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Tax: FIRS To Audit All Companies by kinggenesis(m): 4:54pm On Sep 06, 2015
The Federal Inland Revenue Service on Sunday disclosed plans to carry out a special audit of all companies operating in the country.

The audit, which will be carried out by the service in
collaboration with Audit Firms and Tax Consultants, is aimed at increasing the level of compliance with the relevant tax laws, thus improving tax revenue for the country.

A statement from the FIRS signed by the Director,
Communications and Servicom Department, Mr. Emmanuel
Obeta, explained that the decision to carry out the exercise was reached after a meeting between the Acting Executive Chairman, FIRS, Mr. Babatunde Fowler; and audit firms, chartered accountants, tax consultants and other professional Service providers.

The statement stated that the audit would be carried out within 30 days and would take into consideration the various year ends and peak points of activities of the various companies.

Fowler, according to the statement, pointed out that the
collaboration between the professional service providers, states board of internal revenue and FIRS, would mark a turning point for taxation as well as reduce the country’s reliance on oil.

The statement reads in part, “The meeting focused on the need to harmonise exchange of information across all the revenue authorities as well as ensuring a synchronised auditing of all the various companies in the country.

“At the end of their meetings agreed to share information with
members of National Assembly, particularly on tax laws in
collaboration with other professional bodies as well as relevant stakeholders.

“They also resolved that FIRS, State Revenue Boards and the
various audit firms will carry out joint audits of the various
companies to ensure accuracy of the exercise, enhance
transparency and drive compliance.

“These audits will be completed within 30 days and will take
cognisance of the various year ends and peak points of
activities of the various companies.”

Fowler, according to the statement, said the input from
stakeholders was necessary for the expansion of the nation’s tax net, information dissemination, building capacity of tax
administration as well as sharing information that would
promote voluntary compliance.

Through partnership and consultations with the relevant
stakeholders, the Acting FIRS Boss said, there would be a
significant improvement in tax revenue and tax administration.

http://www.punchng.com/news/firs-to-audit-companies/

1 Like

Re: Tax: FIRS To Audit All Companies by OZAOEKPE(m): 4:55pm On Sep 06, 2015
"PMB is a terrorist", Quote me anywhere.
Re: Tax: FIRS To Audit All Companies by mrvitalis(m): 5:18pm On Sep 06, 2015
Woo this Is what we are supposed to have years ago. .. ...
.. . I bet u internally generated revenue in this country will be more than 10tr if well tracked.... .
... Then we can stop depending on oil and let each state manage their resources

5 Likes

Re: Tax: FIRS To Audit All Companies by yanabasee(m): 5:22pm On Sep 06, 2015
kinggenesis:


The statement stated that the audit would be carried out within 30 days and would take into consideration the various year ends and peak points of activities of the various companies.


http://www.punchng.com/news/firs-to-audit-companies/


.
.
Buhari is still witch-hunting.... He should rather concentrate on the affairs of this country to deliver his set plans for Nigeria rather than takin more days and months doing nothing.... Another 30days for witch-hunting... Till this year runs out... We'll never, I mean NEVER feel Buhari's governance.
Re: Tax: FIRS To Audit All Companies by Nobody: 6:10pm On Sep 06, 2015
Sai Buhari

1 Like

Re: Tax: FIRS To Audit All Companies by laudate: 6:50pm On Sep 07, 2015
The witch hunt is targeted at all Nigerian companies. sad

In my opinion, this is a clueless exercise. The audit firms and tax consultants will just make money at the expense of the state, after harrassing, intimidating and extorting money from the companies, especially the SME ones! Stewpid FIRS people... angry

More companies will fold up, and more jobs will be lost. Daft people... shocked

mrvitalis:
Woo this Is what we are supposed to have years ago. .. ...
.. . I bet u internally generated revenue in this country will be more than 10tr if well tracked.... .
... Then we can stop depending on oil and let each state manage their resources

You have either never run a structured company before in Nigeria, or you have never been visited by FIRS or LIRS Tax officials who are determined to increase their revenue drive, by hook or by crook. undecided

The law-abiding companies are the ones who often bear the brunt at the end of the day. It does not matter how much tax you have been paying before, they will still conjure up all sorts of reasons to ask for new taxes and make you look like a defaulter! shocked angry
Re: Tax: FIRS To Audit All Companies by ArodewilliamsT: 7:08pm On Sep 07, 2015
You won't provide jobs, yet the ones that provide legitimate jobs for themselves, you want to regulate them out of existence with needless bureaucracies. The ones who are planning to provide jobs for themselves then become discouraged and remain in the labour market. Yet you chant "Sai Job creation!"

You'll preach about graduates providing jobs for themselves on TV and radios and yet still be the one trying to suffocate the businesses they are trying to nurture. Black Africans!
Very senseless set of things!
Re: Tax: FIRS To Audit All Companies by seunmsg(m): 7:24pm On Sep 07, 2015
laudate:
The witch hunt is targeted at all Nigerian companies. sad

In my opinion, this is a clueless exercise. The audit firms and tax consultants will just make money at the expense of the state, after harrassing, intimidating and extorting money from the companies, especially the SME ones! Stewpid FIRS people... angry

More companies will fold up, and more jobs will be lost. Daft people... shocked



You have either never run a structured company before in Nigeria, or you have never been visited by FIRS or LIRS Tax officials who are determined to increase their revenue drive, by hook or by crook. undecided

The law-abiding companies are the ones who often bear the brunt at the end of the day. It does not matter how much tax you have been paying before, they will still conjure up all sorts of reasons to ask for new taxes and make you look like a defaulter! shocked angry



Tax audit is a legitimate responsibility of the revenue generating body, (FIRS or SBIR). It is a statutory duty that has always been done in the past so, this is not new.

No tax auditor can increase your tax burden by hook or crook. The reality actually is that MOST companies in the country evade paying the appropriate tax due from them by hook or crook. The companies are the culprit here and not the tax authority.

3 Likes

Re: Tax: FIRS To Audit All Companies by laudate: 11:06pm On Sep 07, 2015
seunmsg:

Tax audit is a legitimate responsibility of the revenue generating body, (FIRS or SBIR). It is a statutory duty that has always been done in the past so, this is not new.

No tax auditor can increase your tax burden by hook or crook. The reality actually is that MOST companies in the country evade paying the appropriate tax due from them by hook or crook. The companies are the culprit here and not the tax authority.

Totally untrue! shocked shocked All they need to do is to inform you that you were wrongly assessed previously, and then they draw up a new set of assessment and ask you to pay.

Secondly, they can use the excuse of incomplete remittance of WHT to create issues for your company. Even when it is obvious that your clients and those you have carried out services for, have deducted the appropriate WHT from your final bill, the tax officials will still refuse to acknowledge this fact and ask for WHT certificates, when they know it takes 6 months to 2 years for WHT certificates to be issued by the same tax office! shocked shocked shocked

Another area of dispute is items, products and services that are vatable or non-vatable. Products like LPG gas for example, have the VAT deducted at source (i.e. at point of importation by the major marketers or LPG Gas Storage Depot), but let a tax official come to your office on a revenue drive. They will argue with you till kingdom come, on why you have to remit VAT on the same product whose VAT has been deducted at source! And you end up paying double VAT. shocked shocked

Don't forget about the levies, education tax etc. The local govt officials are the worst! They are thugs in disguise. If you fail to pay their multiple levies, you are in trouble and they can seal up your premises. Even the state tax officials are in league with them. sad

Multiple taxes, duplicated levies etc bearing all kinds of names are conjured up daily at local govt level and even sometimes at state level. Till today, the controversy over sales tax being a consumption tax and VAT , is yet to be fully resolved, yet Lagos State tax officials insist on collecting that 5% sales tax from different establishments especially those that sell beverages and meals. undecided

Abeg, I don tire... When more businesses start to close down as a result of the shenanigans of tax officials, maybe their eyes will become clear.
Re: Tax: FIRS To Audit All Companies by laudate: 11:18pm On Sep 07, 2015
A friend of mine who was recently laid off from work decided to venture into private business. She dusted up an old company name she had registered some years back, but never used. She went to the bank to try and open an account but they asked for a TIN (i.e. Tax Identification Number). undecided

Okay, so she went to the nearest tax office. You need to see the huge bill they gave her. About =N=25,000 naira multiplied by the number of years that had gone by, since she registered the business. The total sum ran into hundreds of thousands of naira. shocked shocked

All her arguments, that she had never used the company to carry out any business fell on deaf ears at the tax office. sad

Well, she did not have the kind of money the tax people were demanding, so she went back home. And that is how her dream of becoming an entrepreneur was dashed. Think of the number of jobs she would have been able to create if she had been able to open her bank account and set up her business. sad

Why can't TIN Numbers be issued directly at the Corporate Affairs Commission (CAC) offices, on the same day that the RC number is issued?

What would it cost to have a tax representative at the CAC Offices nationwide to help educate, inform and assist people appropriately?? shocked
Re: Tax: FIRS To Audit All Companies by Bevista: 11:26pm On Sep 07, 2015
The audit, which will be carried out by the service in collaboration with Audit Firms and Tax Consultants, is aimed at increasing the level of compliance with the relevant tax laws, thus improving tax revenue for the country.
AlphaBeta loading...

1 Like

Re: Tax: FIRS To Audit All Companies by Bevista: 11:28pm On Sep 07, 2015
mrvitalis:
Woo this Is what we are supposed to have years ago. .. ...
.. . I bet u internally generated revenue in this country will be more than 10tr if well tracked.... .
... Then we can stop depending on oil and let each state manage their resources
South Africa generates more revenue from Taxes than we generate from Oil. If South Africa with a GDP of $350b and a population of 45million can have an annual budget equivalent to N10Trillion, then why should Nigeria with a GDP of $560b and a population of over 170million have an annual budget of less than N5Trillion? Just plain embarrassing!
Re: Tax: FIRS To Audit All Companies by laudate: 11:29pm On Sep 07, 2015
Bevista:
AlphaBeta loading...

Correct! You get am! Your post make sense, die! grin
Re: Tax: FIRS To Audit All Companies by GabrielSuswam(m): 11:30pm On Sep 07, 2015
Nice job...

Most Firms evade tax in Nigeria

Diversification Loading...................................
Re: Tax: FIRS To Audit All Companies by laudate: 11:38pm On Sep 07, 2015
GabrielSuswam:
Nice job...

Most Firms evade tax in Nigeria

Diversification Loading...................................

Most firms evade tax in Nigeria? That is the propaganda that tax officials use to console themselves. How many companies are duly registered by the way, in Nigeria??

How many are fully functional?? Or running skeletal services?

How many have closed shop due to unfavourable tax policies, hostile business environment and insolvency, yet tax officials still believe they are in operation and are yet to pay taxes? shocked shocked

How many have paid their taxes up to date?

How many have problems paying their taxes? sad

In what way has the FIRS made it easy for these people to pay their taxes? undecided

How many tax officials are corrupt, and how many collude with defaulters?

How much assistance does FIRS give to taxpayers to enable them pay their taxes with ease?? sad

How many taxpayers have enjoyed any tax rebates in any area??
Re: Tax: FIRS To Audit All Companies by GabrielSuswam(m): 11:43pm On Sep 07, 2015
laudate:


Most firms evade tax in Nigeria? That is the propaganda that tax officials use to console themselves. How many companies are duly registered by the way, in Nigeria??

How many are fully functional?? Or running skeletal services?

How many have closed shop due to unfavourable tax policies, hostile business environment and insolvency, yet tax officials still believe they are in operation and are yet to pay taxes? shocked shocked

How many have paid their taxes up to date?

How many have problems paying their taxes? sad

In what way has the FIRS made it easy for these people to pay their taxes? undecided

How many tax officials are corrupt, and how many collude with defaulters?

How much assistance does FIRS give to taxpayers to enable them pay their taxes with ease?? sad

How many taxpayers have enjoyed any tax rebates in any area??

Bro yeaaa there is corruption in Nigeria but most evade...

Politics aside plssssss

2 Likes

Re: Tax: FIRS To Audit All Companies by Bevista: 11:43pm On Sep 07, 2015
laudate:


Most firms evade tax in Nigeria? That is the propaganda that tax officials use to console themselves. How many companies are duly registered by the way, in Nigeria??
Your comments throughout the thread has been particularly negative. While I do appreciate that you raise some salient points, most of your comments appear alarmist.

Nigeria still has a relatively low Company Income Tax (@ 30%) compared to other countries. Our VAT is still a miserly 5% when Ghanians pay as much as 17%. We don't even pay ridiculous taxes such as Property Tax, Vehicle Tax, etc.

Payment of taxes is a statutory obligation of every private and corporate citizen of a country. FIRS is not talking about tax increase but merely to enforce the law. Most countries with lower unemployment rates have higher tax rates and more efficient tax collection than Nigeria, so your argument that this will lead to job losses does not necessarily hold true.

2 Likes

Re: Tax: FIRS To Audit All Companies by laudate: 11:46pm On Sep 07, 2015
Bevista:
South Africa generates more revenue from Taxes than we generate from Oil. If South Africa with a GDP of $350b and a population of 45million can have an annual budget equivalent to N10Trillion, then why should Nigeria with a GDP of $560b and a population of over 170million have an annual budget of less than N5Trillion? Just plain embarrassing!

SA has more businesses, which operate in an environment with better infrastructure and as such, they can generate more revenue, which in turn helps them to pay higher taxes.

What is the level of infrastructure in our country? Are you aware that the poor level of infrastructure has killed more businesses in this country than in South Africa? How much power does SA generate for its 45 million people? Compare that with what is generated here. And compare that with the number of businesses that generate their power, water, security, etc. in Nigeria sad

What about the wage levels? Janitors in SA earn more than cleaners here, so who do you think would be in a position to pay more taxes?
Re: Tax: FIRS To Audit All Companies by laudate: 11:53pm On Sep 07, 2015
Bevista:
Your comments throughout the thread has been particularly negative. While I do appreciate that you raise some salient points, most of your comments appear alarmist.

Nigeria still has a relatively low Company Income Tax (@ 30%) compared to other countries. Our VAT is still a miserly 5% when Ghanians pay as much as 17%. We don't even pay ridiculous taxes such as Property Tax, Vehicle Tax, etc.

They are not alarmist. Unlike you, I run an SME so I know the challenges faced on a daily basis by most of my colleagues and myself, within the industry.

So 30% company tax is low to you??!! shocked shocked shocked Wow!

And who told you Nigerians do not pay property tax? What is Land Use Charge and Tenement Rate meant to be? shocked These are payable annually, o!

When a person dies intestate and his next of kin want to apply for letters of administration, do you know what they pay? A blanket 10% - 15% of the cost of the property is paid at the probate office before such letters are issued!

And it takes the govt over 8 months to 2 years to process! sad

You can imagine what they are raking in, if each of the properties cost between 10 million to 40 million! shocked shocked

Guy, go and run a structured business first and deal with aggressive tax officials before coming to preach on NL! angry

Tax officials should first of all think of making it easier for more people to pay taxes first, before thinking of increasing taxes.
Re: Tax: FIRS To Audit All Companies by Bevista: 11:55pm On Sep 07, 2015
laudate:


SA has more businesses, which operate in an environment with better infrastructure and as such, they can generate more revenue, which in turn helps them to pay higher taxes.

What is the level of infrastructure in our country? Are you aware that the poor level of infrastructure has killed more businesses in this country than in South Africa? How much power does SA generate for its 45 million people? Compare that with what is generated here. And compare that with the number of businesses that generate their power, water, security, etc. sad

What about the wage levels? Janitors in SA earn more than cleaners here, so who do you think would be in a position to pay more taxes?
This is exactly why I support efficient and prudent fiscal policies. If we block all loopholes and leakages from even the abysmal business environment which we currently have, Nigeria should generate more revenues than we are currently generating. This revenue will hence be used to invest in infrastructure that will attract and encourage more investment. More investment will lead to widening of the tax base and thus result in more tax revenue.
Re: Tax: FIRS To Audit All Companies by laudate: 11:58pm On Sep 07, 2015
Bevista:
This is exactly why I support efficient and prudent fiscal policies. If we block all loopholes and leakages from even the abysmal business environment which we currently have, Nigeria should generate more revenues than we are currently generating. This revenue will hence be used to invest in infrastructure that will attract and encourage more investment. More investment will lead to widening of the tax base and thus result in more tax revenue.

Where are the leakages, and what are the loopholes? Can you identify them??

Do you realise that even the tax officials make it difficult for people to pay accurate taxes??
Re: Tax: FIRS To Audit All Companies by Bevista: 12:01am On Sep 08, 2015
They are not alarmist. Unlike you, I run an SME so I know the challenges faced on a daily basis by most of my colleagues and myself, within the industry.
I will hesitate to join issues with you @ the bolded. I can see you overate yourself without knowing what others are doing.

So 30% company tax is low to you??!! shocked shocked shocked Wow!
In my comment, I used the term "relatively lower". So yes, compared to most other countries, out corporate tax is relatively low

And who told you Nigerians do not pay property tax? What is Land Use Charge and Tenement Rate meant to be? shocked
Atleast it is not enforceable country-wide like most other countries
Re: Tax: FIRS To Audit All Companies by Bevista: 12:06am On Sep 08, 2015
laudate:

Where are the leakages, and what are the loopholes? Can you identify them??
I take it that you consider the system is being currently run efficiently. Since, in your judgement, there are no leakages and loopholes currently in the way we implement our fiscal policies, I will not insult your sensibilities by trying to mention them.
Re: Tax: FIRS To Audit All Companies by manck2: 12:09am On Sep 08, 2015
tongue sad grin
Re: Tax: FIRS To Audit All Companies by manck2: 12:12am On Sep 08, 2015
[size=38pt]FIRS would need over new 50 offices in Igboland [/size]



Re: Tax: FIRS To Audit All Companies by laudate: 12:21am On Sep 08, 2015
Bevista:
I take it that you consider the system is being currently run efficiently. Since, in your judgement, there are no leakages and loopholes currently in the way we implement our fiscal policies, I will not insult your sensibilities by trying to mention them.

There was nothing in my post that stated that our tax system is being run efficiently. Maybe you can point out where I stated that in chapter and verse. undecided

I am just tired of people jumping on the bandwagon because they want their voices to be heard, not because they have thought through the problems or have cogent solutions.

People who sit down behind their cosy desks and earn a wage irrespective of how their companies perform, cannot understand what it means for an entrepreneur to pound the streets daily, worry about his balance sheet, his workers' wages, his clients' orders, repayment of loans, unsold inventory and provision of infrastructure to drive his daily operations.

After struggling to keep his head above water, then he still has to contend with hungry-looking, aggressive tax officials from state and local govt levels who believe their job is to harass and blackmail the entrepreneur into agreement with whatever tax assessment or levies, they present!! shocked sad

Yet, those sitting comfortably behind a desk are the ones who spout theories about the business environment and taxes, when such subjects come up! shocked

Jeez! Gimme a break! angry
Re: Tax: FIRS To Audit All Companies by laudate: 12:48am On Sep 08, 2015
Bevista:
They are not alarmist. Unlike you, I run an SME so I know the challenges faced on a daily basis by most of my colleagues and myself, within the industry.
I will hesitate to join issues with you @ the bolded. I can see you overate yourself without knowing what others are doing.

So 30% company tax is low to you??!! shocked shocked shocked Wow!
In my comment, I used the term "relatively lower". So yes, compared to most other countries, out corporate tax is relatively low

And who told you Nigerians do not pay property tax? What is Land Use Charge and Tenement Rate meant to be? shocked
Atleast it is not enforceable country-wide like most other countries

Good, please do NOT join issues with me as you have no idea of the reality that most SMEs face.

And keep your relatively lower tax band to yourself. In Norway and Finland where taxes are almost 50%, corporate businesses know that finding or attracting high calibre people to join their workforce has been a challenge, because of the high tax rates.

But then, their own taxes are spent to improve the lives of the citizenry, unlike in Nigeria where our taxes end up in private pockets of politicians, administrators and their cronies. Plug the loopholes that allow the politicians pilfer our taxes (e.g. via Alpha Beta) and see if our tax revenues won't grow. angry

Land Use Charge has been enforced everywhere in Lagos State, Abuja and capital of Edo State. I can't speak for other parts of the country. But nothing stops them from doing so, if they can convince people to pay those taxes on their ancestral homes as well. And if they have enough taxable adults whose income is adequate to make such payments.

By the way, whose fault is it, if Land use Charge is not enforceable in certain parts of the country? Is it the fault of the taxpayers or the tax administrators that cannot be bothered to sensitise people on the need, model or appropriate method of paying it? undecided

People always talk of paying taxes...what is the employment rate? What is the proportion of people that have jobs and are paying taxes? What is the proportion of people that do NOT have jobs and cannot pay taxes? shocked
Re: Tax: FIRS To Audit All Companies by seunmsg(m): 7:34am On Sep 08, 2015
laudate:


[b]Totally untrue!
shocked shocked All they need to do is to inform you that you were wrongly assessed previously, and then they draw up a new set of assessment and ask you to pay. [/b]

Secondly, they can use the excuse of incomplete remittance of WHT to create issues for your company. Even when it is obvious that your clients and those you have carried out services for, have deducted the appropriate WHT from your final bill, the tax officials will still refuse to acknowledge this fact and ask for WHT certificates, when they know it takes 6 months to 2 years for WHT certificates to be issued by the same tax office! shocked shocked shocked

Another area of dispute is items, products and services that are vatable or non-vatable. Products like LPG gas for example, have the VAT deducted at source (i.e. at point of importation by the major marketers or LPG Gas Storage Depot), but let a tax official come to your office on a revenue drive. They will argue with you till kingdom come, on why you have to remit VAT on the same product whose VAT has been deducted at source! And you end up paying double VAT. shocked shocked

Don't forget about the levies, education tax etc. The local govt officials are the worst! They are thugs in disguise. If you fail to pay their multiple levies, you are in trouble and they can seal up your premises. Even the state tax officials are in league with them. sad

Multiple taxes, duplicated levies etc bearing all kinds of names are conjured up daily at local govt level and even sometimes at state level. Till today, the controversy over sales tax being a consumption tax and VAT , is yet to be fully resolved, yet Lagos State tax officials insist on collecting that 5% sales tax from different establishments especially those that sell beverages and meals. undecided

Abeg, I don tire... When more businesses start to close down as a result of the shenanigans of tax officials, maybe their eyes will become clear.



@ the part in bold, are you joking or just ignorant? On what basis will they raise the new/additional assessment? It seems you are very ignorant of how tax assessments are done. FYI, most companies file their tax returns based on self assessment. When FIRS receive the return, they review it and determine if your return is adequate for that type/size of company. If they are not satisfied, they can carry out a tax audit and on that basis, raise additional assessment on the company.

Stop arguing unnecessarily, tax audit is backed by all relevant tax laws. If your company is not satisfied with whatever assessment that was given to them, they can approach the tax appeal tribunal.
Re: Tax: FIRS To Audit All Companies by laudate: 8:02am On Sep 08, 2015
seunmsg:


@ the part in bold, are you joking or just ignorant? On what basis will they raise the new/additional assessment? It seems you are very ignorant of how tax assessments are done. FYI, most companies file their tax returns based on self assessment. When FIRS receive the return, they review it and determine if your return is adequate for that type/size of company. If they are not satisfied, they can carry out a tax audit and on that basis, raise additional assessment on the company.

Stop arguing unnecessarily, tax audit is backed by all relevant tax laws. If your company is not satisfied with whatever assessment that was given to them, they can approach the tax appeal tribunal.

Guy, you are the ignorant one sitting behind a desk that lacks true knowledge about what goes on in the real world. After the company has filed its tax returns, these tax officials still show up in the company's offices at will under a different guise using all sorts of excuses. Go to Apapa area in Lagos and you will understand what I mean. undecided

FIRS guys are still slightly better than LIRS and local govt. Please get off your high horse and talk to owners of SMEs about their ordeal in the hands of various tax officials from the federal, to the state govt and local govt level.

Do you think the fact that you have filed your tax returns appropriately and paid them, means anything to the local govt tax officials, when they storm your premises?? Or do you want to take the local govt people to the tax appeal tribunal??

Obviously, you have never been at the receiving end of their antics, or you are a tax man yourself, which is why you are arguing in this manner.
Re: Tax: FIRS To Audit All Companies by omowolewa: 8:35am On Sep 08, 2015
This is the statutory duty of any Tax authority.

Companies should get a good tax Accountant, adviser or prepare to rub palms.
Re: Tax: FIRS To Audit All Companies by Mogten(m): 9:01am On Sep 08, 2015
A welcome development. If effectively managed, this should translate in higher tax returns and consequently, increased government revenue. Were those in charge of Nigeria's revenue houses of utmost good faith, we could be raking in income somewhere in the region of 20-30% of total revenue from tax sources alone.
Re: Tax: FIRS To Audit All Companies by laudate: 9:31am On Sep 08, 2015
Effect of Multiple Taxation on the Performance of Small and Medium Scale Business Enterprises.
(A Study of West African Ceramics Ajeokuta, Kogi State) | By J.F Adebisi, Director- General, Nigerian college of Accountancy, Jos, Nigeria and D.O. Gbegi, Department of Accounting, Kogi State University, Anyigba, Nigeria | Mediterranean Journal of Social Sciences ISSN 2039-9340(Print) ISSN 2039-2117(Online)

In recent times, the world economy has developed tremendously and this has been linked with activities of Small and Medium Scale Enterprises (SMEs), especially in developing countries. A Study carried out by the Federal Office of Statistics shows that in Nigeria, Small and Medium Scale Enterprises make up 97% of the economy (Ariyo, 2005).

Although smaller in size, they are the most important enterprises in the economy due to the fact that when all the individual effects are aggregated, they surpass that of the larger companies. The social and economic advantages of small and medium scale enterprises cannot be overstated.

Panitchpakdi (2006) sees SMEs as a source of employment, competition, economic dynamism, and innovation which stimulates the entrepreneurial spirit and the diffusion of skills. Because they enjoy a wider geographical presence than big companies, SMEs also contribute to better income distribution. Over the years, small and medium scale enterprises have been an avenue for job creation and the empowerment of Nigeria’s citizens providing about 50% of all jobs in Nigeria and also for local capital formation.

Being highly innovative, they lead to the utilization of our natural resources which in turn translates to increasing the country’s wealth through higher productivity. Small and medium scale enterprises have undoubtedly improved the standard of living of so many people especially those in the rural areas (Ariyo, 2005).

However, the mortality rate of these small firms is very high. According to the Small and Medium Scale Enterprises Development Agency of Nigeria (SMEDAN) Nigeria, 80% of SMEs die before their 5th anniversary. Among the factors responsible for these untimely close-ups are tax related issues, ranging from multiple taxations to enormous tax burdens etc. In many government policies, small and medium scale enterprises are usually viewed and treated in the same light as large corporations. However, their size and nature makes them unique. Therefore, in dealing with small and medium scale enterprises, these unique qualities need to be considered.

In levying of taxes for these enterprises in particular, issues that need to be considered are how these tax policies can be designed to bolster the growth of SMEs and the most effective ways to administer them. The importance of SMEs as a mechanism of economic growth and development is often ignored.

They are perceived as minute establishments, that have minimal effect on the state of the economy. However, if favorable environment is created for these SMEs to grow through proper regulation, the SMEs sector has the highest propensity to transform our economy.

In the same light, taxes are important for the government as they are the major source of funds for government expenditure. Income obtained from taxation of individuals and businesses are used to run governments as well as provide infrastructure such as good roads, water supply, and electricity which are essential for the smooth running of these businesses that are mainly manufacturing companies and as such rely on these commodities to survive.

Read the rest here:http://www.mcser.org/journal/index.php/mjss/article/view/310/326

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