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Only 40 Super-rich Nigerians Pay Correct tax — Govt Report



Nigeria tax revenue
  • Only 40 Super-rich Nigerians Pay Correct Tax

Only 40 super -rich Nigerians pay correct tax on their income, a government report commissioned by the Federal Inland Revenue Service and the Joint Tax Board has found.

A very reliable source in government said during the week that the report was prepared from tax data collected from the 36 states of the federation and Abuja.

The source, a senior public servant, said the findings of the FIRS would influence the fashioning of a new tax amnesty programme to be launched by the Federal Government later this year. Additional findings also revealed that government would soon go after super-rich tax defaulters whose lavish lifestyles do not correlate with the small taxes that they pay annually.

A senior government official told our correspondent during the week that “in the process of tracing stolen funds, it has become apparent that a significant number of Nigerians have assets and fund lifestyles that are not consistent with their income as declared on their tax returns.

“With the assistance of international asset tracing professionals, the government has already identified that the number of potential tax defaulters is significant.”

The tax report entitled, ‘List of individual taxpayers that paid N10m and above in 2016’, was prepared on January 24, 2017. The document, which was commissioned to examine the tax compliance of Nigerians who are “High Net-Worth Individuals,” was obtained during the week.

For the purpose of the exercise, HNIs were defined as Nigerians who must have paid direct assessment tax of at least N10m in 2016 and, thus, were assumed to have made at least N40m and above in income in the same year.

The source said the main implication of the report was that most of the country’s rich and super-rich do not pay correct tax.

“Of course, there are more than 40 people who earn more than N40m in Nigeria in 2016. The rich are not paying. It is the reason tax is just six per cent of our GDP,” the source said.

The report shows that the 40 individuals, who paid at least N10m tax in 2016, paid a total of N1,028,715,362.45 (one billion, twenty-eight million, seven hundred and fifteen thousand, three hundred and sixty-two naira and forty-five kobo). According to the report, all the 40 individuals paid tax in Lagos, an indication that the other 35 states and Abuja have no individuals who had an income of N40m and above in 2016.

“Most HNIs are playing games with the system. They pay tax only on their salaries, which is just a fraction of their income and hide the rest. Where are all the big names that make hundreds of millions and billions every year?” the source asked.

The document was silent on the total number of Nigerians paying tax. It also did not project the number of super rich Nigerians who are expected to pay tax.

The chairman of the JTB, Mr. Tunde Fowler, recently gave the total number of Nigerians paying tax as 13.4million. Fowler spoke at the 136th meeting of the JTB in Abuja where he also revealed that 3,414,496 million new taxpayers were added to the national tax register under six months. The JTB has said that it plans to increase the number of individual taxpayers to 20 million by December 2016.

Also, the tax authorities have always said that the consumption pattern of Nigeria’s super rich and the volume of trade in luxury show that there are thousands of high-income earners who understate their income. For example, an exclusive report published by The PUNCH says the number of private jets in the country rose from 20 to over 150. The report further says that each of the private jet acquired within the period was bought for about $50 million on the average.

A senior tax official, who spoke on condition of anonymity, expressed concerns about the implication of the report. The official said, “Nigeria’s low tax revenues are at variance with the lifestyles of a large number of its people and with the value of assets known to be owned by Nigerian residents around the world. There has been a systemic breakdown of compliance with the tax system with various strategies used to evade tax obligations.

“These HNIs transfer assets overseas. They use offshore companies in tax havens to secure assets and they register assets in nominee’s names. The information obtained on some citizens suggests clearly that the funds they used to purchase overseas assets far exceeded the income declared in the tax returns, rendering such returns false and creating a tax liability.”

Figures from the Federal Inland Revenue Service show that the total number of taxpayers in Nigeria is just 12.5million. Of these, 96 per cent have their taxes deducted at source under PAYE and just 4 per cent comply with Direct Assessment. Nigeria’s tax to GDP ratio is 6 per cent and one of the lowest in the world. South Africa’s tax to GDP ratio is 27 per cent while Ghana’s is 15.9 per cent. Most developed nations have between 32 per cent to 35 per cent tax to GDP ratio.

Meanwhile, the Federal Government is poised to launch a major tax drive to compel super-rich Nigerians to pay correct tax. Multiple sources in government told our correspondent that the new initiative would include a tax amnesty and a revitalised enforcement drive.

A government document sighted by our reporter described the new initiative tentatively as “The Nigerian National Tax Amnesty Programme.’

The source said, “This would reduce the amount that government would have had to borrow for essential projects and would enable Nigeria to make a concerted effort to upgrade essential infrastructure and spur development.

“It is a time-limited opportunity for taxpayers who are in default with their Nigerian tax liabilities to pay the tax due from them relating to previous tax periods. This enables them to regularise their transactions and get Nigerian tax clearance for all the relevant years without fear of criminal prosecution and with the benefit of forgiveness of interest and penalties.”

The Buhari administration had entered into Automatic Exchange of Information agreements with some countries where rich Nigerians have assets in cash, property and other items of value. Some of the countries are United States of America, Canada, United Arab Emirates, United Kingdom, Switzerland and others. The governments of these countries are expected to supply information on the holdings of Nigerians in these countries so that these Nigerians would be properly taxed.

A source privy to the details of this new initiative said, “These agreements will come into force in 2018 and mean that Nigeria will have access to information about the ownership of overseas assets by Nigerians. This information, together with local information, can be compared to tax payment records to identify underpayment of taxes and to support the criminal prosecution of tax evaders.”

When the source was told that Nigerians might view the amnesty as a means of escape for highly connected and rich Nigerians, the source said this was not the case.

The source said, “Even though ignorance of the law is not an excuse, government has decided to take the pragmatic approach of offering an amnesty window to allow Nigerians, who may have evaded tax, whether ignorantly or deliberately, the opportunity to do their civic duty and pay the correct taxes whilst providing much needed revenue for Nigeria’s infrastructure.

“Upon expiration of the amnesty programme, government will concentrate criminal prosecution efforts on those who have evaded taxes and yet failed to take advantage of the amnesty.

“A number of countries, including Indonesia, Italy and Argentina, who have seen their tax revenues illegally, moved to other nations have undertaken similar programmes to fund their national development.”

It was further gathered that the grace period allowed by an FIRS tax amnesty for waiver of interest and penalties would have lapsed by the time the amnesty programme commences.

“The Amnesty Programme is more comprehensive in terms of taxes and time frame. The commitments made by the FIRS during the programme will be respected save for discovery of new facts, non-disclosure and partial disclosure,” the source said.

The amnesty, according to sources, will last for a year and will not be renewed or extended.

“Once the amnesty period has expired, all the remaining tax defaulters who have not taken advantage of it will face the full force of the law,” the source said.

When contacted, The Head , Communications and Liaisons Department, Federal Inland Revenue Service, Mr. Wahab Gbadamosi, denied knowledge of the report. He said, “I am not in a position to respond to this because it is not plausible. We have more than 300 millionaires in Nigeria and it is not possible that it is only 40 of them (that are) paying correct tax.”

A tax expert, Mr. Dennis Afuberoh, told our correspondent that the poor pay more taxes than the rich because the latter evaded taxes with the aid of their highly-placed friends.

“That was one of the findings I made when I did a research. This is why President Muhammadu Buhari’s government has come out with a policy that places special tax on luxury cars. This is to ensure that even when the big men evade tax in other areas , they can’t do the same when they buy luxury cars which they like to ride.”

An activist, Debo Adeniran, also said the rich had perfected ways of evading taxes. According to him, the poor deserve tax rebates more than the wealthy.

“The poor do not have an escape route. Most of them are the civil servants, lowly-placed workers whose taxes are deducted from the source. Even traders who eke out a living hawking on the streets pay taxes to the local governments on a daily basis.

“The government is simply reluctant to correct this anomaly because they know how to assess taxes of these big industrialists and businessmen. They also have the capacity to audit their books and records.

“Low-income earners, whose salaries cannot shoulder their responsibilities should be given tax holidays or rebate. The poor are not being encouraged to survive within their means because the government is not giving them the necessary support.”

Another activist, Amitolu Shittu, said if tax criminals were allowed to go scot free, the economy would continue to bleed because money from tax is meant to be used to develop the nation.

He said, “My annual tax is N39,800 when ordinarily I should not pay more than N4,000. I don’t think anyone has been convicted for withholding tax. There are lots of multinationals, footballers and the rich who don’t pay tax. Only government workers and a few others pay tax monthly because that is where you get tax in bulk.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17




Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17

Tony Elumelu owned Heir Holdings Limited and its related company Transnational Corporation of Nigeria Plc on Friday announced it has completed the purchase of 45 percent stake in Oil Mining Lease (OML 17) through TNOG Oil and Gas Limited.

The acquisition includes all assets of Shell Petroleum Development Company of Nigeria Limited (30 Percent), Total E&P Nigeria Ltd (10 percent) and ENI (five percent) — in the lease.

It was further stated that TNOG Oil and Gas Limited will also have the sole right to operate OML 17.

The field presently has a production capacity of 27,000 barrels per day. Also, there are estimated 2P reserves (proven and probable) of 1.2 billion barrels and an additional one billion barrels in possible reserves — all of oil equivalent.

A consortium of global and regional banks and investors provided a financing component of $1.1 billion for the largest oil and gas financing in Africa in over a decade.

In a statement released on Friday, Shell said the completion was after all the necessary approvals have were received from authorities.

“A total of $453m was paid at completion with the balance to be paid over an agreed period. SPDC will retain its interest in the Port Harcourt Industrial and Residential Areas, which fall within the lease area,” the SPDC said.

Speaking after the completion of the deal, Elumelu said “We have a very clear vision: creating Africa’s first integrated energy multinational, a global quality business, uniquely focused on Africa and Africa’s energy needs. The acquisition of such a high-quality asset, with significant potential for further growth, is a strong statement of our confidence in Nigeria, the Nigerian oil and gas sector and a tribute to the extremely high-quality management team that we have assembled.

“As a Nigerian, and more particularly an indigene of the Niger Delta region, I understand well our responsibilities that come with stewardship of the asset, our engagement with communities and the strategic importance of the oil and gas sector in Nigeria. We see significant benefits from integrating our production, with our ability to power Nigeria, through Transcorp, and deliver value across the energy value chain.

“I would like to thank Shell, Total and ENI, for the professionalism of the process, the Federal Government of Nigeria, the Ministry of Petroleum Resources, and the NNPC for the confidence they have placed in us.”

Tony Elumelu is the Chairman of Heirs Holdings Limited, Transcorp and United Bank for Africa Plc.

Also, read Transcorp Plc Acquires FGN’s 100% Equity in Afam Power for N105 Billion

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Exporters Say CBN Pre-export Requirements is Frustrating Export of Goods



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Exporters Say CBN Pre-export Requirements is Frustrating Export of Goods

Exporters have said the recently introduced pre-export requirements by the Central Bank of Nigeria is creating unnecessary bottlenecks for exporters and the movement of goods out of the country.

Exporters, who spoke under the aegis of the Network of Practicing Non-oil Exporters of Nigeria (NPNEN), said the electronic Nigeria Export Proceed Form now required by financial institutions from exporters had come with so many challenges.

Ahmed Rabiu, the President, NPNEN, explained that the new policy had several requirements that often led to delays and loss of income on the part of exporters.

He said, “We acknowledge the CBN’s desire to ensure that all exports out of Nigeria are documented in order to ensure that the proceeds of such exports are repatriated.

“However, the reality on the field shows that the process is causing undue delays and consequently, encouraging corruption.

According to them, in the new pre-export requirements, the Central Bank of Nigeria wants an export transaction to be initiated through eNXP processing on the trade monitoring system.

After which exporters are expected to have a pre-shipment inspection agent, the Nigeria Customs Service and other designated government agencies carry out their pre-export inspections.

The exporters said the pre-shipment inspection agent was expected to issue a clean Certificate of Inspection while Customs would issue the Single Good Declaration. All these they said takes time and delay goods from leaving the country on time.

Pointing to a recent report, they said about N868 billion worth of goods bound for export were stuck at the ports due to the new policy.

Speaking further Rabiu said, “For example, for the PIA to issue the CCI, the exporter is required to upload a certificate of origin as one of the supporting documents for the eNXP.

“The PIA is also required to upload the CCI to the TRMS(M) and until this is done, the Customs service will not issue the Single Good Declaration.”

He added, “After issuing the SGD, the customs is further required to upload it into the TRMS before the goods are allowed to be gated into the port and loaded on the vessel by the shipping line.

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Ardova Plc in Talks to Acquire Enyo Retail and Supply Limited




Ardova Plc in Talks to Acquire Enyo Retail and Supply Limited

Ardova Plc, Nigeria’s leading integrated energy company, has commenced discussions to acquire Enyo Retail and Supply Limited.

According to the statement issued and signed by Oladehinde Nelson-Cole, Ag. Company Secretary/General Counsel, Ardova Plc, Enyo is one of the newest and fastest-growing retail and supply companies in the downstream sector.

It stated, “This announcement is pursuant to the acceptance in principle of AP’s offer and acquisition framework by the shareholders of Enyo, it is subject to the successful completion of a due diligence exercise and the receipt of all required regulatory approvals.”

“This announcement is pursuant to the acceptance in principle of AP’s offer and acquisition framework by the shareholders of Enyo, it is subject to the successful completion of a due diligence exercise and the receipt of all required regulatory approvals.

Speaking on the yet to be completed deal, Mr. Olumide Adeosun, CEO, Ardova Plc, said upon completion, Ardova will retain the Enyo branded stations which will operate side by side with the Ardova brand while simultaneously leveraging on the strengths of Ardova and its group companies.

He added that the two companies are determined to conclude the deal by the end of Q1 2021.

Enyo presently operates over 90 stations across the nation and attends to over 100,000 retail customers on a daily basis.

Ardova Plc and Enyo Retail & Supply Limited promised to furnish stakeholders with more information on the progress of the deal.

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