THE JOINT TAX BOARD ISSUES PUBLIC NOTICE ON ABUSE OF VOLUNTARY PENSION CONTRIBUTION SCHEME

THE JOINT TAX BOARD ISSUES PUBLIC NOTICE ON ABUSE OF VOLUNTARY PENSION CONTRIBUTION SCHEME

BY ANTHONY EZEAMAMA ESQ.

BACKGROUND

In a bid to ensure that every person who has worked in either the public or private sector of the Nigerian economy receives his or her retirement benefits as and when due, the Nigerian federal government introduced a contributory pension scheme through the Pension Reform Act 2014 (“the Act”) with a view to ensuring that every employee enjoys a decent life after retirement. Section 4(1) of the Act in this regard mandates every employer of labour to whom the Act applies to deduct a minimum of eight (8) percent of each employee’s monthly emolument and to pay same into the employee’s retirement savings account with a Pension Fund Administrator (“PFA”) of his choice, while the employer shall provide a minimum matching contribution of ten (10) percent toward the pension scheme. Section 4(3) of the Act further provides that any employee may in addition to the total contributions being made by him and his employer, make voluntary contributions to his retirement savings account. These contributions when made are tax deductible for the purpose of computing the employee’s taxable income – section 10(1) of the Act and paragraph 2(d) of the Sixth Schedule to the Personal Income Tax Act as amended (“PITA”).

However, the grounds under which payments made into the pension scheme can be withdrawn by an employee are limited to where:

1.       The employee attains 50 years of age; or

2.       The employee disengages or is disengaged from his employment and he is unable to secure another employment within four (4) months of that disengagement; or

3.       The employee disengages from active service on health ground based on the advice of a suitably qualified physician or medical board.

Notwithstanding the above withdrawal restrictions imposed by the Act, an interesting trend has been discovered amongst employers whereby unlimited amounts are deducted from their employees monthly emoluments as voluntary contributions and treated as tax exempt items even though *section 5(7) of the Labour Act caps the total amount of deductions an employer can make from the wages of his worker in any one month period to a maximum of one third (1/3) of that worker’s wages.

This obnoxious tax avoidance practice which is being marketed mostly by PFAs allows an employee to make an unrestricted voluntary contribution from his monthly salary under an arrangement that permits the employee to withdraw same contribution contrary to the above legal restrictions and thereby significantly reducing the tax payable by such an employee.

On the other hand, section 17(1) of PITA which is an anti-tax avoidance provision gives the tax authorities the power to adjust any transaction they consider artificial or fictitious and which has the capability of reducing any tax payable by a taxable person.

*​To continue reading, please click the link below.​

https://www.linkedin.com/pulse/joint-tax-board-issues-public-notice-abuse-voluntary-pension-anthony?published=t

*​​Anthony Ezeamama is a corporate commercial lawyer and a tax specialist*

Email: anthonyezeamama@nigerianbar.ng

​0​8033482067

Sustainable Development Goals: Nigeria’s Path to Implementation

Sustainable Development Goals: Nigeria’s Path to Implementation

ELIZABETH HAUB SCHOOL OF LAW AT PACE UNIVERSITY

White Plains

May, 2017

List of Abbreviations

CGS – Conditional Grant Scheme

DRG – Debt Relief Gains

GDP – Gross Domestic Product

ICT – Information and Communication Technology

M&E - Monitoring and Evaluation

MDA – Ministries, Departments and Agencies

MDG – Millennium Development Goal

NBS – National Bureau of Statistics

NEEDS – National Economic Empowerment and Development Strategy

NMIS – Nigeria MDG Information System

NPC – National Planning Commission

NV 20:2020 – Nigeria Vision 20:2020

OSSAP – MDGs - Office of the Senior Special Assistant to the President on MDGs

OSSAP – SDGs - Office of the Senior Special Assistant to the President on SDGs

DTWG – Donor Technical Working Group

PCAM-SDGs – Presidential Committee on the Assessment and Monitoring of the SDGs

SDG – Sustainable Development Goal

UK-DFID – United Kingdom Department for International Development

UN – United Nations

UNDP – United Nations Development Programme

UNESCO – United Nations Educational, Scientific and Cultural Organization

UNGA – United Nations General Assembly

USAID – United States Agency for International Development

USD – United States Dollar

WHO – World Health Organization

Introduction

 Nigeria’s Path to the Implementation of the Sustainable Development Goals

The world came together in New York in September 2015 under the platform of the United Nations General Assembly (UNGA) to take steps to place the world on the path to achieve sustainable development and prevent long term existential threats to mankind. The UNGA, through a deliberative process involving one hundred and ninety-three member states, as well as global civil society, adopted Transforming our World: the 2030 Agenda for Sustainable Development. The Sustainable Development Goals (SDGs) are at the core of this agenda.[1] The underlying goal of the SDGs is the pursuit of “sustainable development.” Sustainable development, “must meet the needs of the present without compromising the ability of future generations to meet their own needs.”[2] Sustainability has been agreed to be focused on the “three E’s” - economy, ecology, and equity.[3] The MDGs focused on addressing poverty in many dimensions – income poverty, hunger, disease, lack of adequate shelter, and social exclusion, while promoting environmental sustainability, gender equality, and education.[4] The SDGs cut across every aspect of development, with an overarching goal of delivering quality development in a sustainable manner for all peoples. They are a set of seventeen aspirational "Global Goals" with one hundred and sixty-nine targets to achieve them. The goals are illustrated below. 

          

Figure 10: Source: European Environmental Bureau.

The SDGs are effective from January 1, 2016 through 2030. Nigeria is among the one hundred and ninety-three countries that adopted the SDGs. This paper analyses the measures taken by Nigeria to achieve the MDGs, the challenges encountered and the country’s plan for SDGs implementation.       
Overview of Nigeria’s MDGs Implementation– Issues and Challenges

The MDGs presented an important opportunity to accelerate development in critical areas and sectors for Nigeria. Programs were created to vigorously pursue the implementation of the MDGs goals. Nigeria launched the National Economic Empowerment Development Strategy (NEEDS), 7-Point Agenda, Vision 20:2020 and other programs targeted at achieving the MDGs. The NEEDS outlines policies and strategies designed to promote economic growth, and the Seven-Point Agenda for Food Security and Poverty Alleviation complemented and enhanced the national strategy. The Office of the Senior Special Assistant to the President on MDGs (OSSAP-MDGs) was established in 2005 to oversee MDG implementation.[5] Among other things, the OSSAP-MDGs was mandated to ensure effective utilization of the one billion dollars annual funding from the Debt Relief Gains (DRG) for MDGs related projects. The DRG was part of the debt relief deal Nigeria made with the Paris Club of Creditors in September 2005.[6] One of the terms of the deal was Nigeria’s commitment to utilize the relief funds “on pro-poor projects and programs in support of a national effort towards the achievement of the MDGs.”[7] The OSSAP-MDGs directed the execution of relevant MDGs projects by the agencies and departments of the Federal Government. Projects were focused on health, education, agriculture, roads, energy, water and sanitation, women affairs, youth, housing, and environment. Some of the projects executed in these sectors are the provision of microcredit facilities, teachers and federal civil servants training, instituting the National Gender Policy, construction/rehabilitation of primary health centres, deployment of midwives, purchase and distribution of anti-malaria drugs, polio eradication initiative and immunization of children, construction of roads and drainage works, and boreholes etc.[8] The OSSAP-MDGs tracked spending, project execution and supervision to ensure quality and quantity delivery and to evaluate the overall impact of the projects in achieving set targets and goals.

A Presidential Committee on the MDGs (PCAM-MDGs) was also established in 2005, as well as two National Assembly Committees on the MDGs (one each for the Senate and the House of Representatives). The former functioned as a convening and an accountability institution with diverse membership that cut across ministries, departments and agencies (MDAs), states, civil society organizations, and the private sector; while the latter was used to promote legislative understanding, ownership and supervision of MDGs-related activities by the federal legislature.[9]

Another important structure used for the execution of the MDGs was the Conditional Grant Scheme (CGS). Through the CGS program, the federal government co-funded MDG-targeted projects in partnership with state and local governments. The CGS leveraged the oversight ability and coordinating powers of the federal government and the local knowledge of state and local governments to execute and deliver meaningful projects.

A review of final report issued by the Nigerian government on the implementation of the MDGs, Nigeria 2015 Millennium Development Goals (MDGs) End-point Report (Final Report), showed that appreciable progress was made in the pursuit of the MDGs agenda but many of the targets and goals were not met. For instance, regarding the goal of eradicating extreme poverty and hunger, poverty prevalence declined from sixty-five percent in 1990 to forty-five percent in 2010, although the targeted twenty-one percent was not achieved.[10] The World Bank poverty indices for 2012/2013 showed a further decline to thirty-three percent.[11] Economic growth, particularly in agriculture, has reasonably reduced the proportion of underweight children under five years of age from thirty-six percent in 1990 to twenty-six percent in 2014.[12] In terms of education and literacy, Nigeria achieved a literacy rate of  eighty percent in 2008 but experienced a massive decline (sixty-six percent in 2014) due to the displacement caused by the Islamist terror group, Boko Haram.[13] Significant progress was also recorded in the provision of access to safe drinking, as the Final Report indicated an achievement of sixty-nine percent end-point in 2015 from forty percent 1990 baseline. Little or no progress was towards creating access to clean sanitary facilities. Overall, the MDGs targets were mostly not achieved due to some challenges encountered in the implementation process. Some of these are lack of capacity, inadequate finance, data deficiency, and misappropriation of funds.[14] Other challenges reported are absence of evaluation metrics, security problems that result from Boko Haram insurgency in the North-East of Nigeria, absence of a functional national health insurance scheme, and incessant workers’ industrial action in Nigeria. There were also challenges in the area of institutional framework, notably the lack of a comprehensive legal or policy framework. There was no comprehensive policy outline that clearly indicated the roles of every stakeholder and the limit of their responsibilities. This gave rise to two issues– overlap among the relevant stakeholders and lack of coherence in the execution of the MDGs. Proposals have been made to resolve these issues as Nigeria moves towards the integration and implementation of the SDGs.

Transition to the SDGs, Institutional Structures and Necessary Mechanisms for Implementation

In October 2015, the Nigerian government released a policy document, Nigeria’s Road to SDGs: Country Transition Strategy (“Transition Strategy”), which offered a high level review of the country’s performance under the MDGs and discussed steps that will be taken to promptly correct observed errors, while ensuring the timely and successful integration and implementation of the SDGs into national policies, to guarantee on-the-ground results. Nigeria government proposed to retain the existing institutional structures, with keen commitment to strengthen observed areas of weaknesses.

At the federal level, the overall coordinating office of the OSSAP-MDGs was transitioned to the Office of the Senior Special Assistant to the President on Sustainable Development Goals (OSSAP-SDGs), with the following mandates:

a.      Provide leadership and guidance on the Sustainable Development Goals;

b.      Coordinate and integrate the SDGs into Nigeria’s national development plans and priorities, and develop an actionable framework for implementation at the national, state & local government levels; and

c.       Serve as the secretariat to the PCAM-SDGs.[15]

To strengthen this framework, the Nigerian government proposes to harmonise and push for greater coherence between the OSSAP-SDGs and the National Planning Commission (NPC). The NPC was created to advise the president on national polices, create national priorities and goals among other things.[16] The goal is to ensure that both institutions work together to ensure the integration of the SDGs into national development plans, spelling out the duties of all relevant stakeholders towards the achievement of the SDGs.[17] The Transition Strategy also calls for a stronger and permanent intergovernmental collaboration mechanism between the various levels of government. This collaboration will improve coordination and monitoring of actions taken at all levels of the SDGs implementation process. A central clearing house system for proper monitoring and evaluation is also proposed. This will ensure proper data gathering, evaluation and storage.

Another important step that could be taken to ensure a successful implementation of the SDGs is to put in place an overarching policy framework, that will review existing developmental plans and identify gaps and provide the basis for change. It is also important to review the SDGs at the national level and develop nationally-relevant targets, matching ambition and commitments with resources and capacities. This policy will also ensure political stability and continuity of action despite change in administration. The adoption of this policy can assist in establishing expenditure floors and create legislature-backed incentives for the implementation of the SDGs. Expenditure floors could be in the form of a percentage of the annual budgets of all levels of government, channelled towards the execution of the SDGs. It has to be noted that the SDG goals reflect what should be the ordinary goals of all countries, especially developing countries. Dedicating a percentage of government’s funds to its implementation only accelerates the development process. Past efforts, such as, the twenty-three percent UNESCO education funding, the Abuja Declaration (targeting fifteen percent expenditure on healthcare), and the ten percent agricultural goal in the Maputo Declaration were not achieved.[18] Their failure were attributed to the lack of legislative sanction, being only actionable by voluntary executive directive.

The SDGs contain goals that require extensive collaborations for a successful implementation. Some of the SDGs have international or regional dimensions, requiring supranational or regional collaboration for a successful outcome. Nigeria in the past collaborated with local, regional and international governments and entities for the execution of the MDGs.[19]  Specifically, there were partnership formed with UK-DFID, UNDP/UNMC, and Water Aid, among others. An overarching forum, Donor Technical Working Group was created to design appropriate interventions that deliver results against MDG targets. The forum also advised on the appropriate technical measures by which performance was monitored and measured.[20] As the country transitions into the SDGs, it is important to expand the membership of this forum to accommodate other important developmental partners of the country, including but not limited to the World Bank, European Union, African Development Bank (AfDB), and USAID. The need to also include the organized private sector was also noted in the Transition Strategy. These partners can offer both tangible and financial assistance for programs implementation.

Another important aspect of the implementation of the SDGs is data gathering and evaluation. Unlike many developed countries, Africa in general and Nigeria in particular lacks the capacity and technology necessary to implement a systematic data gathering and evaluation mechanism. The problem is not exclusive to the SDGs program, but a country-wide issue. Without a proper mechanism for data collection and analysis, the progress or lack thereof in the implementation of the SDGs will be left to estimation and guesswork. The extent of progress made in Nigeria towards achieving the MDGs has been a subject of debate, because there were no generally acceptable data on the program.[21] As part of efforts to develop a database for monitoring and evaluation of the implementation process, especially with regards to the Conditional Grant Scheme, the OSSAP-MDGs partnered with the Sustainable Engineering Lab to undertake a rigorous, geo-referenced baseline facility inventory across Nigeria spanning from 2009 to 2011.[22] The data collected informed local, state, and federal interventions aimed at closing data gaps. The end result was the Nigeria MDG Information System (NMIS), a comprehensive and detailed inventory that houses all of the data collected. Late in the implementation period, to supplement the NMIS, the National Bureau of Statistics (NBS) launched the MDGs Performance Tracking Survey in 2014.[23] The survey was designed to generate specific indicators to monitor progress of the MDGs across the goals.[24] These findings were to help policy makers identify gaps and challenges to the attainment of the MDGs. Despite the little success recorded in this area during the MDGs implementation, it is important to improve data collection, analysis and access for a successful SDGs implementation. Nigeria can adopt international best practices in this regard and implement a central clearing system for data collection, evaluation and information sharing. Existing fragmented data hubs have to be linked for harmony and completeness. When it comes to data, underutilization is as bad as lack of data. There were indications that relevant stakeholders did not have access to available data for planning and execution of projects during the MDGs era. The OSSAP-SDGs should take steps to enlighten relevant stakeholders about the available data and what use they can be applied to.

Additionally, finance is an issue that is at the bedrock of the implementation of the SDGs. As a developing country of about 180 million people, the funding required to achieve the seventeen goals of SDGs is enormous. Nigeria needs between fifty-eight billion dollars and ninety-six billion dollars per annum to execute the SDGs.[25] Nigeria’s total budget in 2015 was twenty-two billion dollars. If public finance is solely relied upon for SDGs implementation, Nigeria already faces a financing gap of between thirty-six billion dollars and seventy-four billion dollars annually.[26] The DRG was fundamental to the pursuit of the MDGs, but it was inadequate.[27] Nigeria must strive to dedicate a percentage of its annual budget to the implementation of the SDGs. Existing partnerships, local and international must also be explored for SDGs financing. Funds such as the Green Climate Fund under the Paris Agreement on Climate Change are potential sources. Given the considerable increase in required investment for the SDGs in Nigeria, policy-makers must develop strategies to tap into all potential sources of financing – public, private, international, and domestic. The issue of finance is also adversely impacted by Nigeria’s declining revenue earning, due particularly to global collapse in oil prices, affecting both federal and state governments’ ability to execute their planned capital and recurrent expenditure.[28]

Closely related to finance is necessary capacity and technology. A successful implementation of the SDGs will require strong human capacity building and technology. Technology and human resources enable countries to improve their productivity and use limited resources in a sustainable manner. Environmental sustainability is at the core of the SDGs, investments in modern technologies will be required to reduce activities that are not eco-friendly. Nigeria, like many developing countries will depend on technology transfers from developed countries who are technologically advanced. Under the United Nations, there are frameworks put in place to encourage the transfer of capacity and technologies from developed countries to developing countries. One of such frameworks is the Paris Agreement on Climate Change. The potentials of these structures must be fully utilized.

Recommendation

This paper attempted to review the implementation of the MDGs in Nigeria with particular attention given to the challenges encountered during the process. Proposed steps for the integration of the SDGs into national policies and plans for a successful implementation were also discussed. There was a review of the institutional and coordination frameworks adopted for the implementation of the MDGs and those proposed for the SDGs, with recommended improvements. The paper also discussed potential hurdles that must be surpassed if the 2030 goals are to be achieved.

In summary, there is need to create an overarching and comprehensive legal regime for the implementation of the SDGs. This will clearly define institutional frameworks, modus operandi, guarantee continuity, and enjoy legal support. In this way, cohesion and harmony will also be achieved. Progress can only be made through harmonized strategic action, centrally coordinated.

Secondly, there is need to improve the data gathering and evaluation mechanisms currently in place. Massive improvements in Nigeria’s statistical capacity is needed. Similarly, it is necessary to make real interventions to address inadequacies in human and technical capacity. The importance of this cannot be overstated. Every other layer of the implementation process rests on this foundation.

Thirdly, finance is critical for a successful outcome at the expiration of the implementation period – 2030. Diverse avenues for programs funding must be explored and available funds must be strictly applied according to strategic plans. Misappropriation of funds must be discouraged and prevented, and punished were it is proven to have occurred.

Fourthly, the security concerns that displaced about two million people in the North-East of Nigeria have to be addressed.[29] No meaningful development can be made in an unstable atmosphere.

Finally, the political-will to improve the overall economy of the country, ensure sustainable use of resources and lift citizens out of the debasing captivities of poverty will be the foundation of all efforts. Government at all levels must be willing to successfully implement the SDGs and achieve the enumerated goals. As stated in the Transition Strategy, no Nigerian should be left behind.

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[1] Sustainable Development Goals, Wikipedia, https://en.wikipedia.org/wiki/Sustainable_Development_Goals ( Last visited March 12, 2017).

[2] Sustainable Development, International Institute for Sustainable Development,  http://www.iisd.org/topic/sustainable-development, (Last visited March 12, 2017).

[3] In commercial circles, this is referred to as the “Three P’s” of sustainability, representing, people, profit and plant. A corporation that intends to remain viable in the future, must pay attention to these three key components of the sustainability.

[4] Millennium Project, Goals, targets and indicators, http://www.unmillenniumproject.org/goals/gti.htm#goal1 (Last visited April 22, 2017).

[5] Otive Igbuzor, Overview of Implementation of the MDGs in Nigeria: Challenges and Lessons, African Centre for Leadership, Strategy & Development (Centre LSD) 9 (Oct., 12-13th 2011), https://pdfs.semanticscholar.org/cb1a/6ad3a5888bb9eb99d22cb07f6f887f5193e3.pdf. 

[6] MDGs Conditional Grants Scheme Implementation Manual (Revised), available at http://www.sparc-nigeria.com/RC/files/5.1.6_MDGs_CGS_Implementation_Manual_Revised.pdf (Last viewed April 12, 2017).

[7] Id.

[8] Otive Igbuzor, Overview of Implementation of the MDGs in Nigeria: Challenges and Lessons, African Centre for Leadership, Strategy & Development (Centre LSD) 9 (Oct., 12-13th 2011), https://pdfs.semanticscholar.org/cb1a/6ad3a5888bb9eb99d22cb07f6f887f5193e3.pdf. 

[9] Nigeria’s Road to SDGs: Country Transition Strategy 8 (Oct. 2015), http://www.ng.undp.org/content/dam/nigeria/docs/IclusiveGrwth/Nigeria%20transition%20strategy%20to%20SDGs.pdf. (Last viewed April 11, 2017).

[10] Nigeria 2015 Millennium Development Goals (MDGs) End-point Report 3 (2015), http://www.undp.org/content/dam/undp/library/MDG/english/MDG%20Country%20Reports/Nigeria/Nigeria_MDGs_Abridged_Sept30.pdf?download (Last viewed April 12, 2017).

[11] Id. at 4.

[12] Id.

[13] Id.at 5.

[14] Otive Igbuzor, Overview of Implementation of the MDGs in Nigeria: Challenges and Lessons, African Centre for Leadership, Strategy & Development (Centre LSD) 9 (Oct., 12-13th 2011), https://pdfs.semanticscholar.org/cb1a/6ad3a5888bb9eb99d22cb07f6f887f5193e3.pdf. 

[15] Mandates of the Office of the Senior Special Assistant to the President on Sustainable Development Goals (OSSAP-SDGs), http://sdgs.gov.ng/about-sdgs/our-mandate/ (Last visited May 8, 2017).

[16] The Ministry of Budget and National Planning, About Us, http://www.nationalplanning.gov.ng/index.php/about-us (Last viewed May 5, 2017).

[17] Nigeria’s Road to SDGs: Country Transition Strategy 9 (Oct. 2015), http://www.ng.undp.org/content/dam/nigeria/docs/IclusiveGrwth/Nigeria%20transition%20strategy%20to%20SDGs.pdf (Last viewed April 11, 2017).

[18] Id. at 14.

[19] Id. at 17.

[20] Id. at 18.

[21] Obinna Ositadimma Oleribe & Simon David Taylor-Robinson, Before Sustainable Development Goals (SDG): why Nigeria failed to achieve the Millennium Development Goals (MDGs), Pan Afr. Med. J. 2016; 24: 156, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5072827/citedby (Last viewed May 6, 2017).

[22] The Nigeria MDG Information System Allows You to See the Bigger Picture, Sustainable Engineering Lab., http://qsel.columbia.edu/assets/uploads/blog/2014/04/NMIS.pdf (Last visited May 8, 2017). 

[23] United Nations Development Programme, Nigeria MDGS Survey Report 2015 (March 26, 2015), http://www.ng.undp.org/content/nigeria/en/home/library/mdg/NigeriaMDGsSurveyReport2015.html (Last visited May 6, 2017).

[24] Id.

[25] Eberechukwu Uneze, Adedeji Adeniran & Uzor Ezechukwu, Transiting from Plan to Implementation Challenges and Opportunities Ahead for Sustainable Development Goals in Nigeria, Southern Voice on Post-MDG International Development Goals 9 (April 2016), http://southernvoice.org/wp-content/uploads/2016/04/SV-OP-30.pdf.

[26] Id.

[27] Nigeria 2015 Millennium Development Goals (MDGs) End-point Report 12 (2015), http://www.undp.org/content/dam/undp/library/MDG/english/MDG%20Country%20Reports/Nigeria/Nigeria_MDGs_Abridged_Sept30.pdf?download (Last viewed April 12, 2017).

[28] Obinna Chima, Falling Oil Prices Threaten Nigeria’s Earnings, Reserves Accretion, Thisday (March 13, 2017), https://www.thisdaylive.com/index.php/2017/03/13/falling-oil-prices-threaten-nigerias-earnings-reserves-accretion. 

[29] Nigeria IDP Figures Analysis, Internal Displacement Monitoring Centre (IDMC), http://www.internal-displacement.org/sub-saharan-africa/nigeria/figures-analysis (Last visited May 8, 2017).

INSPECTOR GENERAL OF POLICE (IGP) ORDERS ARREST OF TAX/REVENUE COLLECTORS ON FEDERAL ROADS - BY BARR. ANTHONY EZEAMAMA

BACKGROUND

The use of aggressive and unorthodox methods for collection of taxes such as harassment of innocent passers-by, gaining of forceful access into offices and shops, mounting of road blocks and throwing of spikes on coming vehicles etc. by the various government agencies and their proxies have been noted as one of the challenges of the Nigerian tax system. Taking judicial notice of this menace, especially as it involves officers of Local Governments in Nigeria, the Court of Appeal, per Dalhatu Adamu, J.C.A in Eti-Osa Local Government. V. Jegede (2007) 10 NWLR (Pt.1043) 537 had this to say: “In recent time, it has become a social menace to see the Local Government personnel or officers parading themselves on the highway or making a road block and harassing or embarrassing and intimidating bona fide passers-by and members of the public on account of their right or power to impose, collect or extort various taxes and levies some of which are apparently usurpatory and illegitimate. Even in the markets or other public places, the Local Government staff are a common sight extorting from the public, one form of tax or levy or another and blocking the public right of way on that account or ground. While legitimate imposition of taxes and levies is the source of funding of every tier of Government, the matter should not be allowed to degenerate into a desperate extortion, usurpation and illegitimate exploitation of the public by the said governments (of whatever tier or cadre). It should come to a stop.”

In this regard, paragraph 5.1(iii) of the National Tax Policy, 2016 which embodies the Nigerian government policy direction on taxation enjoins that “the President and Governors should work towards ensuring that there is only one revenue agency per level of government. This would streamline revenue administration and improve efficiency of revenue collection. Ministries, Extra-Ministerial Departments and Agencies other than tax authorities should not become tax collecting bodies.”

In fact, this menace was one of the reasons that accounted for the enactment of Decree No. 21 of 1998 by the then Federal Military Government. The Decree has now become the Taxes and Levies (Approved List for Collection) Act as amended (the Act). Section 2(1) of the Act provides that no person, other than the appropriate tax authority, shall assess or collect, on behalf of the Government, any tax or levy listed in the Schedule to the Act, and members of the Nigeria Police Force shall only be used in accordance with the provisions of the tax laws. By section 2(2) of the Act, no person, including a tax authority, shall mount a road block in any part of the Federation for the purpose of collecting any tax or levy. Consequently, section 3 of the Act makes it an offence punishable upon conviction with a fine of NGN50,000.00 or imprisonment for three years or both for any person to collect or levy any tax, or mounts a road block, or causes a road block to be mounted for the purpose of collecting any tax or levy, in contravention of section 2 of the Act,

IGP ORDERS ARREST OF ILLEGAL TAX COLLECTORS ON ROADS AND HIGHWAYS

The Inspector-General of Police (IGP) Mr. Ibrahim Idris in line with the provisions of the extant law cited above recently ordered the immediate deployment of a special force team (Special X-Squad) to arrest illegal tax and revenue collectors on all federal roads in the country as well as to also ensure the removal of all forms of illegal blockage and obstructions on the roads. This directive took effect from Monday, 17th April, 2017. The special team was also under strict instruction to arrest, investigate and prosecute any person or group of persons found committing the illegal act.

TAKEAWAY

This directive is a step in the right direction and will go a long way in checkmating the activities of these illegal and overzealous tax collectors whose activities have left tales of woes in the mouths of their hapless victims. One expects that by now, the special force team would have dislodged the notorious tax collectors along the Benin bypass in Edo State, Nigeria that usually demand for radio licenses from travellers that have no connection whatsoever with the State. The activities of these tax collectors have been known to cause avoidable road accidents along that Federal highway.

Anthony Ezeamama is a corporate commercial lawyer and tax specialist

INCORPORATION OF A COMPANY WITH MULTIPLE CAC FORMS ENDS FRIDAY, 31ST MARCH, 2017

INCORPORATION OF A COMPANY WITH MULTIPLE CAC FORMS ENDS FRIDAY, 31ST MARCH, 2017

BY BARR. ANTHONY EZEAMAMA

The Corporate Affairs Commission (CAC) in their recent meeting with stakeholders on Wednesday, the 29th day of March, 2017 which held at the Lagos Chamber of Commerce and Industry Conference and Exhibition Centre, Alausa, Ikeja, Lagos and attended by yours sincerely, advised that effective from the close of business on Friday, the 31st of March, 2017, CAC will stop the current incorporation of company regime that requires the submission of multiple incorporation forms. This decision was taken with the view of ushering in fully, the recently introduced incorporation regime that requires the submission of only a single CAC form (i.e CAC Form 1.1 – Application for Registration of Company) for incorporation purposes.

To this end, as from the 1st day of April, 2017, these multiple CAC forms will longer be accepted by the CAC for incorporation of new companies in Nigeria:

(1) Form CAC 2 (Statement of Share Capital and Return of Allotment);

(2) Form CAC 3 (Notice of Situation/Change of Registered Address);

(3) Form CAC 4 (Declaration of Compliance with the Requirements of Companies and Allied Matters Act);

(4) Form CAC 2.1 (Particulars of the Company Secretary); and

(5) Form CAC 7 (Particulars of Directors).

It need be emphasised that Forms CAC 2.1 and 3 are however still post-incorporation documents.

CAC also advised that as from 1st May, 2017, all incorporations will now be processed online on the CAC portal as the current practice of manual registration will cease on 30th April, 2017. CAC however noted that the hard copies of the incorporation documents uploaded online must still be submitted to the CAC for certification and capturing of their original signatures as well as for their record keeping.

Also the stamping of Form CAC 1.1 and the Memorandum and Articles of Association of the company would also be processed online.

TAKEAWAY

Persons who have initiated the process of incorporating their companies with the CAC but are yet to submit the required incorporation documents to the CAC as at today, the 31st of March, 2017 are advised to note these new changes and should immediately contact their solicitors for advice and direction.

Anthony Ezeamama is a corporate commercial lawyer and tax specialist.

MONETARY POLICY COMMITTEE RETAINS MONETARY POLICY RATE AT 14 PERCENT - WHAT DOES THIS PORTEND TO INVESTORS AND YOU?

MONETARY POLICY COMMITTEE RETAINS MONETARY POLICY RATE AT 14 PERCENT - WHAT DOES THIS PORTEND TO INVESTORS AND YOU?

BY BARR. ANTHONY EZEAMAMA

The Monetary Policy Committee (MPC) is a Committee of the Central Bank of Nigeria (CBN) established pursuant to section 12 of the CBN Act, 2007 to facilitate the attainment of price stability in the economy amongst others. The MPC essentially augments the efforts of the Federal Government by providing the monetary and credit policy direction for the economy (e.g fixing of interest rate) while the Federal Government on their part provides the fiscal policy direction (e.g government taxation policy, provision of electricity and good roads etc). The MPC rising from their meeting on Tuesday, the 21st of March, 2017 voted to retain the Monetary Policy Rate (MPR) at 14 percent while the Cash Reserve Ratio (CRR) was also retained at 22.2 percent as was the case in the previous period amongst others. It need be mentioned that the MPR is simply an indicative or benchmark interest rate which is used to determine other interest rates in the economy while the CRR is the amount of customers’ deposits that licensed banks are required by law (section 15 of the Banks and Other Financial Institutions Act) to maintain with CBN in cash at a material time. The CRR determines how much of customers’ deposits banks can lend to the public at a material time. Consequently, the higher the CRR, the lower will the banks be able to lend to the public and vice versa. Both the MPR and the CRR are potent monetary policy tools at the disposal of the CBN to fight inflation.

Therefore, the pegging of MPR at 14 percent will naturally have different kinds of effects (whether good or bad) on different classes of persons and transactions some of which I will consider below.

IMPORT OF 14 PERCENT MPR ON DIFFERENT PERSONS AND TRANSACTIONS

(1) Tax Authorities/Tax Payers: By several provisions of the Nigerian tax legislations (see for instance sections 54 of the Petroleum Profit Tax Act, 74(1) of Personal Income Tax Act as amended, 34 of the Value Added Tax Act as amended and 32(1)(b) of the FIRS (Establishment) Act to mention but a few), defaults in tax compliance carry with it payment of penalties and interest at the prevailing commercial rate or MPR and in extreme cases (e.g in the case of blatant tax evasion), fines and imprisonment upon conviction by a court. Consequently, tax defaulters at this time are liable to pay at least 14 percent interest on the principal sum/tax owed by them to the tax authorities.

(2) Investment Account Holders: The MPR being an indicative rate determines how much of interest banks will be willing to offer and pay to their investment account holders (e.g fixed deposit account holders). For instance, banks usually quote savings rate at MPR minus 8 or 7 percent per annum. This therefore translates into between 6 – 7 percent interest per annum on such investment accounts at this time (also depending on the amount fixed and the negotiating powers of the parties). Little wonder, over 2 million Nigerian investors opted to patronise the popular Ponzi scheme, MMM last year.

(3) Pricing of Loans Facilities by Financial Institutions: Most Naira denominated loans are generally priced using either MPR or the Nigerian Inter-Bank Offered Rate (NIBOR) or the Nigeria Treasury Bills Rate (NTB) as the benchmark interest rate. However most institutional lenders will in other to hedge their risk against fluctuations of these rates set a floor rate of interest. For instance, such loan can be priced at 5 percent over MPR with a floor rate of 21 percent. This in a simple term means that no matter the percentage of the MPR at any time, the interest rate payable on the loan cannot be below 21 percent.

(4) CBN/Financial Institutions Transactions: The rate of interest at which the CBN will borrow from banks or lend to them is tied to MPR. It used to be plus or minus 2 percent. This simply means that if that was to be at this time that CBN will lend to the banks at 16 percent and borrow from them at 12 percent.

Other categories of financial activities and persons affected by this MPC decision are the base lending rates of banks, inter-bank lending rate, the rate of interest/coupon payable by the government on issued bonds and treasury bills and ultimately cost of living generally.

TAKEAWAY

In conclusion, it can be sensed that the reason behind this MPC decision is to keep inflation which is already double digits in check. One however expects a robust fiscal policy response from the Federal Government so as to complement the efforts of the MPC/CBN in reviving the ailing economy and push it out from this present economic recession in no distant time. Until then, it would appear that this MPC decision may translate into little or nothing to an ordinary man on the street if not the imposition of more misery and hunger on him.

Anthony Ezeamama is a corporate commercial lawyer and tax specialist