Naira Devaluation: Nigerians advised to prepare for aggressive tax drive by Government

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Following the significant drop in governments’ revenue as a result of the plunge in crude oil prices, tax payers in the country have been advised to prepare for aggressive tax drive by the Federal Inland Revenue Service (FIRS) and other revenue generating agencies in various states of the federation this year, Thisday reports.

The Partner and Head, Tax, Regulatory and People Services, KPMG Nigeria, Mr. Victor Onyenkpa, who stated this at a tax breakfast meeting organised by KPMG Nigeria in Lagos, stressed that government’s revenue had also been under intense pressure as a result of the significant drop of the country’s forex reserves and the naira devaluation.

Although the Nigerian economy had been diversified, government’s major revenue base was yet to be diversified. In spite of the small size of oil and gas in the GDP, it is the largest as far as government’s revenue is concerned and over time, it contributes about 90 per cent of the foreign exchange earnings and over 60 per cent of revenue of government.

To this end, Onyenkpa argued that in 2015, “we might find that no capital budget would be done in the course of the year, given that recurrent (expenditure) tends to be a bit fixed and you can’t play around it too much. The real swing portion of the expenditure is the capital budget.”

He added: “Don’t be too surprised if work on the Lagos-Ibadan expressway is stopped, the reason would be that you can’t afford to finance it. So, if you put all these things together, it means aggressive tax drive. We are in the era of very aggressive tax drive. I make no mistake about it, it is even going to get worse than what you might have seen so far.”

He also stated that the reduction of tax holiday periods that had been given to companies and in some instance, outright cancellation, were indications of preparedness of revenue generating agencies to be aggressive.

“We have also seen very strange conditions being place for the collection of tax clearance certificates (TCCs),” he disclosed.

According to the Companies’ Income Tax Act, once a company income tax, had been paid, the payer should be entitled to a TCC, because the certificate basically does is to document how much was paid.

“But what we have been told now is that when you apply for tax clearance, there are some strange conditions that are given,” he stated.

The KPMG partner also revealed that a task force made up of senior officials of the FIRS, have been moving around enforcing tax payments in major cities in the country.

“The focus of the task forces is on companies that are not compliant, so if you haven’t filed your returns, they are going to pay you a visit soon. So, the first step is to be complaint. By being complaint, you take yourself off their radar. That is extremely important.  We also think that as a tax payer, you have to know your right under the law. You also need to engage professionals that can march the FIRS officials when they take you on,” he added.

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