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Experts Want Strict Enforcement Of Tax Laws

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Some tax experts have called for stricter punishment for tax defaulters, to make funds available for the provision of critical infrastructure and growth of the economy.
The experts, in separate interviews with The Tide source in Lagos, Monday also called for a probe of the tax records of politicians.
The experts spoke against the background of the recent revelation by the Federal Inland Revenue (FIRS) that close to 7,000 billionaires had defaulted in payment of tax.
Consequently, the FIRS said it would go after the defaulting taxpayers who were raking in billions in Nigeria and not paying taxes.
“This category of Nigerians has deprived the country of huge sums of money needed to build roads, hospitals, schools and others.
“Most developed and developing economies rely on tax for infrastructural development. There is need for stricter punishment on tax evaders in the country.
“Tax evaders are sent to jail in other climes,” Prof. Sheriffdeen Tella, a Senior Economist at the Olabisi Onabanjo University, Ago, Iwoye, said.
The economist insisted that the FIRS should probe the tax records of politicians who were spending millions of naira to collect forms for their party primaries.
The Director, Legal Services, Lagos State Internal Revenue Service (LIRS), Mr Seyi Alade, also attributed incessant tax evasion in Nigeria to non prioritisation of taxation by the Federal Government.
Alade said the federal government did not prioritise the issue of tax which could be used to develop infrastructure.
Alade explained that the revelation that more than 6,772 billionaires evaded tax meant that there was less revenue available to the government to fund critical infrastructure.
According him, such huge tax evasion was partly responsible for the level of the country’s rising external debt, because government is borrowing more to take care of the infrastructure gap.
“Taxation is a tool for economic management and development and should support sustainable growth and infrastructural development at all times.
“Payment of taxes is a civic responsibility of all legible tax payers and evasion of taxes is tantamount to depriving the economy of its sustainable means of economic development.
“Tax evasion is the bane of the tax system and it is also a criminal offence and should be strongly decried.
“Of course it will lead to tangible economic loss more so as revenue from oil is no longer stable,” Alade said.
The Assistant Director, Chartered Institute of Taxation of Nigeria (CITN), Mrs Oso Afolake, advised the federal government to streamline the taxation system for more revenue generation.
Afolake blamed the rampant tax evasion in the country to weak taxation system, which she said was fixable by the government.
She called for more stringent application of the nation’s tax statute by tax authorities against tax defaulters and also against entities that have statutory duties to remit taxes.
According to her, for multinationals like MTN and many others operating in Nigeria to evade tax, means lots of economic loss on the country.
She said it would impact on the economy negatively; making the tax to GDP ratio to remain low.
“Tax evasion results to reduction in revenue obtainable from taxes and this will deprive government the required resources to perform its statutory duties.
“Our government usually doesn’t give priority to the issue of tax, may be because of the resources at their disposal.
“It behooves on the government to restructure the tax system such that every legible taxpayer will be compelled to pay tax as at when due,” Afolake said.
The president, International Centre for Tax Research and Development, Mrs Morenike Babington-Ashaye, urged government to lay emphasis on building Nigerians’ attitude towards voluntary compliance to tax law through processes and procedures.
Babington-Ashaye argued that using the banks to go after defaulting taxpayers was not a legitimate process.
“Actually, I don’t believe the FIRS should be going beyond the law. The process by the FIRS is turning to be a military system.
“The only way they can do that is if they go through the judiciary process by taking the defaulting taxpayers to court. Then, the court makes a judgement that they pay penalty and interest,” she said.
Babington-Ashaye, also a founding member of the Chartered Institute of Taxation of Nigeria (CITN), described the FIRS’s process of asking the banks to seize money as ‘going through the back door’.
This, the president said might lead to customers not saving their money in the banks, thereby reducing their resources for operation.
“It will also encourage some individuals and companies to be transacting businesses in another companies’ names. So, the process is not legitimate.
“In the first instance the banks are not direct agents and do not have any judiciary position between the FIRS and the taxpayers,” she said.
A Tax Leader, PwC West Africa, Mr Taiwo Oyedele, described the process as unconventional, and that executing such order should be in accordance with the law to avoid negative impact on businesses and ease of paying taxes.
Oyedele advised that tax payers to pay attention to their tax affairs and discharge their tax obligations as and when due.

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Electricity: Bands BCDE Suffer No Power

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As DisCos struggle to meet the required 20 hours power supply to “Band A” customers following shortage of gas which has hindered power generation since January, customers on Bands B, C, D, and E are left with no light, according to The Tide’s source.
The source learnt that the distribution companies were concentrating more on the Band A customers to keep their Band A feeders from being downgraded.
Band A customers enjoy a minimum of 20 hours of electricity daily.
On April 3, the Nigerian Electricity Regulatory Commission announced that subsidies would no longer be paid for the electricity consumed by Band A customers.
The electricity tariff for Band A customers was revised upward from N68 per kilowatt-hour to N255/KWh.
1 kWh is the amount of energy that could be used if a 1,000-watt appliance is kept running for an hour. For example, a 100-watt light bulb operating for 10 hours would use 1 kWh.
After the power subsidy was removed, the NERC directed the 11 DisCos to release their lists of Band A customers, who must get at least a 20-hour supply daily.
The regulator and the Minister of Power, Adebayo Adelabu, emphasised that there would be sanctions should the distribution companies fail to supply Band A customers with 20 hours of electricity.
The DisCos were also mandated to inform customers whenever they failed to meet the required minimum service level.
NERC said where a DisCo failed to deliver on the committed level of service on a Band A feeder for two consecutive days, the DisCo should, by 10 am the next day, publish on its website an explanation of the reasons for the failure and update the affected customers on the timeline for restoration of service to the committed level.
It stated that if a customer’s service level improves to at least 20 hours, they should be upgraded from lower service bands to Band A, adding that if the DisCo fails to meet the committed service level to a Band A feeder for seven consecutive days, the feeder will be downgraded to the recorded level of supply by the applicable framework.
In their efforts to meet up with the service level, the source gathered that some of the DisCos were gradually resorting to diverting the little allocation they get to the Band A customers.
This is in spite of the fact that the gas constraints that have hindered power generation since the beginning of the year have yet to be addressed.
Many communities said they could not boast 30 hours of power supply since January, a development the government blamed on the refusal of gas companies to supply gas to power-generating companies due to heavy debt.
Recall that recently, the IBEDC spokesperson, Busolami Tunwase, explained that, “One of the primary factors is the low supply of gas to generating companies, which has led to a gradual decrease in available generation on the grid.

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‘Inappropriate Insider Dealing’ Earns Julius Berger NGX Sanction

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Authorities at the Nigerian Exchange (NGX) have sanctioned Julius Berger Nigeria (JBN) Plc for engaging in inappropriate insider dealing in shares.
According to a document obtained by The Tide’s source, JBN, Nigeria’s leading construction company, was sanctioned for “insider dealing during closed period”.
Incorporated in 1970, Julius Berger, Nigeria, which was incorporated in 1970, became a publicly quoted company in 1991 and has more than 10,000 shareholders.
NGX Regulatory Company (NGX RegCo), the self regulatory organisation (SRO) that regulates activities at the NGX, stated that JBN breached certain provisions of the listing rules and was thus sanctioned accordingly.
According to NGX RegCo, JBN violated provisions on “closed period”, in breach of the construction company’s commitment to adhere to listing rules and standards.
The NGX had tightened its rules and regulations to checkmate boardroom intrigues and block information arbitrage that tend to confer advantages on companies’ directors.
The amendments expanded the scope and authority of corporate financial reporting while eliminating gaps that allowed companies to sidetrack relevant rules in stage-managing corporate compliance.
The enhanced framework provided clarity and greater disclosures on directors’ trading in shares, corporate liability for accuracy and compliance of financial statement, dissuade bogus dividend payment and other sundry boardroom’s maneuverings that tend to favour insiders.
The amendments came on the heels of noticeable increase in violations of rules on ‘closed period’, a period when directors are banned from trading in the shares of their companies.
Rule 17.17 of the NGX disallows insiders and their connected persons from trading in the shares or bonds of their companies during the ‘closed period’ or any period during which trading is restricted.
This period is mostly at a period of sensitive material information, like prior knowledge of financials, dividends or major corporate changes, which places directors and other insiders at advantage above other general and retail investors.
A review of the disclosure violations at the stock market had shown that all violations in 2021 were related to violation of Rule 17.17 on ‘closed period’.
Under the amendments, in addition to the provisions of relevant accounting standards, laws, rules and requirements regarding preparation of financial statements, companies are now required to include several specific declarations on securities transactions by directors, changes in shareholding structure, self-assessment on compliance with corporate governance standards and internal code for directors on securities transactions among others.

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Nigerian Breweries To Suspend Operations In Two Plants

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Nigerian Breweries Plc says it is planning for a company-wide reorganisation which include the temporary suspension of operations in two of its nine breweries.
It said this is part of a company-wide reorganisation as part of a strategic recovery plan  aimed at securing a resilient and sustainable future for its stakeholders.
The Business Recovery Plan includes a rights issue and a company-wide reorganisation exercise which includes temporary suspension of two of its nine breweries and an optimisation of production capacity in the other seven breweries, some of which have received significant capital investment in recent years.
These measures include relocating and redistributing employees to the remaining seven breweries and offering support and severance packages to those that become unavoidably affected.
The company said this move is essential to improve its operational efficiency, financial stability and enhance a return of the business to profitability, in the face of the persistently challenging business environment.
In letters signed by the company’s Human Resource Director, Grace Omo-Lamai, and addressed to the leadership of the National Union of Food, Beverage & Tobacco Employees (NUFBTE) and the Food Beverage and Tobacco Senior Staff Association (FOBTOB), the company informed both unions that its proposed plan would include operational efficiency measures and a company-wide reorganisation that includes the temporary suspension of operations in two of its nine breweries.
As a result, and in accordance with labour requirements, the company invited the unions to discussions on the implications of the proposed measures.
Recall that the company recently notified the Nigerian Exchange Group (NGX) of its plan to raise capital of up to N600 billion by way of a rights issue, as a means of restoring the company’s balance sheet to a healthy position following the net finance expenses of N189 billion recorded in 2023 driven mainly by a foreign exchange loss of N153 billion resulting from the devaluation of the naira.
Speaking on these developments, the Managing Director/CEO, Nigerian Breweries, Hans Essaadi, described the business recovery plan as strategic and vital for business continuity.

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