Security tax bill targets 5% of firms’ profits

Registered companies operating in Nigeria will have to pay up to 5 percent of their profit as Security Tax, if a proposed bill presently before the Senate scales through.

BusinessDay finds that when passed into law, funds realised will be disbursed among security agencies in the following manner: Nigeria Police Force 35 percent, Nigerian Civil Defence Corps 15 percent, Department of State Services 15 percent, Nigerian Prisons 25 percent and Nigeria Fire Service 10 percent.

The National Security Tax Fund Bill 2015, which has already passed First Reading at the upper legislative chamber is sponsored by Senator Buruji Kashamu (PDP, Ogun East).

The proposed bill seeks to establish a National Security Tax Fund to provide adequate funding for security agencies in the country for crime detection and prevention.

The new law also seeks to devise new means by which security can receive extra funds, in addition to the existing Federation Allocation, in order to make them more efficient.

Security experts have called for increased funding of security agencies in the country to ensure safety of lives and properties.

Dwindling oil revenues are challenging  government to rev up income, especially through other sources, such as taxes, and may undermine President Muhammadu Buhari’s ability to deliver on his election promises since he took office in May.

Revenues have dropped by over half since the beginning of the year.

Nigeria plans to double the Value-Added Tax rate to 10 per cent this year, to help shore up government revenue eroded by the declining price of oil, the country’s main export, the Federal Inland Revenue Service said.

Nigeria depends on crude exports for about 70 per cent of government revenue and more than 90 percent of foreign exchange. The price of Brent crude has dropped by more than half, since peaking in June last year,

The FIRS will put more effort in meeting targets after its collection of N1.97 trillion ($9.9 billion) in revenue in the first half fell short of a goal of N2.29 trillion.

Under the proposed bill, the Federal Board of Internal Revenue shall assess and collect the imposed tax when assessing Companies Income Tax or Petroleum Income Tax.

A document seen by BusinessDay indicates that the collected funds would be managed by the National Security Tax Fund Board, headed by a Chairman and six other members drawn from the six geo-political zones of the country.

A representative of the Federal Ministry of Finance, Police Affairs, Nigerian Civil Defence Corps, Department of State Services, Nigerian Prison Service and Nigerian Fire Service are also members.

The Board will disburse the fund to develop, maintain and provide facilities and equipment for the agencies.

Section 8 (2) (a) of the draft bill, says “If tax due under Subsection (2) of this Section is not paid within the time specified in that section, the Board shall serve on the company, a demand note for the unpaid tax plus a sum which is equal to 15 percent of the tax”.

While Sub-section (b) states that “If a sum demanded under paragraph (a) of this sub-section is not paid within tow months of the demand, the company is guilty of an offence under this Act”.

The document also revealed that tax imposed by the Act shall be due and payable within 60 days after the Board has served notice of the assessment on a company.

The bill also lists penalties to include: a fine of N500,000 or three years imprisonment for first offenders and N100,000, five years imprisonment or both for subsequent offenders.

OWEDE AGBAJILEKE