Q2 2020 experienced one of the toughest economic disruptions with the novel COVID-19 Pandemic having drastic effects on most sectors of the economy. The Nationwide lockdown also aggregated this and led to the poor performance of most sectors of the economy. However, the economy gradually picked up in Q3 2020.
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First Thoughts: Like the Phoenix; Like Nigeria.
I grew up reading a lot of fantasy story books and believed for a very long time in the existence of a lot of mythical creatures. I looked forward to encounters with fairies, centaurs, bush babies, unicorns, dinosaurs and mermaids among others. I was almost a teenager before I got to finally accept that I was never going to actually see any of these creatures and so had to settle for the encounters with them in these story books and movies. I read all the 7 Harry Potter Books by J.K. Rowling from my early teens and into my early twenties and of course watched every single one of the movie adaptations and this simply reinforced my fascination with the imaginary world.
Read MoreFollowing the recent release of the 2021 budget by the President of the Federal Republic of Nigeria, there have been concerns over Nigeria’s debt stock as the nation plans to fund the 2021 budget deficit with N4.28 trillion new borrowings, a situation that has attracted huge backlash from the citizens. The proposed new borrowings represent about a third of the proposed budget. We explain further details on the proposed budget below while comparing it to the 2020 budget.
Read MoreTax compliance: PAYE
In Nigeria today about 75% of potential taxpayers are not in the tax net, and about 65% of registered taxpayers are not fully compliant. This is a worrisome reality that needs to be critically addressed as the average level of tax compliance in Nigeria is put at about 10% based on our research findings.
A taxpayer must ensure that his/her taxes are paid and are also duly accounted for from time to time. This means taxes are paid as and when due and that relevant returns are submitted to the tax authorities in prescribed forms and formats. Going by the news emanating from many State Boards of Internal Revenue, the level of compliance with the requirements for filing of Personal Income Tax returns as prescribed by the Personal Income Tax Act (PITA) remains low across the country.
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According to the latest Federation Account Allocation Committee (FAAC) Disbursement Report, released by the National Bureau Statistics (NBS), the sum of N676.41bn was disbursed to the three tiers of government in August 2020 from the revenue generated in July 2020. Compared to the amount disbursed in the previous month (July 2020) this brings about a 2.83% decrease.
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The latest CPI and Inflation Report released by the National Bureau of Statistics has revealed that inflation increased by 13.22% (Year-on-Year) in August 2020. This is 0.40% points higher than the rate recorded in July 2020 (12.82%).
It’s is not so surprising that the consumer price index (CPI) in Nigeria rose to its highest in over 3 years in the previous month (August 2020). The increase in the price of food is said to be the major reason in this hike.
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As you are aware, on Tuesday, 10th September 2020, the Tax Appeal Tribunal sitting in Lagos State, Nigeria (TAT) delivered Judgement in Appeal No. TAT/LZ/VAT/029/2019: Ess-Ay Holdings Limited v. Federal Inland Revenue Service (FIRS) (available at: https://taxaide.com.ng/wp-content/uploads/2020/09/Judgement-Ess-ay-Holdings-Ltd-v.-FIRS.pdf)
Issues to be determined:
- Whether rental income from real property is subject to Value Added Tax (VAT) under Nigeria’s VAT Act, 1993 (as last amended in 2007)?;
- Whether the provisions of the FIRS Information Circular No. 9701 dated 1st January 1997 which exempted only rents from residential properties (and not commercial properties) is valid?
First Thoughts: Post-Lockdown Musings
I have often heard some people say they usually get their inspiration to write from rather uncomfortable situations and experiences. I say, ‘well done to them’. I guess I need to learn how they manage to do this. So, I’ve been in traffic for the last three hours and guys, I can’t seem to get any inspiration from this experience and putting down my ‘First Thoughts’ for today’s Newsletter has been quite a challenge. I have been looking from my laptop to the window repeatedly as we move at snail speed. Once or twice, I have been tempted to step out of the car to stretch my legs but hey, this is Lagos, and this is the Third Mainland Bridge! Anything can happen! Hopefully, I would get home before I am done with this piece.
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Welcome to the fourth part of this series.
The gift that keeps giving comes in the form of Tax reliefs and that is why we keep coming back with this series on Tax reliefs.
We have been reviewing the tax reliefs made available by the Federal and State Governments to taxpayers to cushion the effects of the COVID-19 pandemic.
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Welcome to the third part of this series.
We have been reviewing the tax reliefs made available by the Federal and State Governments to taxpayers to cushion the effects of the COVID-19 pandemic.
So far, we have reviewed the tax reliefs made available in the following states: Lagos, Bayelsa, Kebbi, Gombe, Jigawa, Bauchi, Akwa Ibom and Yobe State. You can read them HERE.
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