TAX 2.2A CITA (AMENDMENTS INTRODUCED)
- Streamlining Companies Tax:
- The Federal Inland Revenue Service was Established under the FIRSEAct 2007 to replace the FBIR which was recognised under Section 1 of the CITA.
- TAT Established in Section 59. This replaced the Body of Appeal Commissioners.
- Part 1 of the CITA was removed. Similar provisions have been made in the FIRSEA.
- Matching Concept: has been abolished in Section 19. To this effect, redemption of tax credit is no longer limited to the year in which the credit note was received. You can now redeem your last year’s tax credit this year. Although in practice, there might be delay.
- Minister’s power to vary/alter rate of tax removed from Section 23 of the principal Act.
- Penalties have been reviewed to meet current circumstances and deter offenders. E.g. late filing has been increased from N500 to 25k, pre-operational levy (not starting the business you registered within 6 months) has been increased from N500 to N20,000. Section 40(4) of the Amendment Act.
- Some Allowances and deductions have also been Reviewed:
- Under Section 8, losses can now be carried forward ad infinitum. This is in cognisance with the Tax Study Group’s recommendation.
- Section 14 has removed the 1 percent bonus for prompt filing.
- Donations to universities… deductible under s 21.
- Allowance now made in respect of cottage industries.
- 5 percent rural investment allowance removed in Section
- Tax Clearance Certificate introduced: this certificate may be required for certain transactions.
- Section 5 of the Amendment Act exempts the profits of companies in export processing zones or free trade zones where 100 percent of the company’s production is for export.
- Revisions: provisions on taxation of insurance companies, deduction of tax at source, amongst other were reviewed in a bid to counter evasion.
- A new section; call for returns, books and evidence was introduced.
Amongst others. These improvements are applauded although they appear to be cosmetic.
OUR DISCUSSION SHALL BE MADE ON SECTIONAL BASIS FOR CLARITY. PLEASE HAVE YOUR LAWS BY YOUR SIDE.
The FIRS Establishment Act 2007.
Established the FIRS to replace FBIR. Section 1(2) of the FIRSEA provides that it shall be a body corporate with perpetual succession and common seal which can sue and be sued and hold or dispose property. The FIRSEA is not a taxing statute. It just establishes an authority to administer tax.
Section 2 provides that the objects of the service shall be to control and administer tax and account for such taxes collected.
Section 3 Establishes the Federal Inland Revenue Service Board which shall supervise the FIRS the board shall be composed of:
- An Executive chairman and six other members with requisite qualification who shall be appointed by the president.
- A representative of the AG Fed, Governor of CBN or his representative.
- Representative of the minister of finance.
- MD of NNPC, Comptroller of Customs, Registrar General and so on.
Section 7 and 8 provide for the powers and function of the board and service. Some of which include:
- Assessing, collecting, recovering and accounting for tax collected from chargeable persons, companies and enterprises.
- Reviewing the tax regime in collaboration with relevant agencies.
- Examination, investigation and enforcement of tax compliance, eradication of tax evasion in collaboration with relevant agencies.
- Maintain database of taxable persons, individuals and companies.
- Enlightenment and promoting public awareness.
- Provide the general policy guidelines relating to the functions of the service.
The Tax Appeal Tribunal is established under Section 59 to settle disputes arising from operations of the Act.