Nyesom Wike.
Meanwhile, Governor Nyesom Wike has ordered the Rivers State Revenue Service (RSRS) to fully implement the State Value-Added Tax Law 2021 which he assented to recently.
The governor gave the order in a broadcast, hours after the judgement.
“With today’s (Monday’s) judgement, the way is now clear for the administration and enforcement of the Rivers State Value-Added Tax Law 2021 across the entire state until otherwise decided and set aside by the superior courts,” he said, maintaining that the state did no wrong in exercising its legal right under a constitutional democracy to stop the continuing breach, denial, and curtailment of the constitutional right of states to lawfully impose and collect value-added and other related taxes within their jurisdiction.
“Consequently, I hereby direct the Rivers State Revenue Service (RSRS) to ensure the full and total implementation and enforcement of this law against all corporate bodies, business entities, and individuals with immediate effect.
“Let me warn that the Rivers State government is fully in charge of the state and will not tolerate any further attempt by the FIRS to sabotage or undermine our authority to freely administer our tax and other related laws in our own state. Those who play with fire risk having their fingers burnt; enough of the shenanigans.”
The Tax Appeal Tribunal sitting in Lagos has ordered Multichoice Nigeria Limited to pay the sum of N900 billion as deposit, Federal Inland Revenue Service (FIRS) said on Wednesday.
FIRS spokesman, Dr Abdullahi Ahmad, explained that the money was 50 per cent of the N1.8 trillion which the revenue had determined through a forensic audit to be the amount in taxes that Multichoice – owners of DSTV – failed to pay to the Nigerian Government in past assessment years.
According to him, a five-member Tax Appeal Tribunal (TAT) led by its Chairman, Professor A.B. Ahmed, issued the order following an application to it by the counsel to FIRS.
“The FIRS counsel made the application under Order XI of the TAT Procedure Rules 2010 which enables a party to make an application at any stage of the proceedings,” Ahmad said.
“Counsel to FIRS drew the attention of the Tribunal to Paragraph 15(7) of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act 2007 and urge the Tribunal to direct Multichoice Nigeria Limited to deposit with the FIRS 50 per cent of the amount of the Assessment under Appeal as security and a condition that must be fulfilled before the prosecution of the Appeal brought before TAT.
“In certain defined circumstances to which the Multichoice appeal fits, Paragraph 15(7) of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act 2007 (FIRS Act) requires persons or companies seeking to contest a tax assessment to pay all or a stipulated percentage of the tax assessed before they can be allowed to argue their appeal contesting the assessment at TAT.”
Multichoice, according to the FIRS spokesman, filed the case at the Lagos TAT following its dispute over the agency’s issuance of Notices of Assessment and Demand Note in the sum of N1,822,923,909,313.94 on April 7.
He said the amount was what the FIRS calculated as due in taxation to the government of Multichoice after an investigation over several months to determine the extent to which the company has been evading taxes in Nigeria.
“At the Tuesday’s hearing of the matter in Appeal No: TAT/LZ/CIT/062/2021 19/08/2021 (Multichoice Nigeria Limited v. Federal Inland Revenue Service), Multichoice Nigeria Limited amended its Notice of Appeal and thereafter sought through its counsel, Bidemi Olumide of AO2 Law Firm for an adjournment of the proceedings to enable it to respond to the FIRS’ formal application for accelerated hearing of the appeal and prayer before the TAT, directing Multichoice to produce before the Tribunal the integrated Annual report and Management Account Statements of Multichoice Group Ltd for Tax Years 2012 to 2020., among other prayers,” Ahmad said.
He added that in response, the FIRS counsel asked TAT to issue an order directing Multichoice to make the statutory deposit of 50% of the disputed sum.
After hearing arguments from both sides, TAT upheld the FIRS submission and directed Multichoice to deposit with the FIRS 50 per cent of the assessment under the appeal.
The company was also asked to pay 10 per cent % of the deposit as a condition precedent for further hearing of the appeal.
Thereafter, TAT adjourned the appeal to September 23 for report of compliance with its order and continuation of the hearing, subject to compliance with the Tribunal’s order.
The Kaduna State Internal Revenue Service has sealed four branches of Fidelity Bank in the state for tax Liabilities amounting to N43.3 million.
The branches are located at Ali Akilu Road, Ahmadu Bello Way, Polytechnic Road by Maimuna Gwarzo Junction, and Kachia Road, all in Kaduna metropolis.
The Executive Chairman of the Revenue service, Zaid Abubakar, said the bank’s branches were closed based on a court order after the bank refused to settle outstanding tax returns of N43.3 million owed the state government from 2011 to 2020.
According to her, the action taken against the bank is in line with Section (3) and (4) of the personal income tax Amendment Act 2011 and Section 37 (3l and (4) of Kaduna state Tax Codification And Consolidation Law, 2020 as amended.
She said the management of the bank was served with notices of the tax assessment five times, but the notices were ignored.
The move is part of efforts by the state government to encourage voluntary settlement of all tax liabilities by taxpayers.
Fidelity Bank and the bank’s regulatory body, the Central Bank of Nigeria (CBN) have not reacted to the incident as of the time of this report.
(File) President Muhammadu Buhari speaks at a function in Abuja on July 11, 2019.
President Muhammadu Buhari has said that the 2020 Finance Bill exempts earners of minimum wage from paying taxes.
Buhari disclosed this on Monday in a speech delivered virtually by Vice President Yemi Osinbajo at the opening session of the 26th Nigerian Economic Summit Group Conference themed: “Building Partnerships for Resilience.”
“We are proposing in the new Finance Act that those who earn minimum wage should be exempted from paying income tax,” he was quoted as saying in a statement issued by the Senior Special Assistant to the Vice President on Media and Publicity, Laolu Akande.
“These provisions which complement the tax breaks given to small businesses last year will not only further stimulate the economy but are also a fulfilment of promises made to take steps to help reduce the cost of transportation and the impact of inflation on ordinary Nigerians.”
The President also commended the private sector for building a resilient economy in the country.
To Buhari, “This government has always emphasized that the private sector has a key role to play in our efforts to build a more resilient and competitive economy as expressed in the Economic Recovery and Growth Plan.
“Private companies in design, construction, logistics and finance are very much engaged in our infrastructural projects in power and rail as well as road and bridges and the installation of broadband infrastructure which is an essential requirement if Nigeria is to participate actively and benefit from the 4th Industrial Revolution.”
SEE FULL STATEMENT HERE:
OUR 2020 FINANCE BILL EXEMPTS MINIMUM WAGE EARNERS FROM TAX – BUHARI
*Adds: This will reduce the impact of inflation on ordinary Nigerians
*N15Trn Infrastructure company in the offing
*VP explains the reduction of import duties on cars, says govt will buy locally assembled vehicles
In order to reduce the impact of inflation on Nigerians, the Buhari administration through the 2020 Finance Bill is proposing the exemption of minimum wage earners from the Personal Income Tax.
And when coupled with other items in the proposed Bill, and various economic policies of the Federal Government, these incentives would ensure the resilience of the Nigerian economy to exogenous shocks, according to President Muhammadu Buhari.
The President made these disclosures in his speech delivered virtually by Vice President Yemi Osinbajo, SAN, on Monday at the opening session of the 26th Nigerian Economic Summit Group Conference themed: “Building Partnerships for Resilience”.
According to the President, “we are proposing in the new Finance Act that those who earn minimum wage should be exempted from paying income tax.
“These provisions which complement the tax breaks given to small businesses last year will not only further stimulate the economy but are also a fulfilment of promises made to take steps to help reduce the cost of transportation and the impact of inflation on ordinary Nigerians.”
Explaining the role of the private sector in building a resilient economy, President Buhari said “this government has always emphasized that the private sector has a key role to play in our efforts to build a more resilient and competitive economy as expressed in the Economic Recovery and Growth Plan.
“Private companies in design, construction, logistics and finance are very much engaged in our infrastructural projects in power and rail as well as road and bridges and the installation of broadband infrastructure which is an essential requirement if Nigeria is to participate actively and benefit from the 4th Industrial Revolution.”
Continuing, the President added, “…it is clear that we must diversify the economy away from dependence on crude oil exports, speed up human capital development and improve on infrastructure. Above all, our economy must be made more resilient to exogenous shocks. It is important for the private sector to play a key role as we work together to identify national priorities and try to influence our future national trajectory.”
The President also gave insights to the collaboration between the CBN, the Nigerian Sovereign Wealth Investment Authority (NSIA) and other stakeholders in the creation of an Infrastructure Company (Infraco) Fund to address some of the nation’s critical infrastructure needs.
“It goes without saying that partnerships remain essential to attract the resources for building a solid national infrastructural base. I am pleased to inform you in this regard that we are working actively with the Central Bank, Nigerian Sovereign Investment Authority and State Governments under the auspices of the National Economic Council to design and put in place a N15 trillion Infraco Fund which will be independently managed.
“The Infraco Fund will help to close the national infrastructural gap and provide a firm basis for increasing national economic productivity and growth,” the President explained.
Restating the commitment of his administration to sustaining collaborations with the private sector in addressing challenges, President Buhari said “if there is one single lesson to be learnt from the COVID-19 pandemic, it is that partnerships are essential for credible responses with lasting effects.”
His words: “Our national journey to economic prosperity is a long one, so we must all certainly work together. As we saw, partnerships were essential when we were faced with the serious challenge of combatting COVID-19.
“We saw the key role that partnerships played in our national effort to combat the COVID-19 crisis. While Federal and State Governments worked together to manage the health response and ensure the establishment of isolation centres and availability of test kits, personal protective equipment, and medicines, the private sector also played an active role as individual entities, and also worked together in groups like the Coalition Against COVID-19.”
During the speech presentation, the Vice President responded to the issue of import duties raised by some speakers at the summit. The Vice President noted that “the point of the reduction in levies on motor vehicles, commercial vehicles for transportation is to reduce the cost of transportation by reducing the cost of vehicles.”
He explained that “with subsidy removal and the increase in fuel price and the pass-through to food prices, transportation costs had to be reduced. Now the automotive policy is directed at localizing the production of vehicles. So the logic was increase the duty and levies so that local production becomes more competitive. But the annual demand for vehicles is about 720, 000 vehicles per year. Actual local production is 14,000 vehicles a year.
“So, the problem is that at current rate of production, we will not meet the serious national needs and this will just mean higher prices of vehicles and greater strain on other sectors of the economy that depend on transportation. But we are not giving up on the local auto industry.
“Two important things to note; the first is that we still have relatively high duty at 35%, so there is still a disincentive for importation. Second is that we are promoting policy that the government must buy only locally manufactured cars.”
The opening session of the summit featured presentations by speakers including Chairman of the Nigerian Governors Forum and Governor of Ekiti State, Mr Kayode Fayemi; Governor Aminu Bello Tambuwal of Sokoto State; Chief Executive Officer of MainOne, Ms Funke Opeke; and the Chief Executive Officer of GIG Group, Mr Chidi Ajaere; among others.
Laolu Akande
Senior Special Assistant to the President on Media & Publicity
A file photo of Kaduna State Governor, Nasir El-Rufai.
Governor Nasir El-Rufai of Kaduna state has lamented that Nigeria is not collecting as much public revenue as it can. He says that there is still much potential for growing Value Added Tax (VAT) and independent revenues of the Federal Government than what is being collected presently.
El-Rufai made this assertion in a keynote address he delivered at the 22nd Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN), held in Lagos on Thursday, with the theme: ” Taxation and Economic Competitiveness: Imperatives for National Development – a Nigerian Subnational Perspective”.
The governor who noted that there is considerable resistance to the hike in VAT from 5 percent to 7.5 percent, says Nigeria’s rates are still much lower than other neighboring countries.
This low rate of internal revenue collection according to him, depresses public finances, hampers the ability to deliver social goods, services and physical infrastructure. In addition, he opines that the low IGR in turn limits competitiveness, shrinking the ability to promote the sort of enabling environment and economic dynamism that can create jobs, expand public revenues and improve public welfare.
He also said that leakages in the tax system constitute a significant drain on government collection and utilization of revenue, adding that leakages may occur at the stage of revenue generation at the stage of assessment, where taxpayers are either not assessed at all or where the assessment is incorrectly done; at the stage of collection, where government revenue is not fully collected or where collection is not fully accounted for. or at the stage of utilization, where revenue collected is not accounted for adequately, or where allocated and disbursed, it is not prudently spent.
“With national tax revenues (oil and non-oil) still less than 7 percent of GDP, Nigeria is way behind the average of comparator nations of about 20% of GDP. As the world goes green, and crude oil loses its primacy as a leading source of energy, Nigeria must look inwards and compel every adult to pay tax as part of our citizenship obligation.
“In light of the situation that we are, we have very few options other than develop our capacity to collect to broaden the tax net, assess and collect taxes from individuals and companies to levels of our comparator nations – at least 20% of GDP within the shortest possible timeframe. As political leaders and tax professionals, we must put our collective heads together to ensure this national objective is achieved as soon as possible”.
The Kaduna state Governor also said that only a minority of Nigerians pay income tax, especially those whose taxes are deducted at source – including the formal sector employees, public servants and the like, lamenting that Voluntary compliance with the obligation to pay income tax remains a major challenge in the country.
He listed Lagos and Edo as having done relatively well in terms of tax revenue mobilization at the subnational level, stating that the overall picture is even less encouraging than at the national level.
“The total internally generated revenues by states are currently less than one percent of GDP, despite the fact that Nigeria’s current fiscal federalism framework allows states (and local governments) to collect many taxes, levies and fees as in the Taxes and Levies (Approved List for Collection) Act, LFN CAP T02.
“We were determined from 2015 to assess and collect enough tax revenues to cover at least our personnel costs, and in the medium term, our entire recurrent budget such that we don’t need to wait for the monthly FAAC ‘handouts’ to keep our governmental operations running.
“To underscore our commitment to this, the then Deputy Governor and I resolved to donate 50 percent of our salaries and allowances to the state treasury until we are able to achieve the first benchmark.We did so in 2019!”
El-Rufai, however, stressed the need for tax design in a developing country such as Nigeria to consider supportive strong institutions, particularly by government building fiscal capacity across its economic and political institutions. .
“The positive effects of tax revenue depend on prudence. For instance, efficient infrastructure enable firms to be competitive, and inefficient infrastructure harms competitiveness. Excessive taxation can be an added business burden that also adversely affects competitiveness. For example, multiple and high levels of taxation affect supply and output prices, firm revenues, and profits.
“The pace of national development, especially in developing and emerging economies such as Africa critically depends on the role government plays in providing both the traditional services that are her exclusive reserve such as law and order, defense, etc. and non-traditional services such as justifiable economic and social interventions in infrastructure, education and basic healthcare. Recent literature and country experiences suggest that ‘developmental states’ – that often intervene significantly in social and economic sectors – are better able to achieve faster economic growth and diversification than the regulatory states promoted by the now-discredited Washington Consensus which pushed for lesser government involvement in the economic arena.
“From the foregoing, it is clear that four key points have emerged as the guiding principles for achieving development with taxation:
“Forming and running efficient and effective governments with strong policies, institutions and executive capacity;
“Performance-based budgeting to enhance efficiency and effectiveness in the utilization of government revenues;
“Prioritizing expenditure to intervene in sectors that accelerate national economic growth and performance;
“Building autonomous institutions that reduce uncertainties and transaction costs, influence socially responsible choices, and compel rational actions.
“Taxation, Development and Competitiveness:
“Competitiveness is determined by an environment that promotes investment and innovation by businesses, which enables them to compete globally and in return attract investment from international companies.
“It is therefore obvious that many factors besides tax policy determine where a company locates its investment.
“These factors include availability of strong institutions, product/service markets, good infrastructure, educated and skilled labor and a robust financial system, amongst many others.
“Organizations appear to be more competitive when the tax burden on them is reduced. The reduction of the corporate tax rate from 30% to 20% and 0% for companies with turnover of N100M and N25m, respectively, was expected to boost the competitiveness of Nigeria’s economy.
This incentive is expected to encourage businesses to innovate, expand their productive base, increase employment of skilled and unskilled labour, improve supply chain efficiencies, and attract foreign direct investment.
“Tax policy is one of the veritable tools available to countries to improve and promote national competitiveness. No wonder in recent times, many countries have focused on reducing their corporate income taxes in order to attract investment and businesses, and create jobs and wider tax net.
“In Europe, for instance, Belgium considered reducing its corporate tax rate from 33.99% to 25%, Luxembourg cut its corporate income tax rate from 26% to 20%, while the overall EU tax rate fell from 45% to 24%. The US also considered reducing corporate taxes from 35% to 21% to enhance its competitiveness globally.
“What We are Doing about Tax in Kaduna State:
“There has been steady rise in revenue collection in Kaduna State within the last four years. We have increased our revenues from N23bn in 2016 to N44.9b in 2019, an increase of N21.9bn.
“To appreciate this journey, it is important to recall that revenue collection in 2015 was N13.55bn. Our government had nearly doubled this by 2017, prior to the great leap forward in 2019, all this without hiking tax rates.
“This achievement was made possible through the deliberate implementation of a carefully designed plan. The main focus has been on critical reforms, broadening the tax net and automation of processes to support our ease of doing business charter.
“One of such reforms was the enactment of the Kaduna State Tax (Codification and Consolidation) Law in 2016.
“The law established the Kaduna State Internal Revenue Service (KADIRS), in place of the defunct Kaduna State Board of Internal Revenue (KDBIR), in order to holistically turn around the institution into a more efficient, service delivery agency, with a private sector, business-like orientation.
“The main thrust of the law is to eliminate multiple taxation, provide a clearer understanding of taxes and reduce the cost of compliance.
“Other important features of the Tax Code include the following:
“Empowering KADIRS as the sole revenue collection agency in the State Prohibiting cash collection which helped to block revenue leakages.
“Providing multiple payment channels to ease compliance encumbrances. Reducing the number of levies, fees and other charges, especially at the local government level.
“Established a tax information and complaint office in all MDAs Simplifying tax assessment for the informal sector
“To implement the provisions of the law effectively, the organisation had to be restructured. KADIRS has a flat structure, with functions-based departments, for easier co-ordination and synergy. We have prioritised the expansion of the tax net to increase the number of taxpayers and potential taxpayers, and we are scaling up advocacy and public private dialogue”.
“From 2015, we reformed or created new institutions to anchor the execution of our governance agenda. Amongst other measures, we enacted legislation to establish a new revenue agency, and a new body to digitize the land registry and to manage land administration in the state.
“We created a one-stop shop for investors and passed laws to reform the management of public finances, including a Fiscal Responsibility Commission. We enacted a Contributory Pension Law and made the scheme effective from 1st January 2017. This mix of legislation and new agencies provide the platform for a coherent approach to supporting private investment and business growth.
“Within the limited scope of the taxing powers available to a sub-national government, the Kaduna State Government supports new business start-ups and investors with tax holidays to help them set up and stabilize. We waive some of the taxes, levies and fees payable to the state government to make our state more attractive to investors”.
Protesters take part in a demonstration called by the workers unions against the imposition of bonuses for civil servants, in Ouagadougou, on March 7, 2020. OLYMPIA DE MAISMONT / AFP
Thousands of Burkina Faso civil servants took to the streets of Ouagadougou on Saturday to protest against a new tax on bonus payments.
Between 10,000-20,000 took part in the demonstrations, some singing the national anthem and chanting “bread and freedom for the people”, an AFP reporter saw.
The government in February extended an exceptional tax on civil servants bonuses.
According to authorities it was needed to bring civil servants into line with private sector workers.
Of the country’s 200,000 civil servants, 190,000 saw their salary in February decrease by 1,000-5,0000 West African CFA francs (1.5-7.5 euros, $1.7-8.5).
“Workers are being crushed by so many taxes. This new tax will not change anything in the country as long as the leaders do not make the competent management of the public good a priority,” health worker Sayouba Compaore, 43, told AFP.
Unions are planning a general strike from March 16-20 with a march to be held on March 17.
President Roch Marc Christian Kabore, elected in 2015, had pledged to reduce poverty through an ambitious national economic and social development plan.
But his government failed to secure the 28 billion euros ($32 billion) needed to fund it.
Along with neighbours Mali and Niger, Burkina Faso, one of the poorest countries in the world, is facing a growing jihadist insurgency that has put even greater strain on its economy.
Jihadist attacks in Burkina Faso have killed around 800 people and forced 800,000 from their homes since 2015.
US President Donald Trump attends a meeting with Indian Prime Minister Narendra Modi (not shown) at UN Headquarters in New York, September 24, 2019, on the sidelines of the United Nations General Assembly. SAUL LOEB / AFP
A US federal judge in New York on Monday dismissed President Donald Trump’s efforts to block access to years of his personal and corporate tax returns, saying sitting presidents are not immune from criminal investigations.
In a 75-page ruling, Judge Victor Marrero rejected Trump’s argument, saying such vast immunity would “operate to frustrate the administration of justice” by putting the president’s personal and professional affairs off-limits.
“This court cannot endorse such a categorical and limitless assertion of presidential immunity from judicial process,” Marrero wrote. “The Court cannot square a vision of presidential immunity that would place the President above the law.”
Trump had filed suit against Manhattan District Attorney Cyrus Vance Jr, who had subpoenaed the accounting firm Mazars USA, seeking access to the president’s tax returns dating back to 2011.
Vance is investigating payments made by Michael Cohen, Trump’s former personal attorney, to Stormy Daniels, an adult film actress who claimed to have had an affair with Trump before he ran for president.
Trump is expected to appeal the judge’s ruling.
Trump has declined to release his tax returns and there have been various attempts to obtain them, including by the Democratic-led House of Representatives.
(FILES) A file photo taken on November 20, 2017 shows logos of US multinational technology company Google displayed on computers’ screens. LOIC VENANCE / AFP
US internet giant Google has agreed a settlement totalling 945 million euros ($1.0 billion) to settle a tax dispute in France under an agreement announced in court on Thursday.
The company will pay a 500-million-euro fine for tax evasion, as well as a further 465 million euros to settle claims with French tax authorities.
In a statement, Google confirmed the settlement and hailed the fact it had put an end to fiscal differences that it had had with France for numerous years.
French Justice Minister Nicole Belloubet and Budget Minister Gerald Darmanin welcomed the “definitive settling” of all the contentious issues, adding in a statement that the outcome was the result of two years of intense work by the French authorities.
“This outcome is good news for the public finances and fiscal fairness in France,” their statement said.
Belloubet said the settlement showed that the French authorities have the tools to ensure an equitable tax system.
“It is a historic settlement both for our public finances and because it marks the end of an era,” Darmanin said. “By normalising Google’s situation in France, (the settlement) responds to our citizens’ demands for fiscal fairness,” he said.
The settlement comes as France, as well as European allies, seek to find common ground with the United States in a long-running dispute over the taxation of digital giants.
French President Emmanuel Macron said alongside US President Donald Trump at the G7 summit in August that leaders had reached an agreement on the taxation of tech giants, though the precise details remain to be worked out.
