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Viable Tax System Vital to Revenue Drive –CITN

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Evaluation of Public Accountability and Tax Culture among Tax Payers in Nigeria
  • Viable Tax System Vital to Revenue Drive –CITN

The Chartered Institute of Taxation of Nigeria and the Lagos State Internal Revenue Service have emphasised the importance of tax compliance as the country steps up its revenue mobilisation drive.

The bodies, therefore, said getting taxpayers enlightened on their responsibility in paying taxes was part of the social contract between citizens and the government.

They said this would help taxpayers to understand their obligations under the various tax laws.

Official of the CITN and the LIRS spoke at a joint taxpayers’ enlightenment programme organised in Lagos recently.

It was the second tax compliance sensitisation series to be organsed by the institute.

The event, which focused on how to file tax returns, was tagged, “Joint taxpayers’ education and enlightenment programme.”

The President, CITN, Dr. Teju Somorin, said filing of tax returns was an important component of the tax compliance process.

She said, “It is our expectation that at the end of this programme, taxpayers would be able to understand the process involved in filing of tax returns in a prescribed manner, timing for payment of taxes, applicable penalties and sanctions for tax default.

“A viable tax system is the panacea to our revenue mobilisation challenges with every stakeholder playing their part. It is in this regard that we have enlisted the partnership of the LIRS being a tax agency of government to be a part of this programme.”

She explained further that although the programme was meant to enhance tax compliance and assist taxpayers to make informed decisions in handling their tax affairs, the institute had no intention to take over the responsibilities of the tax authorities but to support them in ensuring that taxpayers were better informed.

“This in our view will bring about a better understanding of their rights and obligations as taxpayers thereby engendering increased compliance and reducing, if not eliminating, the tendency to default in payment of taxes,” she added.

Somorin, who noted that taxes were the ingredients of a civilised and functional society, said the time was ripe for the government to review the existing tax laws in order to remove “obsolete provisions and ambiguities.”

According to her, the laws have been structured in such a way that makes it difficult for a layman to understand the provisions.

The Executive Chairman, LIRS, Mr. Ayodele Subair, who was represented by the Director, Special Duties, Mr. Owolabi Kamson, said the state would partner relevant stakeholders to enhance tax compliance in the state.

According to him, the state will continue to do everything to make tax payment easy and convenient for the people.

The Dean, Tax Policy and Administration Faculty, CITN, Chris Onyegbule, in his presentation, said Nigeria’s tax-to-GDP of 6.1 per cent was very low.

He said, “The current tax-to-GDP ratio is 34 per cent on the average for Organisation for Economic Cooperation and Development countries; average of 16.8 per cent for developing countries under tax reform. Unfortunately, the rate is 6.1 per cent for Nigeria.

“The size of the informal sector in Nigeria is estimated at about 60 per cent of the GDP. The implication is that the untapped tax potential in Nigeria resides in the informal sector and in personal income tax.”

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

Banking Sector

COVID-19: CBN Extends Loan Repayment by Another One Year

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Central Bank Extends One-Year Moratorium by 12 Months

The Central Bank of Nigeria (CBN) has extended the repayment of its discounted interest rate on intervention facility by another one-year following the expiration of the first 12 months moratorium approved on March 1, 2020.

The apex bank stated in a circular titled ‘Re: Regulatory forbearance for the restructuring of credit facilities of other financial institutions impacted by COVID-19’ and released on Wednesday to all financial institutions.

In the circular signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, CBN, the apex bank said the role-over of the moratorium on the facilities would be considered on a case by case basis.

The circular read, “The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from nine per cent to five per cent per annum for one year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 pandemic on the Nigerian economy.

“Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.

“Following the expiration of the above timelines, the CBN hereby approves as follows:

“The extension by another 12 months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities.

“The role-over of the moratorium on the above facilities shall be considered on a case by case basis.”

It would be recalled that the apex bank reduced the interest rate on its intervention facility from nine percent to five percent and approved a 12-month moratorium in March 2020 to ease the negative impact of COVID-19 on businesses.

To further deepen economic recovery and stimulate growth, the apex bank has extended the one year-moratorium until February 28, 2022.

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Finance

MTN Nigeria Generates N1.35 Trillion in Revenue in 2020

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MTN Nigeria Grows Revenue by 15.1 Percent from N1.169 Trillion in 2019 to N1.35 Trillion in 2020

Despite the COVID-19 pandemic and challenging business environment, MTN Nigeria realised N1.346 trillion in revenue in the financial year ended December 31, 2020.

The leading telecommunications giant grew revenue by 15.1 percent from N1.169 trillion posted in the same period of 2019.

Operating profit surprisingly jumped by 8.5 percent from N393.225 billion in 2019 to N426.713 billion in 2020.

This, the telecom giant attributed to the surge in finance costs due to increased borrowings from N413 billion in 2019 to N521 billion in 2020.

MTN Nigeria further stated that the increase in finance costs was the reason for the decline in growth of profit before tax to 2.6 percent.

MTN Nigeria grew profit before tax by 2.6 percent to N298.874 billion, up from N291.277 billion filed in the corresponding period of 2019.

The company posted N205.214 billion profit for the year, a 0.9 percent increase from N203.283 billion recorded in the 2019 financial year.

Share capital remained unchanged at N407 million. While Total equity increased by 22.3 percent from N145.857 billion in 2019 to N178.386 billion in 2020.

MTN Nigeria’s market price per share increased by 61.8 percent from N105 to N169.90.

While market capitalisation as at year-end also expanded by 61.8 percent to N3.458 trillion, up from N2.137 trillion.

The number of shares issued and fully paid as at year-end stood at 20.354 million.

MTN Nigeria margins were affected by Naira devaluations and capital expenditure due to the new 4G network coverage roll-out.

Margins were adversely affected by the effect of naira devaluation and expenses associated with new sites’ roll-out to boost 4G network coverage in FY’20.

“On the former, we note that MTNN expanded the scope of its service agreement with IHS Holding Limited and changed the reference rate for converting USD tower expenses to NAFEX (vs CBN’s official rate previously). Thus, over the full-year period, the company’s operating margin contracted by 1.9 ppts YoY to 31.7%,” CardinalStone stated in its latest report.

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Finance

Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

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Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

Nestle Nigeria, a leading food and beverage company, has declared a final dividend of N35.50k per 50 kobo ordinary share for the year ended December 31, 2020.

The beverage company said N24.50k of the amount declared was from the after-tax profit of 2020 and N5 and N6 were from the after-tax retained earnings of the years ended December 2019 and 2018, respectively.

Nestle Nigeria stated that the amount declared is subject to appropriate withholding tax and approval at the Annual General Meeting of shareholders.

It also noted that payment will be made only to shareholders whose names appear in the Register of Members as at the close of business on 21 May 2021.

Dividends will be paid electronically to shareholders whose names appear on the Register of Members as at 21 May 2021, and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their Bank accounts.

Shareholders who are yet to complete the e-dividend registration are advised to download the Registrar’s E-Dividend Mandate Activation Form, which is also available on their website: www.gtlregistrars.com, complete and submit to the Registrar or their respective Banks.

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