Given that oil prices have
fallen globally with its attendant effects on every sector of the economy in Nigeria in particular, a tax expert, has said that the development would not affect the pattern of tax payment of the individual public servant.
Senior partner at Ikata Ikata and Company, Mr. Iduonku Ikata who stated this in an exclusive interview with our correspondent in Port Harcourt, Wednesday said the fall in oil prices would not affect the tax process of the individual worker.
He said since the individual worker pays tax under the Pay As You Earn income tax arrangement, such taxes were paid based on some parameters.
Ikata explained that with the 2001 amended “Beta” income tax pact, there is in place what is known as the consolidated relief allowance that government pays to all tax payers.
The tax consultancy expert explained that the government applies some exemptions to workers through their contributions to the National Housing Fund (NHF) and the contribution to the Staff Retirement Saving Scheme (PENCOM).
According to him, when all these are factored in, we then find out that the fallen oil price will not affect tax payers under this category.
However, the tax firm’s boss revealed that the opposite was the case for corporate organizations.
“Indeed, fallen oil prices will affect corporate income tax because such taxes are paid by corporate entities,” he said.
Further, he said for companies whose business activities are oil related, their total revenue or revenue generated at the end of the day would surely affect their turn over and the cost of doing business would be affected.
He said since the naira has been devalued it means corporate organisations would spend more to enable them execute the same job.
When this happens he further explained it means your profit by the end of the day will reduce.
“Therefore reduction in profit till affect the tax by the amount they pay,” he said.
In the circumstance, Ikata said the corporate entity would pay less tax, even as he said it would have been better if he (corporate) had paid more tax and made up profit.
“But now most of what could have accrued to them as profit has been eaten up by the devaluation of the naira.”
“That is how the fallen oil prices has affected the tax incidence on tax payers and the paying process,” he said.
On which sector bears the brunt of the development, the tax expert said it was the country’s economy.
“The economy, of course the economy is worse off generally because the government would have realised this and come up with a means of running expenditure because company income tax will be lower now,” he said.