Ogun says its residents who work in Lagos should tell their companies to remit their taxes to Ogun, not Lagos
ARTICLE | DECEMBER 7, 2011 - 5:33AM | BY EMMANUEL CHIDIOGO

Tax experts have advised the Joint Tax Board (JTB) to immediately resolve the ongoing tax crisis between the Lagos and Ogun State governments to avoid its escalation.

Speaking in Lagos, the experts noted that the dispute could degenerate if a solution was not proffered immediately.

They advised the JTB to create inter-agency relationship among the internal revenue services of the different states.

It will be recalled that recently, the Ogun State Government directed people who reside in the state but work in Lagos, to stop paying their personal income taxes to Lagos State.

Sunday Jegede, President of the Chartered Institute of Taxation of Nigeria (CITN), said the issue was complicated because Personal Income Tax Act (PITA) 1993 provided the framework for the assessment of income tax on residence, depending on the income and employment.

He also pointed out that Lagos and Ogun were not the only states involved in the tax jurisdiction conflict.

“There are also disputes between Niger, Nasarawa and other states sharing boundaries with the Federal Capital Territory (FTC), Abuja,” he said.

According to him, the determination of fiscal residence is complex and confusing, and has created more conflicts among tax authorities and individuals than any other provision of PITA.

Jegede, who is also president of President of Association of African Tax Institutes (AATI), said that fiscal residence was determined by the principal place of residence of the tax payer on January 1 of the year of assessment or the day the employment starts.

Prince Kunle Quadri, immediate past President Chartered Institute of Taxation of Nigeria (CITN), said that all tax disputes should be referred to the JTB.

He noted that the Ogun State Government has a legal right to demand taxes from its residents working in Lagos state.

Quadri, also the president of West African Union of Tax Institute (WAUTI), said that the affected persons might be subjected to double taxation because of the clumsiness of tax system in Nigeria.

Chukwuemeka Eze, a lawyer and Chairman of Ikeja District Society of CITN, said it was unlawful for residents of Agbara, Akute, Agbado, Sango, Ojodu, Isheri and Ibafo towns in Ogun, who work in Lagos State, to regard themselves as Lagos residents.

He said that the Ogun Government had not known peace since it decided to apply the PITA strictly, adding that workers had embarked on a warning strike because of the mode of calculation of the taxable income under Governor Ibikunle Amosun.

Eze said that the solution depended on the recommendation of the National Tax Policy that tax payers be registered and issued with a Unique Tax Identification Number (U-TIN) throughout the country.

“It is envisaged that a technologically-driven database will be created to make it easy for each board of internal revenue to access taxpayers whether in Ogun, Lagos or any other state of the federation,” he said.

In his opinion, it was not practical for any internal revenue service to apply provisions that dealt with set-offs, payment and re-payment of income tax already collected.

Eze also said that PITA had been criticised by many academic scholars due to its obnoxious provisions, lack of simplicity, clarity and flexibility.

Abayomi Ogunjimi, a former chairman of Amuwo district of ICAN corroborated the stance of other professionals.

He urged employers to design forms to be filled by employees, indicating their place of residence, so that taxes deducted could be remitted to the appropriate authority.

“It is assumed that the state will use the tax to provide social amenities which you will enjoy in your residence,” he said.

http://dailytimes.com.ng/article/resolve-tax-crisis-between-ogun-and-lagos-experts

Initially I thought that the right thing to do is for residents of Ogun who work in Lagos to pay tax to Ogun. But now that I think about it more, this really doesn't make much sense.

Ogun should be able to tax the income of workers who earn their daily bread in Ogun, but not those who do so in Lagos. If I live in Ogun and earn $1 billion/year in Lagos, Ogun had absolutely nothing to do with me earning that money, so has no real right to ask for a share.

Anyway I'm sure they'll resolve it amicably.