BY BAMIDELE FAMOOFO
The International Centre for Tax Research and Development has cautioned the Federal Inland Revenue Service from introducing multiple tax in Value Added Tax as well as increasing the tax burden of the consumers in order for investors not to abandon manufacturing which will yield to importation.
President of International Centre for Tax Research and Development and Former Chairman, Ogun State Internal Revenue Service, Morenike Tejuade Babington-Ashaye, while speaking in an interview with the press stated that presently, the cost of producing goods in the country is higher than the goods imported adding that increasing VAT is not the solution as it could lead to employees being laid off from work, thereby increasing the rate of unemployment.
According to her, wanting to take VAT services to the market does not fit into the system of the VAT because they’re traders and are intermediaries between the manufacturers and the distributors, noting that the retailers has no value to add as there must be a value added to any product before VAT is charged, ‘Otherwise such tax becomes Sales Tax which will be additional tax burden to the consumers’.
Morenike appealed to FIRS to collaborate with MATAN to make sure those who are meant to pay their taxes pay and they should as well monitor their payments and not ask the market association to add VAT as it has been added on the goods during purchase.
She added that the way internal revenue can generate funds genuinely is to make sure that the legislators are charged properly.
She reiterated that taxation is so simple and those who have embezzled public funds should be made to pay tax; whether it is stolen money or not, as long as it is in one’s possession and it is a public fund tax must be paid, and companies must be monitored closely to ensure payment of correct taxes.
The foremost tax practitioner advised FIRS to look into companies that are used to launder public funds in a secret way.
Morenike added that FIRS should go into high network people, to see how they can generate funds as there are lots of people with public funds and those who have the commonwealth of the country in their possession.
“FIRS in partnership with Market Traders Association of Nigeria in return takes into account some exemptions which includes any business that has an annual turnover that falls below N25 million is exempt from registering or charging Value Added Tax, Traders in VAT-exempt goods including medical and pharmaceutical products, basic food items, educational books and materials, baby products, amongst others are not expected to charge nor remit VAT under the VAT Direct Initiative, VAT-Exempt Services such as medical services; services rendered by Micro-Finance Banks and Mortgage Institutions; Plays and Performances conducted by educational institutions as part of learning are not under the VAT Direct Initiative.
“The above exemptions can be found in the Value Added Tax (VAT) Act and the amendment in the Finance Act 22019 part IV of the Value Added Tax Act, which amended Section 15 of VAT Act, and substituted Section 15(1) and (2). Under (2) where there is a provision exempting a taxable person with less than N25 million taxable supplies from charging VAT as it states that “Provided that any person that does not fall within the threshold in subsection (1) is exempt is exempt from the provisions of section 8(2-), 13, 29, 34, and 35 of this Act,” she said.
According to the ACT, these exemptions include Section 8(2) – Registration; Section 13 – Remission of tax collected ;Section 29 – Failure to issue tax invoice (offence and conviction); Section 34 Failure to collect tax (Penalty); Section 35 – Failure to submit returns (Fine).
Morenike Babington-Ashaye revealed that FIRS should not be in a hurry to implement this new initiative without giving proper education to the public on the process of implementation. “This new direct initiative is not clear to the public and FIRS must carry the people along. It is not enough to issue directives and information. In any democratic setting implementation of new policies takes at least six months for stakeholders to key into the system. We cannot because looking for funds to pay foreign and local loans ignore the rules of implementing tax policies or carrying out professional tax administration,” she warned.