Vi-M Professional Solutions

Category: Accounting

  • FIRS ISSUES PUBLIC NOTICE ON THE DEPLOYMENT OF AUTOMATED TAX ADMINISTRATION SOLUTION

    FIRS ISSUES PUBLIC NOTICE ON THE DEPLOYMENT OF AUTOMATED TAX ADMINISTRATION SOLUTION

    The Federal Inland Revenue Service (FIRS) on 30th March 2021, gave a notice which is in harmony with the provisions of Section 25(4) of the Federal Inland Revenue Service Establishment Act 2007 as amended by section 51 of Finance Act 2019.

    This notice was addressed to the general public, tax practitioners and, particularly, all taxable persons (including individuals, trustees, partnerships, companies, corporations, etc.) as follows:

    • The Federal Inland Revenue Service (the FIRS) shall, not earlier than 30 days from the date of publication of this notice, begin to connect its Automated Tax Administration System to access, for tax purposes, relevant records, data or information stored or otherwise residing in computers or other electronic devices (including cloud computing facilities) maintained, operated, controlled or owned by relevant persons or their agents.
    • The connection shall include relevant point of sales or invoicing platforms of all taxable persons (individuals, enterprises, companies and entities).
    • Relevant persons are required to grant FIRS access to all computers, electronic devices or cloud computing facilities wherein records, data or information are stored or otherwise residing (Section 26, FIRS Act).

    The attention of the tax paying public is drawn to the penalties prescribed in Section 26(3) of the FIRS Establishment Act for Failure to grant the necessary access.

    Click here to view the FIRS Publication.

    To find out about the relevant taxes in Nigeria, which FIRS can specifically track with automated solutions, please visit our ebook store. To find out all about VAT and how it works in Nigeria, please refer to our ebook on ‘Value Added Tax Explained‘.

    For further clarifications or professional assistance in connection to this subject, please contact Vi-M Professional Solutions on clients@vi-m.com or www.vi-m.com.

  • President Buhari Signs Finance Bill into Law

    President Buhari Signs Finance Bill into Law

    This morning, President Buhari signed the Finance Bill into Law. 

    According to President Buhari, this is the first time, since the return of democracy in 1999, that a Federal Budget is being accompanied by passage of a Finance Bill specially designed to support its implementation, and to create a truly enabling environment for business and investment by the private sector.

    The Finance Act introduces significant changes to 7 tax laws as follows:

    1. Companies Income Tax Act
    2. Value Added Tax Act
    3. Customs and Excise Tariff etc. Act
    4. Personal Income Tax Act
    5. Capital Gains Tax Act
    6. Stamp Duties Act
    7. Petroleum Profits Tax Act

    Overall, the Act seeks to:

    • Reform Nigeria’s tax laws to align with global best practices;
    • Support Micro, Small and Medium Enterprises in line with the Country’s Ease of Doing Business Reforms;
    • Incentivise investments in infrastructure and capital markets;
    • Raise Government revenues

    Our articles, detailing the changes in Tax Laws as introduced by the Finance Act (final harmonised/ signed version), and the practical implications, will be published in series in the coming days/ weeks.

    As recommended in our earlier newsletter, only proper and timely bookkeeping/ accounting, early issuance of audited financial statements, and proper tax advisory can help businesses successfully navigate the new Finance Act.

    Businesses can rest easy on any tax law changes with our Tax and Accounting Services Cover (TAS Cover) package once they subscribe here; or once they book an associated service here.

  • FIRS TO BRING TAX DEBTORS TO BOOK.

    FIRS TO BRING TAX DEBTORS TO BOOK.

    On 19 August 2019, the Federal Inland Revenue Service (FIRS) issued a Public Notice, directed at all tax defaulters whose bank accounts had been placed under lien earlier in the year. A list of 19,901 such tax defaulters was also published by the FIRS. These tax defaulters were defined as entities with an annual turnover of N100 Million and above, that have been collecting Value Added Tax (VAT) as well as deducting Withholding Tax (WHT) without remitting same to the Government. 

    In its 19 August Public Notice, the FIRS called on all companies whose bank accounts were placed under lien but are yet to regularize their tax statuses, to do so within 30 days from 19 August 2019, or have their Principal officers face penalties as stipulated under section 49 (2) (a- d) of the Federal Inland Revenue Service Establishment Act (FIRSEA), without further notice after the 30 days.

    Section 49 (2) of the FIRSEA stipulates that: “Where an offence under this Act is committed by a body corporate or firm or other association of individuals-

    (a) every director, manager, secretary or other similar officer of the body corporate;

    (b) every partner or officer of the firm;

    (c) every person concerned in the management of the affairs of the association; or

    (d) every person who was purporting to act in any capacity, commits an offence and shall be liable to be proceeded against and punished for the offence in like manner as if he had himself committed the offence, unless he proves that the act or omission constituting the offence took place without his knowledge, consent or connivance.”

    Steps to lift lien on an account:

    1. Make payments of applicable taxes for the period(s) in debt.

    2. Visit the closest Substitution Review Unit (SRU): 

    • Fill Taxpayers form as required. Attach evidence of tax payments made, alongside the following: 
    • A letter to the ECFIRS on response to the substitution on your account; Attach to letter:
    • Copy of your last filed return 
    • Copy of current tax clearance certificate 
    • Bank statement for 3 years 
    • Copy of incorporation and commencement of business (Incorporation documents and documents to show when business commenced).

     3. State Sources of income if Loan; or operate Bureau de Change etc. 

    4. SRU team will analyze and give feedback. 

    These details can also be sent to taxpay@firs.gov.ng.

    For help with preparing and submitting the required documentations, please send your detailed needs to clients@vi-m.com.

    To avoid a tax lien and/or other tax issues, the following are advisable: 

    • Once a new business/ Nigerian subsidiary or related entity is registered or incorporated, tax compliance should commence. Both the cost of engaging a good professional tax advisor/ accountant and the tax liabilities will be lower, well planned and properly managed from this stage.
    • Anger at Nigeria’s tax of fiscal system and Government’s lack of significant support for businesses and citizens cannot wipe off tax obligations. Tax is a civic responsibility, and the law.
    • Avoid bribing tax officials or illegally ‘negotiating’ tax payments. One cannot successfully maneuver taxes by bribing tax officials. It will always come back to hunt the taxpayer.
    • The government means business when they say there is no hiding from tax anymore; one can learn this from this episode of tax lien on bank accounts. Some avenues through which the government mines information on tax defaulters include: records of foreign exchange transactions, Corporate Affairs Commission (CAC) records, Bank Verification Number (BVN) records, withholding taxes (WHT) deducted by your customers from your business invoices and paid to the tax authorities, records of landed properties, vehicle registrations etc.
    • There is no tax-free period whatsoever on commencement of business. Taxes apply from commencement of business. Companies Income Tax (CIT) even starts counting right from the date of incorporation.
    • Every business should strive to keep proper and reliable financial records. It helps to facilitate good business decisions, keeps all stakeholders correctly in the know about the state of the business, controls fraud and mismanagement of business resources, is a legal requirement (by the Companies and Allied Matters Act), and will be the organization’s defense in the face of tax issues. The business’ transactions can also be planned for optimum tax effectiveness. 
    • Knowledge of the tax laws is very important. Vi-M has made this extremely handy by compiling the tax laws in a handy and readable app – ‘Tax Law Book’on google play and app store.  
    • For start-up businesses, vi-mtaxassist.com is helping over 1,300 users to compute their monthly taxes – VAT, WHT and PAYE. The web application is FREE TO USE.
    • For growing businesses, Vi-M’s monthly and annual Tax and Accounting Services Coverplans have helped a lot of businesses stay tax compliant as well as have good, credible and up-to-date financial records.
    • For fairly new businesses with backlog of outstanding accounting and tax related tasks, Vi-M’s Post Start-Up Assistplan has also helped a good number of businesses.
    • We are now extending an offer of installment payment of our fees (for up to 6 months) on the Post-Start-Up Assist plan to help growing businesses stagger the cost of compliance/ regularization in a struggling economy. 
    • We are also extending an offer of very discounted fees on tax health check for any business who may require such.
    • Businesses operating a group structure or within a circle of related companies should ensure their Transfer Pricing obligations are fully satisfied. 
    • On-going tax checks and reviews to ensure that your company is fully compliant is key. If one thinks the cost of compliance is high, one should not wait to experience or deal with the cost of remedying non-compliance or paying penalties to the tax authority!

  • Beyond the elections, what is next for businesses?

    Right about now, everyone in Nigeria- citizens, foreigners and investors alike are concerned about the outcome of the upcoming elections and the possibility of resolving Nigeria’s age long problems. Several people are beginning to showcase their analytic talents and knowledge of the country’s statistical indexes while they try to critique the ‘cause and effect’ of Nigeria’s problems. With every publicity tool at their disposal, people voice out their opinions about the forthcoming elections and the suitability or otherwise of the presidential candidates. But a pertinent question to ask is, “what is next for business organizations after the elections?” 

    The current situation calls to mind a typical pre-wedding arrangement- so much anxiety, so much worries, so much planning, love, doubts, excitement, disputes, expenditure etc. – all geared towards ensuring the success of the D-day. Little attention is paid to the real marriage and the couples’ life after the wedding. 

    If businesses bear in mind that the presidential and gubernatorial elections would hold on single days respectively, and afterwards, they would be faced with the realities of the nation’s current economic indices, they might want to focus more attention on developing sustainable business plans for the New Year and post elections. Essential questions to ask would be – what are the current economic indicators? How are they likely to affect businesses? What are the leadership styles and agenda of the presidential candidates and how can this knowledge benefit businesses in tidying up their business structures and processes in order to benefit from any policy changes by the new government? 

    It is common knowledge that the global price of crude oil has fallen significantly- as at Friday, 30 January, the WTI crude oil was priced at $44.53 per barrel, with a one year forecast of $51. This is still below the price that would guarantee economic and financial comfort for the government. With the depleting foreign exchange reserves, the Naira continues to suffer devaluation while average prices of foods and commodities continue to increase gradually. Poverty rate is currently at 71% while unemployment rate is at 24%. If the Federal government decides to embark on a similar program as the then ‘Structural Adjustment Program (SAP), the bulk of the economic activities would likely be driven by the private sector. 

    Many companies in the oil and gas sector are beginning to gradually restructure their cost base albeit the length of time it takes for old oil and gas suppliers’ contracts to terminate. New oil and gas investments are currently on hold and many employees are being laid off. We cannot confidently say that the oil and gas sector players are having a good time now. There is so much suspense as these players are unsure of the long term implications of the market indices and how the government would go about finding new markets for Nigeria’s crude. This feeling of suspense should not be peculiar to oil and gas businesses alone. Every Nigerian business is advised at this time to develop cost effective structures and in-house strategies that would guarantee its continuity in spite of any negative economic or business indicators.

    When making such strategies and business projections, it is important to consider the leadership focus/ agenda of the two presidential aspirants so as to ensure a win-win situation for the business whatever the outcome of the elections. 

    The 100 day plan of the APC’s presidential candidate anticipates a government whose focus would be on the following:

    • Conservatism and transparency in government spending
    • Curbing insurgency and insecurity
    • Revitalization and preservation of the Niger Delta resources
    • Ensuring diversity and inclusion for increased harmony in institutions
    • Revitalization of the health sector and review of laws guiding this sector
    • Massive investment in the agricultural sector and revamp of key development banks to fund agricultural operations
    • Creation of jobs 
    • Management of oil revenue and growing of the foreign exchange reserves
    • Facilitating the growth of SMEs
    • Finalizing the PIB and boosting local content participation in the downstream sector
    • Resolving discrepancies in labor relations
    • Revitalizing the power sector
    • Investing in information technology and youth development

    If this government comes into power, small businesses, agricultural businesses, development banks, downstream sector of the oil and gas industry and its indigenous players, power sector businesses, information technology ventures and players in the health sector would need to put the necessary structures in place to take full advantage of the promised government focus. Suppliers of raw materials and services to these industries should also be able to benefit directly from any growth in these sectors or favorable policy changes affecting them.

    The PDP is yet to publish any formal agenda for the future, however, the pointers from their campaign statements focus on curbing insurgence, boosting the agricultural sector, job creation, improvement in infrastructure- educational facilities, health, power, transportation etc. The same outlook and preparation is expected of businesses operating in these sectors. In addition, they should begin to take necessary steps at projecting their businesses for recognition by the government.

    Beyond the elections, the current economic indices are not looking so good and as earlier mentioned, this calls for urgent actions from the private businesses to create cost effective business structures while still achieving efficiency. Human capital resources should be strategically planned and properly managed to ensure the continued growth and success of these businesses. Businesses should strive to create niche products and invest in niche projects that would distinguish them from contemporaries, attract more customer loyalty and stand the test of time. 

    Essentially, the back office structures should be tidied up to ensure properly balanced businesses ready to succeed in any given economic circumstance. The information technology infrastructures should be foolproof to prevent fraud and ensure smooth running of the companies’ operations. Policies should be updated and internal control measures put in place to safeguard the companies’ assets. The accounting systems should be compliant with the relatively new International Financial Reporting Standards (IFRS). If there are businesses in Nigeria that are yet to implement the IFRS, and properly too, it is one indication of inefficiency in the internal processes. Cash flow projections and project yields should be analyzed before any huge capital expenditure is made while existing property, plant and equipment should be properly handled and maintained to prolong their useful lives. Operating expenses should be well structured and managed to achieve full tax and business efficiency.

    It is now absolutely important for businesses to plan their operations around achieving tax efficiency because from the present economic indications, government may resort to aggressive taxation for increased revenue generation. Either of the two presidential aspirants, whoever wins, would require funds to execute his leadership agenda. Also, election expenses would need to be recovered and the government would require sustainable sources of revenue to recuperate before even embarking on either the planned/promised projects or the 2015 budget execution.

    Taxation may be a sore point in the next regime. Hence, our advice is for businesses to carry out comprehensive tax health check of their business operations. This activity would ensure that tax leakages are identified and resolved, remedial tax payment discussions held with the relevant tax authorities and payments made before any additional tax liabilities are levied by the tax officials through aggressive tax audits that may characterize this year. This exercise would also help in putting structures in place such as tax policies and procedures that would guide the proper preparation and filing of tax returns from henceforth. 

    Tax reviews also have a way of flowing into the transfer pricing, accounting, information technology and human resource structures of companies. The cost structures are also revisited and non-tax effective expenses identified. Any loopholes from this total review of your business would be identified and remedial actions advised/ implemented once and for all to reduce stress and ensure that the companies’ management can focus their strength and mental energy on what matters more – growing the business.