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States Failed to Remit N41bn VAT – FIRS

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  • States Failed to Remit N41bn VAT – FIRS

The Federal Inland Revenue Service has accused state governments of failing to remit Value Added Tax to the tune of N41bn to the Federal Government’s coffers.

The Jigawa State Governor, Abubakar Badaru, disclosed this to State House correspondents at the end of the meeting of the National Economic Council presided over by the Acting President, Yemi Osinbajo.

This came just as the Lagos Chamber of Commerce and Industry has faulted the provisions in Section 31 of the Federal Inland Revenue Service Act, which allowed for the freezing of accounts of tax defaulters.

Badaru said the indebtedness of the state governments formed part of the presentation made to the council by the Chairman of the FIRS, Babatunde Fowler.

The governor quoted the FIRS boss as saying that the state governments had only remitted about N40bn VAT and withholding tax to the FIRS between January and July.

He said Fowler also informed the council members of some initiatives meant to enhance tax collection and remittance from the states.

Badaru said, “We had a briefing from the Chairman of the FIRS. It dwelt on the two aspects of tax. One is the Value Added Tax that is being collected by states. He informed the states what the positions are, that there is outstanding VAT from the states to the tune of N41bn.

“The FIRS also came up with new techniques/platform that will help in VAT/withholding tax collection. It is very important when talking of zero oil economy. Currently, a lot is going on, on how to remit tax. With the new initiative, tax can now be transferred to the Federal Government.

“He said, so far, from January to date, about N40bn had been remitted from the states. This is a significant figure from what happened last year. So, the states are well notified and they are willing to pay.”

Badaru also briefed on the measures by NEC to optimise the contributions of the Micro Small Medium Enterprises to the nation’s tax profile.

He said the number of the MSMEs in the country had reached 37 million.

The Minister of Finance, Kemi Adeosun, reported to NEC that as of August 14, 2018 that the balance in the Excess Crude Account stood at $2, 250, 434, 918.00; Stabilisation Fund Account, N21, 591, 091, 564.37; and Natural Resources Development Fund, N143, 479, 688, 711. 25.

Meanwhile, Badaru confirmed to journalists that the Nigeria Governors Forum had engaged the services of lawyers to challenge the probe of states’ security votes by the Economic and Financial Crimes Commission.

The anti-graft agency had recently initiated a process to probe Benue State Governor Samuel Ortom’s security votes, drawing the wrath of the state chief executives.

Badaru confirmed to newsmen that the issue was discussed by the governors in their meeting in Abuja on Wednesday night.

He said the lawyers had been instructed to investigate the case.

“The issue was discussed at the governors’ forum and the position is that we will have our lawyers see the legality of doing that.

“After giving us the report, then we will see the next line of action to take,” he said.

In a related development, the Director-General, LCCI, Mr Muda Yusuf, has described the provisions in section 31 of the FIRS Act as ‘draconian’.

The Act gives the FIRS the powers to appoint collection agents for the recovery of tax payable by the taxpayer. Such agent will be mandated to pay any tax payable by the taxpayer from any money held by the agent on behalf of the taxpayer.

The chamber was reacting to a recent decision by the FIRS to appoint banks as collecting agents and freeze accounts of taxpayers considered to be in default of tax payment.

The FIRS had directed that such account be debited to the tune of the tax debt.

“This provision is draconian and could be used as a tool of intimidation, coercion and harassment of taxpayers. It should be invoked with utmost discretion and caution,” Yusuf said.

In a statement on Thursday, the LCCI DG pointed out that the provision in the FIRS Act could be used as a tool of intimidation, coercion and harassment of taxpayers.

He said, “It should be invoked with utmost discretion and caution. The LCCI is a strong proponent of regulatory compliance by private sector players. However, it is important to underscore the fact that tax administration should be in consonance with the basic tenets of the rule of law and the fundamental principles of a good tax system.

“Tax administration should be consistent with the basic principles of equity, fairness, legality and accountability. The LCCI is concerned about the recent turn of events, especially the freezing of accounts of bank customers based on tax assessments that are in dispute. This development raises a number of key concerns which need to be urgently addressed.”

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

Peter Obaseki Retires as Chief Operating Officer of FCMB Group Plc

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The Board of Directors of FCMB Group Plc has announced the retirement of Mr. Peter Obaseki, the Chief Operating Officer of the financial institution, with effect from March 1, 2021. He was also an Executive Director of the Group.

His retirement was approved at a meeting of the Board of the Group on February 26, 2021. This has also been announced in a statement to the Nigerian Stock Exchange (NSE) by the financial institution.

The Chairman of FCMB Group Plc’s Board of Directors, Mr Oladipupo Jadesimi, thanked Mr. Obaseki for his valuable service and excellent support to the Board for many years.

FCMB Group Plc is a holding company divided along three business Groups; Commercial and Retail Banking (First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited); Investment Banking (FCMB Capital Markets Limited and CSL Stockbrokers Limited); as well as Asset & Wealth Management (FCMB Pensions Limited, FCMB Asset Management Limited and FCMB Trustees Limited).

The Group and its subsidiaries are leaders in their respective segments with strong fundamentals.

For more information about FCMB Group Plc, please visit www.fcmbgroup.com.

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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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