₦airaland Forum

The Personal Income Tax legislation exempts from tax the costs associated with an employee’s move to take up new employment or relocate to a new employment location. However, for such expenses to be exempt, they must be deemed as reasonable (which is not defined).

The Lagos State Internal Revenue Service (LIRS) recently issued a public notice to all employers, company owners and their representatives, employees, high net worth individuals and other members of the public to clarify the definition of reasonable removal expenses for the purpose of tax exemption. LIRS cited Section 4(3)(c) of Personal Income Tax Act, LFN Cap P8 2004 as amended, which exempts "reasonable removal expenses" from tax.

LIRS thus defined "reasonable removal expense" as any expense which an employee incurs to move to a new employment location and the payment made by the employer towards the expenses which results in no net overall benefit to the employee. It is also any payments made to or on behalf of an employee taking up employment with a new employer such as relocation allowance. The reasonable amount should not be more than the amount incurred by the employee in relocating.

Other highlights of the public notice are as follows:

Criteria for removal expense to qualify as tax deductible are:
The reimbursement or payment to the employee is in respect of relocation/ removal expense actually incurred
The expense is of a reasonable amount
The payment of expenses must be properly documented
Changing accommodation must be necessary for the given circumstance
Documents and information to be maintained by the company to substantiate the expenses include:
Name and address of the employee
Date and reason for the relocation/removal
Distance (km) involved
Receipts of the actual expenses.
Further, any amount paid to the employee as temporary subsistence allowance which covers expenses already incurred by the employer shall be taxed as it would amount to duplication.

In order to obtain certainty for tax deductibility of such removal expenses and temporary subsistence allowances, LIRS has also requested corporate and business enterprises to submit their staff policy and guidelines, as well as their per diem rates for pre-approval.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

You can always contact me for any accounting and tax related advice both compliance and advisory.

There is no hiding place for tax defaulters. The Federal Government has engaged the services of asset tracing-companies to investigate the tax payment status of 150 firms/individuals.

Minister of Finance Mrs. Kemi Adeosun said yesterday in Lagos that investigators would rely on information derived from Bank Verification Number (BVN),  records of property ownership, records of foreign exchange allocation, and records of company ownership from the Corporate Affairs Commission (CAC), among others, to ascertain the income status of the companies/individuals vis-a-vis their lifestyle.

The minister, who delivered a lecture at PWC’s Business School, with the theme: “Voluntary Assets and Income Declaration Scheme (VAIDS) Interactive Session for Executives and Business Owners” said: “We are using some firms (I will not mention their names)  to trace assets internationally.

“We are working alongside projects we have locally, like the Bank Verification Number (BVN), records of property ownership, records of property allocation, records of company ownership from the Corporate Affairs Commission (CAC), among others. It is from these projects that we look at how much tax such companies or individuals should be paying”.


She said findings from these statistics would be computed, and compared with how much tax the person/company is paying to know if the right taxes are being paid or not.

Adeosun said:  ”The investigators’ findings will enable us compare the income and how much tax the company/person is really paying, and that gives us lots of information. But we encourage people to come up and pay their taxes willingly.”

She added: “You can register a high-end car. It tells me something about your income. So we look at your tax returns. If you registered Mercedes E-Class and you are paying N100,000 tax, then something is wrong. Those are red flags. We now have the capacity to assess people accurately.”

The minister said no one would be left out in the campaign to enlarge the tax net adding that the response being received so far showed that people were embracing the tax policy..

She said some beggars were earning millions, and the government would even look at their lifestyles and tax them, adding that “even proceeds from begging are taxable. You are supposed to pay taxes even if your means of income is begging”.

To Mrs Adeosun, tax is a matter of law and Nigerians should continue to pay. “We are trying to build an economy where we have oil and other things. It is going to be oil plus and wider economy,” she said.

Asked whether the funds from taxes will be judiciously used, she replied: “Why I think the resources will be used judiciously is because when people pay taxes, they get involved. When people do not pay taxes, when you call for budget meetings, they will not come. But when they pay their taxes, if the government says these are the projects we want to execute on the budget, people will show up because they have contributed to the tax revenues.”

In her view, such contributions improve the democratic process. “As our tax revenues go up, governance will improve. We have many projects we want to execute and I think if we have the funds, they will be executed. I think we are seeing improved budget performance. That will lead to getting the roads done, and improve the condition of our schools. Progressively, what we should look out for are improvements in the standard of living, and lifestyles of Nigerians as we get more tax compliant.”

The minister said government set a preliminary tax target of $1 billion annually, but her belief is that the target can be surpassed. “I think we can get more, and let’s see how it goes. For me it is not about how much money we recover it is about getting more people to pay their right taxes continuously. How much we recover from taxes is not as important as getting people into the tax net and paying the right taxes,” she added.

The minister also disclosed that the people who are paying taxes are mainly those whose taxes are being deducted from source. Also, the people who seem to be evading taxes are either on their own business, or high net-worth individuals.

“Ideally, they are supposed to be the biggest tax payers. What is happening now is that the lower earning people are carrying the huge burden, which is really unfair. So, we need to reverse that. Everybody has to pay their fair share, according to their level of income,” she said.

Mrs  Adeosun spoke of tax as a means of income distribution, adding that taxes should be taken from the rich, to support the poor.

Explaining how it works, she said: “If somebody has a property. We have no problem with that. The only thing the tax man asks you is where did you get the money to buy the property? If you bought it for N20 million, that’s no problem, but the income you used to buy that property would have been subjected to tax. If you show us your tax slip then no problem.”

“But what we are finding out is that there are someone people with a property of N20 million, but when you look for the tax returns, they paid only N15,000 annually for the last seven years. So, how did they fund that house? What that means is that the person has other incomes, which was not declared to the taxman because for you to own that house, it is either the money was stolen, or it was inherited. If it was stolen, another agency will deal with that, because it is not for us.”

“In that case, you will tell us, from whom you inherited it, and such information can be confirmed. From your income, you couldn’t have earned that. So, we want you to now declare those incomes. We want to correct people, whose lifestyle is not commensurate with their income. It may be house, it may be private jet, and so on.”

To Mrs. Adeosun, it is regrettable that while most developing countries have tax to Gross Domestic Product ratios above 20 per cent, Nigeria still records a global low of six per cent.

She said the Federal Ministry of Finance, in a bid to address this, set up the Voluntary Assets and Income Declaration Scheme (VAIDS) in collaboration with the 36 states. The scheme was launched by the Acting President Prof. Yemi Osinbajo.

The main objective of VAIDS is to increase the number of taxpayers in the tax net and raise revenue for government. Specifically, it is expected to increase Nigeria’s tax to GDP ratio from six per cent to between 10 per cent and 15 per cent, broaden the national tax base, curb tax evasion and discourage illicit financial flows.

Besides, it is expected to improve good governance, guarantee a better quality of life, encourage robust national planning and increase the size of the formal economy.

Mrs. Adeosun stated that at six per cent, Nigeria’s tax compliance rate was low whilst most developed nations were at 30 to 32 per cent. “Prosperous nations have high levels of tax compliance whilst poor nations have low rates. Nigeria aspires to be a prosperous nation, so this problem must be solved,” she said.

The scheme, which began on July 1, will last nine  months and will be implemented by the Federal Inland Revenue Service (FIRS) in collaboration with all 36 State Internal Revenue Services and the FCT IRS.

Taxpayers who make full and honest declarations will enjoy a waiver of interest and penalty, immunity from prosecution, confidentiality of information supplied, exemption from tax audits for the periods covered by the disclosure and flexible payment of tax due.  Taxpayers who fail to participate in the scheme will be investigated and if found culpable will face trial.

LIRS Executive Chairman Ayo Subair said: “We have seen the positive impact taxpayers’ money can make at the state level in terms of social services, administration of government and infrastructure development. So we are fully supportive of this initiative and we are ready to assist as many taxpayers who would like to take advantage of the Scheme to remediate their tax affairs,”

According to Taiwo Oyedele, Head of Tax at PwC Nigeria, “paying taxes is not particularly easy anywhere in the world for anyone who has expended time, energy and other resources to earn the income”. “However, it is necessary for there to be an organised society for the benefit of all.”

In his welcome address at the session, Uyi Akpata, Country Senior Partner, PwC Nigeria said: “This session and indeed the renewed interest and policy direction on taxation by this administration is a positive development for the transformation of our economy. At PwC, we have consistently made the point that reliance on oil as the main source of government revenue is not sustainable and that other forms of revenue generation, such as taxation, must be explored for Nigeria to build a truly viable economy and reach all of its potential. On taxation, we have over time advocated various initiatives to broaden the tax base, reform the tax laws, and improve the ease of paying taxes so we are happy that some of these ideas are beginning to take life.”


Source

http://thenationonlineng.net/fed-govt-hires-asset-tracers-go-150-moneybags/?utm_content=buffer7d007&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

A Spanish court said Friday it had replaced Barcelona star Lionel Messi’s prison sentences for tax fraud with fines.

The Argentine, one of the world’s best-paid players, and his father had been convicted of hiding image rights royalties in offshore accounts and had been given jail terms of 21 and 15 months respectively.
Following the ruling by Barcelona’s provincial court, Messi will instead pay 252,000 euros ($287,000) and his father 180,000 euros in fines.
The fines correspond to 400 euros for each day the two men were sentenced to jail.
Under the original sentence, neither Messi or his father would have been likely to serve time behind bars, because in Spain first offenders for non-violent crimes are spared jail time for sentences of less than two years.

The two were in July 2016 found guilty of using companies in Belize, Britain, Switzerland and Uruguay to avoid paying 4.1 million euros in taxes on income Messi earned from his image rights from 2007-09.
The income relates to the five-time world player of the year’s endorsement deals, including with Danone, Adidas, Pepsi-Cola, Procter & Gamble and the Kuwait Food Company.
The player and his father made a voluntary payment of five million euros — equal to the amount of the alleged unpaid taxes plus interest — in August 2013 after being formally investigated.
They were also fined around 3.5 million euros when they were convicted for tax fraud.

The Barcelona court said it took these payments into account when deciding to exchange their prison sentences for new fines.
“This made them both deserving of having the prison sentence substituted by a fine,” the court said in a ruling released on Friday.
Spanish prosecutors last month said they did not oppose the changes to the sentences. They had asked during last year’s trial for Messi to be absolved, arguing there was no evidence that the player was aware of how his income was managed.

During the trial, Messi had argued that he trusted his father with his finances and “knew nothing” about how his wealth was managed.
– Messi’s golden week –
The court ruling caps off a golden week for Messi, who on Wednesday extended his contract with Barcelona until June 2021, just days after he married his childhood sweetheart in Argentina.
The club did not give financial details but club president Josep Maria Bartomeu said Messi was now the best-paid player in the world.
“He is the best player in the world and he is paid like the best in the world and in the history of football,” Bartomeu said Wednesday.
Prior to his contract extension, Messi was the world’s third-highest paid sportsman with an income of $80 million, of which $53m was in salary and bonuses, according to a list published by Forbes magazine in June.
Messi is not the only footballer to run into problems with Spain’s courts, with Real Madrid forward Cristiano Ronaldo the latest to have been summoned to appear before a judge investigating tax fraud.
He is due to be questioned on July 31 on suspicion of evading 14.7 million euros in taxes.
Brazil star and Barcelona forward Neymar and his parents are due to stand trial for alleged corruption over his transfer from Santos in 2013.
Barca’s Argentine defender Javier Mascherano also agreed a one-year suspended sentence with authorities for tax fraud last year, while Manchester United manager Jose Mourinho was last month accused of committing tax fraud by Spanish prosecutors in 2011 and 2012, when he was in charge at Real Madrid.
And former Barcelona president Sandro Rosell was arrested in May in a money laundering investigation related to the sale of the Brazilian national team’s television rights.


Source: https://www.today.ng/sport/football/311970/messi-tax-fraud-sentence-reduced-fine

I’ve always been a closeted introvert. I see networking events as the “necessary evil” part of the freelance lifestyle. Walking around and having casual conversation with complete strangers sends chills down my spine. So when I found a free “mingling school” for introverts online, I knew I had to take it. How else could I get rid of the “oh my God, don’t come towards me, stranger!” feeling I had every time I saw a smiling face approaching? Here are six tips that I successfully implemented to help me improve my mingling techniques at networking events.

1. Check your language. I started the article with the confession that I am an introvert. That’s what I thought about myself my entire life. But what if that’s not actually the case? What if, by simply labeling myself as an introvert, I’m transforming this into a self-fulfilling prophecy? Some of the labels we assign to ourselves are holding us back. Because of them, we don’t see the “other path” when it presents itself. The reality is that I can be shy, and I can also become better at mingling. Being good at networking is a skill that can be trained. It is not who I am, but what I do that matters.

2. Let go of negative focus. Your brain is hardwired to take care of your well-being. If you consider mingling a stressful situation, your body will react as such. Your anxiety will kick in, your palms will start to sweat, your muscles will tense and your pulse will accelerate. Your brain is equipped for survival, so it naturally kicks into survival mode. But networking is rarely a life-threatening event, despite the feelings of fear we have towards it. Train your mind to stop focusing on a potential negative outcome by following tip no. 3.


3. Imagine the obstacles aren’t there. Most of the time, we tend to imagine the outcome as a worst case scenario. What if I say something stupid? What if I stutter? What if I won’t fit in? Take some time before the event and write down best case scenarios. What is the best thing that could happen if I dare to put myself out there? What connections could I make? What opportunities could I uncover? This is what you’ll miss out on if you decide not to attend.

4. Find the common ground. If you think you’re the only one at the event dreading the small talk, have I got news for you. You’re not. There are other people in the room who would rather be somewhere else too. And guess what. That’s only one of the things you have in common. The brain signals approval when we meet someone that we share some common ground with. So find the common ground with other attendees. It can be anything, from working in the same field, to having the same name, to liking the same restaurants. You can also research beforehand who is going to attend the event and figure out one or two things that you have in common. It's not stalking. It's preparation. Preparation often eases anxiety.

5. Use self-fulfilling prophecies to your advantage. We usually think of a self-fulfilling prophecy in negative terms. We’re afraid that something bad will happen, and it does. What if we could reverse that? Studies show that people who think they’ll be liked by others will behave in ways that will, indeed, make them more likeable. They appear less nervous and more warm, so they are more likely to elicit a positive response in a social situation. Start with the belief that the event will be a success and that you’ll manage to make good connections. If in doubt on how to do that, go back to the answers you wrote down for tip no. 3.

6. New behaviors are like new shoes. This metaphor is probably the best take-away from the Mingling School for Introverts course. When you first wear a new pair of shoes, it’s bound to feel uncomfortable. But the more you break them in, the better you feel wearing them. It’s the same with new behaviors. They’re difficult and uncomfortable at first, but if you persevere in them, they become second nature. They just fit. Mingling and networking are skills, therefore they can be trained. And the best training methods include training our behaviors. This takes time and practice, but it is possible.


Source

http://time.com/4074050/networking-tips-introvert/?xid=tcoshare

CHIEF Financial Officers, Heads of Finance and Tax Managers in some of the leading organisations across major industry groups in Nigeria have described the style of Federal Inland Revenue Service, FIRS, in assessment of additional tax liabilities as aggressive.


This was the summary of a study carried out by KPMG Nigeria, which was launched at a stakeholders meeting tagged: ‘Transfer Pricing Audit- Global Perspective and Nigeria’s Experience’. The study reported that only 18 percent considered them friendly while 46 percent considered them aggressive and 36 percent see them as very aggressive. It further stated: “In the case of disputes in the course of transfer pricing, 73 percent of the respondent preferred resolving it with FIRS through the decision review panel, while 18 percent consider it challenging additional tax assessments in court, and 19 percent indicate willingness to pay assessed liability.”

Reacting to the outcome of the survey, Partner & Head, Transfer Pricing Unit of KPMG in Nigeria, Mr. Tayo Ogungbenro, pointed out the need for companies to think from the perspective of FIRS and be more proactive. “If you are well prepared with nothing to hide and you know the kind of document you have and with a good consultant you will address their aggressiveness” he added. Ogungbenro advised that with the recent wave of transfer pricing audits, adequate care must be taken by companies to ensure that safeguards are in place to avoid costly errors during audit process. Corroborating his view, Partner & Head, Global Transfer Pricing Service, KPMG in US, Sean Foley called on government to promote fairness and make sure that the appropriate tax is collected.”

http://www.vanguardngr.com/2017/07/firms-consider-fg-tax-collection-aggressive-kpmg-survey/

The Sixth Schedule of the Personal Income Tax Act (as amended) is pretty clear on this. Amount paid in respect of a health insurance scheme is tax exempt or tax deductible. Which means in calculating your taxable income, this amount should be deducted from your employment income before applying the tax table.

The issue of getting a rebate is another question all together. Rebate means getting a refund from the government in respect of taxes already paid. While the law supports refund of tax, in practice the government hardly ever refund any tax paid in excess. The best practice in Nigeria is to net off any excess tax paid against future taxes.

You can always contact me for any tax issue both advisory and compliance.

You can always contact us for any of your tax needs. Giditaxadvisory@gmail.com

The Federal Government will deploy technology and rely heavily on it henceforth in the pursuit of increased tax compliance and expansion of revenue base. The declaration came on the heels of three related events having to do with legal framework, voluntary asset declaration and invitation from a group of international asset tracers to Nigeria, which ran simultaneously.

This may be part of reforms to boost the nation’s revenue, announced by the Minister of Finance, Mrs. Kemi Adeosun, in which she vowed that the country would engage in several strategies to ensure that elites and other eligible taxpayers with assets in and out of the country do their civic duty.

While the Acting President, Yemi Osinbajo, signed an Executive Order on Assets Declaration, followed by the launch of Voluntary Asset and Income Declaration Scheme (VAIDS), the Global Forum on Transparency and Exchange of Information for tax purposes told Nigeria it would open information on assets that belong to its citizens abroad, which are hidden from tax and governmental authorities.

But as part of the pre-conditions, Nigeria would have strong information technology system and support within the tax administrations to ensure that information received will be used properly and the confidentiality assurance.

Adeosun, in a monitored programme on TV yesterday, explained that the signing of an Executive Order underlines the seriousness attached to the scheme, which would be vigorously implemented.

Lamenting that at six per cent, Nigeria’s tax compliance rate was low, while most developed nations were at 30-32 per cent, she said:”Prosperous nations have high levels of tax compliance whilst poor nations have low rates. Nigeria aspires to be a prosperous nation, so this problem must be solved.”

According to her, government had already deployed data mining to compile list of thousands of taxpayers, which showed that the level of non-compliance and tax evasion is huge. Citing Bank Verification Number, land registry and other sources within Nigeria, as well as data from foreign governments, she also listed the work of an international asset-tracing firm as a source of overseas data.

“Technology has been key in enabling us to build an accurate financial profile for Nigerians and based on the information we gathered, we saw that the level of non-compliance was very high and we knew we had to do something about it. In the past, tracking true income and assets would have been difficult but now, it is at the touch of a button,” she said.


Source

https://guardian.ng/news/government-to-pursue-it-driven-tax-collection-system/

The National Executive Council [NEC] recently approved in principle, the implementation of a Voluntary Assets and Income Declaration Scheme (VAIDS). The Scheme is expected to come into effect from May 2017 once formal guidelines have been issued. The Scheme encourages voluntary disclosure of previously undisclosed assets and income for the purpose of payment of all outstanding tax liabilities. The Scheme will offer a limited waiver for declaration within the specified period of time.
The Scheme is expected to help expand Nigeria’s tax base and therefore improve the low tax to Gross Domestic Product [GDP] ratio currently about 6%. It also seeks to curb the use of tax havens for illicit fund flow and tax avoidance. It is estimated that the Scheme would generate approximately USD 1 billion in tax revenues.


Limited Amnesty: The Scheme would grant some waivers as a reward for voluntary declaration of assets and payment of tax liabilities.

Scope: All individuals resident in Nigeria and companies operating in Nigeria. However, the primary targets are multinational enterprises and high net worth individuals.

Applicable taxes: The disclosure requirements would be in respect of all taxes payable to all levels of government – federal, state and local government taxes including Companies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax and
Technology Tax.

Non declaration: Any taxpayer who fails to embrace the voluntary disclosure Scheme will be investigated and if found culpable will be prosecuted in addition to full payment of tax due including penalty and interest.

Takeaway
The Scheme aims to address tax evasion and illicit financial flows particularly by individuals. Given that there are no formal guidelines yet, the details of the limited waiver are not yet known. The Scheme is in line with global best practices on disclosure of information and declaration of assets. A similar scheme was adopted in India which resulted in the addition of over 350,000 individuals to the tax net yielding approximately US$1.2 billion. There will be collaboration with foreign governments where assets and illicit funds are likely to be held by Nigerians. Government will leverage on various international agreements including the recently ratified Convention on Mutual Administrative Assistance in Tax Matters which has been signed by over 100 countries.

Download the executive order here

http://pwcnigeria.typepad.com/files/vaids-executive-order.pdf

FOR THE RECORD: Full Text of Executive order signed by Osinbajo on tax payment

http://www.premiumtimesng.com/news/top-news/235522-record-full-text-executive-order-signed-osinbajo-tax-payment.html

Source

[url]http://pwcnigeria.typepad.com/tax_matters_nigeria/2017/06/voluntary-assets-and-income-declaration-scheme-vaids-has-been-launched.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TaxMattersNigeria+%28Tax+Matters+Nigeria%29&utm_content=Yahoo%21+Mail[/url]

LilChamp:
Only Cowards run away from the challenges of life & commits suicide.

Pity the mum though.
The song that comes to my mind right now: (aiye le o, ibosi o, aiye dorikodo komayemi mo..)

Have u heard of what is called clinical depression. It ha nothing to do with challenges in life.... DONT JUDGE!!

So I have a client that has a significant amount of dollars for sale.

Please contact me via email giditaxadvisory@gmail.com if u have any one interested in buying a significant amount of dollars @ 430 naira. Please buyer should have a valid Form M.

Thanks.

So we started a campaign a few weeks ago for the provision of free tax service to 10 companies in Nigeria as a form of CSR. The free tax service Focused more on start-ups. We still have 2 slots left. If you are interested in this opportunity you can reach us on giditaxadvisory@gmail.com.

Who we are: We are a tax and business advisory firm based in Lagos. We provide tax service to many local companies and multinationals.