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Taxation: Banks Set to Release Customers’ Information to FG

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  • Taxation: Banks Set to Release Customers’ Information to FG

The Deposit Money Banks in the country are about installing appropriate technologies that will enable them to submit the information of wealthy customers and other taxpayers to the Federal Government under the Common Reporting Standard programme, which Nigeria signed up to last August.

The CRS, an automatic exchange of information programme, is being driven by the Organisation for Economic Co-operation and Development, an intergovernmental body with 35 member countries.

The CRS, which is similar to the United States Foreign Account Tax Compliance Act, promotes sharing of information across borders.

The Federal Government has also signed up to the Beneficial Ownership Register with the United Kingdom for the purpose of driving the Voluntary Asset and Income Declaration Scheme.

The Federal Government has already directed the DMBs to release information on the income and assets of their customers, especially those of over 12,000 high net worth individuals, who are either not paying taxes or have been underpaying.

This is in preparation for the government’s plan to enforce compliance by prosecuting the high net worth individuals who fail to settle their tax liabilities or commit to the gradual payment after the expiration of the tax amnesty on March 31.

The Federal Government’s nine-month tax amnesty under the VAIDS will expire in less than two months.

The Federal Inland Revenue Service and the tax authorities of the 36 states under Joint Tax Board launched the VAIDS on July 1, 2017.

The scheme is a nine-month tax amnesty given to every Nigerian, especially the high net worth individuals, to enable them to declare their assets and incomes and get certain waivers, including penalties and interest payments.

As the VAIDS expires on March 31 this year, banks are said to be working on the technology that will enable them to submit the required data to the tax authorities.

Findings showed that although the banks were making progress on the technology, it would take some time to perfect and submit taxpayers’ information to the government in line with the CRS programme.

The information is expected to be shared with other countries, which in turn will make available details of accounts and assets held by Nigerians in them.

This is preparatory to the Federal Government’s plan to prosecute defaulting taxpayers, especially the over 12,000 high net worth individuals scattered across Lagos, Abuja, Port Harcourt and other parts of the country, who have failed to take advantage of the scheme.

A partner, Tax and Regulatory Services, PricewaterhouseCoopers Nigeria, Esiri Agbeyi, said the government had discovered that many Nigerians were not in the tax net.

According to Agbeyi, government’s findings have shown that many of the high net worth individuals, including those who have expensive assets within and outside the country, are either not paying their taxes or paying far less than what they should be paying.

As a result, the PwC partner stated that the Federal Government was committed to implementing VAIDS to the letter.

She dropped the hint at a breakfast meeting organised by Ecobank Nigeria in Lagos on Friday, adding, “Nigeria’s tax to Gross Domestic Product ratio is currently at six per cent and the government is committed to taking it to 15 per cent. Statistics have shown that not so many people are in the tax base and many of the HNIs are not paying taxes or are paying less.

“The Federal Government has therefore directed that every taxpayer’s information must be collected by the banks and submitted to the tax authority.”

Agbeyi said the information being obtained by the Federal Government would be used to drive the VAIDS.

She stated that the Federal Government signed information exchange agreements with the United Kingdom last August and many other countries such as Ghana, to enable it to trace details of Nigerians’ funds and assets in foreign countries.

“The government is getting all these in place to drive the VAIDS. With all these in place, the government can then go after those who fail to take advantage of the tax amnesty,” Agbeyi added.

This is said to be similar to the US Foreign Account Tax Compliance Act. The US FATCA, which was passed as part of the HIRE Act, generally requires that foreign financial institutions and other non-financial foreign entities report the foreign assets held by their US accountholders or be subject to withholding tax.

According to reports, Nigeria has at least 12,000 high net worth individuals, the second highest in Africa, coming after South Africa, which has 40,000.

Of the over 12,000 high net worth individuals in Nigeria, over 6,800 are resident in Lagos, 4,000 in Abuja, while the remaining can be found in Port Harcourt and other states of the federation.

The Minister of Finance, Mrs. Kemi Adeosun, said the Federal Government was targeting about $1bn from the VAIDS before the March 31 deadline.

A professor of law specialising in taxation, Abiola Sanni, said tax amnesty had been used in several countries of the world to rake in billions of dollars in revenue for governments.

According to him, findings have shown that the government can get more in terms of tax revenue from the rich than from the poor.

Sanni said, “The informal sector is important and the government is already working on that. The truth is that the government can get more from the rich through a tax amnesty programme like the VAIDS.

“Tax amnesty has worked in many countries. Given our situation in Nigeria, tax amnesty will help the government to improve tax compliance and get more revenue to fund the budget.”

The Federal Government has confirmed that some foreign countries, including the UK, have commenced the Automatic Exchange of Tax Information, particularly on overseas assets held by Nigerians.

Adeosun gave this indication during the presentation of the Progress Report on Tax Laws Reform by the Vice Chairman of the National Tax Policy Implementation Committee, Mr. Taiwo Oyedele, in Abuja on Friday.

The minister expressed satisfaction with the data being supplied to Nigeria by foreign countries under the AETI, to which the country became a party in January this year.

She stated that Nigeria had written to a number of nations to request specific information about offshore trust and bank accounts held by its citizens.

The minister advised users of offshore structures to take advantage of the VAIDS to regularise their taxes before the expiry of the amnesty programme.

Adesoun said, “The offshore tax shelter system is basically over. Those who have hidden money overseas are being exposed and while Nigerians can legally keep their money anywhere in the world, they must first pay taxes due to the Nigerian government so that we can fund the needs of the masses and create jobs and wealth for our people.

“The moral argument against illicit financial flows and tax evasion and the strong international cooperation are such that every Nigerian taxpayer should do the right thing. The needs of our people for development override any other argument against payment of 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.

Finance

More Retirees Quit Pension Scheme, Collects N28.46 Billion

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Pensioners

114,837 Retirees Quit Pension Scheme, Collects N28.46 Billion

Thousands of retirees whose employers did not adequately fund their Retirement Savings Accounts and retired with balances below N550,000 have collected their contributions and quit the Contributory Pension Scheme (CPS).

A total of 114,837 employees who retired after attaining the age of 50 and had less than N550,000 in their CPS account had collected their contributions and left the scheme as of the end of June 2020.

This includes contributors from the state, federal and private sectors.

In the quarterly report released on Friday by the PenCom, these retirees withdrew a total sum of N28.46 billion since the inception of the scheme till June.

The report showed about 6,561 of the total retirees that left the program were from the Federal Government sector while 3,879 and 104,397 were from the state and private sectors, respectively.

The report also showed that some of those who collected their contributions included foreign nationals who retired and returned to their countries of origin.

A further breakdown showed as of the end of third quarter of 2019, a total of 109,284 retirees with similar low balances withdrew N27.09 billion. While by the final quarter of 2019, 2,241 retirees withdrew about N569.27 million.

In the first quarter and second quarter of 2020, about 2,227 and 1,085 retirees withdrawn N531.95 million and N274.09 million, respectively. Bringing the total from inception to N28.46 billion.

PenCom stated in its Q2 report on en-bloc payments that, “The commission granted approval for the payment of the entire RSA balances of the categories of retirees whose RSA balances were N550,000 or below and considered insufficient to procure a programmed withdrawal or annuity of a reasonable amount over an expected life span.

“Approval was also granted for payment of RSA balances to foreign nationals who decided to return to their home countries after making contributions under the CPS.

“Accordingly, the sum of N274.78m was paid to 1,085 retirees, which comprised 140 from the public sector retirees (FGN and state) and 1,085 from the private sector retirees during the second quarter.

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Finance

Central Bank to Promote Zero Balance Account Opening to Drive Financial Inclusion

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Central Bank

Banks Now Accept Zero Balance Account Opening to Deepen Financial Inclusion

In an effort to boost financial inclusion in the country, the Central Bank of Nigeria has said it would start promoting zero balance account opening to encourage and lure the unbanked into the banking system.

The apex bank disclosed this in its report titled ‘Monetary, credit, foreign trade and exchange policy guidelines for fiscal years 2020/2021’.

The report read in part, “As part of its effort towards promoting greater financial inclusion in the country, the bank shall continue to encourage banks to intensify deposit mobilisation during the 2020/2021 fiscal years.

“Accordingly, banks shall allow zero balances for opening new bank accounts and simplify their account opening processes, while adhering to Know-Your-Customer requirements.

“Banks are also encouraged to develop new products that would provide greater access to credit.”

The apex bank said the Shared Agency Network Expansion Facility, launched to deepen provision of financial services in under-served and unserved locations and drive financial inclusion through agent banking, would continue in the 2020/2021 fiscal years.

Banks, mobile money operators and super-agents would also continue to render returns in the prescribed formats and frequency to the CBN.

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Finance

Investors Oversubscribed for FGN Bonds by N205.87 Billion in October

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bonds

FG October Bonds Oversubscribed by N205.87 Billion

The Debt Management Office (DMO) has said investors oversubscribed for the Federal Government’s October bonds by N205.87 billion.

The DMO stated this after concluding the monthly FGN bonds auction on Wednesday.

Two instruments of 12.5 per cent FGN March 2035 re-opening 15-year bond and 9.8 per cent FGN July 2045 re-opening 25-year bond were auctioned.

The two bonds of N15bn each with a total auction figure of N30bn received a subscription of N235.87bn.

The 15-year tenor and 25-year tenor bonds received 99 and 67 bids but recorded 21 and 26 successful bids respectively.

The amounts allotted for each of the bids were N20bn and N25bn respectively.

According to the DMO, successful bids for the 15-year tenor bond and 25-year tenor bonds were allotted at the marginal rates of 4.97 per cent and six per cent respectively.

However, it added, the original coupon rates of 12.5 per cent for the 12.5 per cent FGN March 2035 bond and the 9.8 per cent for the 9.8 per cent FGN July 2045 bonds would be maintained.

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