Need For Tax Law Review, By Bulkachuwa, Bamidele, Malami, Others

Some law experts and other eminent Nigerians have stressed the
need to urgent review the nation’s tax laws.

They said this would raise revenue for government and boost the
economy.

They argued that a review of the laws would bring the nation
up-to-date with current realities, ensure effective revenue
collection and curb leakages currently being experienced in the tax
collection process.

The speakers include the Minister of Justice and Attorney
General of the Federation (AGF), Abubakar Malami; President of the
Court of Appeal (PCA), Justice Zainab Bulkachuwa and the Chairman
of Senate Committee on Judiciary, Human Rights and Legal Matters,
Opeyemi Bamidele.

Others are: former Edo State governor, Professor Oserheimen
Osunbor; Justice Adebukola Banjoko of the High Court of the Federal
Capital Territory (FCT); Chairman of the House of Representatives
Committee on Justice, Ozurigbo Ugonna and Acting Chairman of the
Nigerian Law Reform Commission (NLRC), Prof Jummai Audi.

They spoke yesterday in Abuja at a national workshop on “The
Reform of Tax Laws in Nigeria: The Companies Income Tax Act, Cap.
C21 LFN 2004.”

All the speakers at the event, organised by the NLRC, hailed the
agency for its initiative to reform the laws.

They said the decision had become more apt as the nation seeks
improved revenue in the face of mounting needs.

Represented by the Special Assistant (SA) to the President on
Financial Crimes, Abiodun Aikomo, the Justice Minister said a
review of the nation’s tax laws would make them more compliant with
global and international best practices.

“The current policy of the Federal Government is to encourage a
diversification of revenue generation through the encouragement of
alternatives to oil revenue.

“This diversification has become necessary with the realisation
that dependency on crude oil earning cannot sustain our public
expenditure.

“One of such credible and reliable alternative sources of
revenue for most countries is, and in our peculiar circumstances,
one that can reduce over-dependence on oil.

“The reform of the extant law will greatly boost the country’s
revenue base and build a solid economic structure.

“As things stand, the Nigerian legislative framework lacks the
required efficacy to address the challenges resulting from the
implementation of Companies Income Tax Act, hence the need to
review and reform the Act,” Malami said.

Bamidele and Ugonna (who was represented by Dike Uche) assured
of the National Assembly’s support.

The lawmakers promised speedy passage of Bills to be generated,
at the end of the workshop, for amendments to aspects of the tax
laws.

Bulkachuwa (who was represented by Justice Mohammed Shuaibu),
Justice Banjoko and Osunbor suggested areas to amend among the
existing laws and promised their supports to carry the review
process.

Audi explained that the reform would correct the challenges
associated with the operation of existing Companies Income Tax Act
and bring its provisions in conformity with global standard as well
as re-position the country to attain its full potentials in the
collection of taxes to boost the country’s revenue base and build a
solid economic structure.

“If taxes are to be collected effectively and fairly, both in
monetary and equitable terms, for the benefit of all Nigerians, our
proposed or intending reforms should be key and must warrant
serious consideration, as there seems to be an obvious short
comings or lacuna noticed in the operation of the entire Act.”

In identifying some of the shortcomings in the existing Act,
Prof Audi said: “It is a defect in the Act for tax authority to
treat certain undistributed profits of a company as distributed for
tax purposes. This is unfair and can lead to forcing a company to
declare dividends when it intended to reinvest such profit for
growth and development of the company.

“Powers of the President to exempt any company or class of
companies from the payment of tax under this Act is very wide.

“Powers of the President and Minister to allow certain donations
to be deducted from the profits of a company for tax purposes is
very wide.

“Some of the provisions of the existing Act proposed for
amendment include section 10 of the Act, where the commission
proposed that every company shall after registration with the
Corporate Affairs Commission (CAC) register with the Federal Inland
Revenue Service (FIRS) and obtain a Tax Identification Number
(TIN), which shall be used in all tax and other transactions.

“This implies that aside the Incorporation Number obtained from
CAC, a company shall also have a TIN after registration with FIRS
which shall be used for tax and other purposes.

“In reforming Section 13 of the Act, the commission is proposing
an amendment by expanding the section to bring within the tax net
companies with significant economic presence in Nigeria and to
define the phrase ‘significant economic presence’ and to amend the
section to provide for a new provision to impose six per cent tax
on all online advertising.

“In Section 60, the commission proposes that any person filing a
return upon demand by the commission shall do same with a sworn
affidavit verifying the truth contained in the returns filed. This
is to ensure that those who make false statement can be
prosecuted.

“Also, the commission proposed increase in the punishment
provided in some sections of the Act, e.g. Section 64(7) from
N10,000 to N50,000 and six months imprisonment to two years;
Section 55(3)(a) from N25,000 to N50,000 and Section 55(3)(b) from
N25,000 to N50,000; Section 94 from N1 000 to N100,000.

“The commission also proposed the expansion of the Second
Schedule to the Act on Capital Allowances to accommodate assets
such as ships, aircraft and intangible assets such as licence,
franchise and so on.”