Anxiety Mounts Over New Property Tax

0
766

The Federal Inland Revenue Service’s recent move to use value of property owned by companies to generate Company Income Tax (CIT) may have unsettled professionals in the built environment.
Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler recently confirmed that the agency has commenced the use of property value to determine what companies should pay as CIT.
He said: “We established over 2000 plus properties and lands, that were built, developed in corporate names limited liability companies that have not filed any taxes.
“The value of these taxes were in the excess of two trillion naira and have never paid any taxes before. We contacted them, sent them our assessments and a number of them are paying.
“Some of them claim not to own the property, those of them that claim not to own the property and of course their list was sent to government. Presidency is to decide what would happen to those properties that have no owners.
“To those that have owners and have not paid, they would be prosecuted. We are also in the process of going to court to get the approval of the court orders to sell those properties. We are not only doing that in Abuja. We’ve concluded in Lagos. We are currently doing it in Osun, Oyo, Kaduna and eventually we would cover the whole federation”.
The CIT is regulated by Companies Income Tax Act (CITA) Cap C21, laws of the Federation of Nigeria and income derived from the country by a non-resident company.
It is a payment on account of the year’s income tax assessment and taken at the rate of 30 per cent of total profit of a company.
However, due to heavy default by companies, FIRS has resorted to looking at property of companies who are not paying tax as a way of making them live up to their responsibilities.
But experts opinion vary on the issue, with some of them expressing worries that it will further stifle organisations, which are still managing to cope with difficult business environment in the country.
Former Chairman of Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON), Elder William Odudu, said it is wrong to use  property as a basis for income tax.
According to him, if a company like First Bank Plc, which owns a building like its corporate headquarters in Lagos, is to pay tax on the value of its property that runs in billions of naira, it will kill the company.
This, he said, is because the bulk of the building is used for administrative purposes and not for rents.
He stressed that what FIRS should be looking for is the income generated by the property and not the asset, which is not generating income.
But an estate surveyor, Mr. Akin Olawore felt that there is nothing bad in such move as the main objective is to bring many people to the tax net.
According to him, companies are also required by law to declare their fixed assets in their accounts and are to identify if they are not existing and what they are doing with the property.
Olawore who is the President of the Nigerian-British Chamber of Commerce (NBCC) said, there is no direct implications to the real estate as it is all about a way of bringing a lot of people to the tax net, since property is physical and cannot run away.