Speaking at an interactive forum, organised by the Association of Chartered Certified Accountants (ACCA) in partnership with the Chartered Institute of Taxation in Nigeria (CITN) in Lagos recently, Taiwo Oyedele, keynote speaker- PWC West Africa Tax leader/partner, who stated that increase in Value Added Tax (VAT) from 5 percent to 7.5 percent, has resulted in rise in the cost of production, said that market prices of goods would go up because companies must pay tax.
To him, all taxes are borne by people through the price of goods, adding that professionals have a lot of work to do under the new Finance Act.
“It is good to do tax planning but the most important thing is to get everybody into the tax net first. When people are invading tax, it cost even higher than trying to do the right thing,” he said.
Oyedele pointed out the need for professional to learn to put some planning behind their companies’ tax payment. He listed options such as claiming capital allowance on assets such as car, phones and others as good way to plan.
In terms of tax compliance, he noted that many professionals are worse than the ordinary people because there are tax consultants, who don’t pay taxes. “These kinds of people help companies to comply when the practitioner is not compliant.”
He advised professionals using company name such as ‘Taiwo & Co’ to use this opportunity to register a limited liability company, where all their revenues can be transferred to enable him pay lower tax rate of Personal Income Tax (PIT) as low as 2 percent on the initial company.
Oyedele, who noted that there are lot of corruption among practitioners than the entire population, appealed to people to say no to bribery to enable the system to get better, adding that practitioners needs to be committed to doing the right thing.
Titilayo Fowokan, Group head, Strategic Tax and Compliance, Dangote Industries Limited, who noted that the Finance Act came with mixed feelings for the industry, said there were issues of small, medium and large, and the question was basically how to classify and separate them from each other.
According to her, the first mixed feeling was on the rate, which sent many signals to the industry as to what to do about customers that have paid in advance for products. “So, most companies took the heat of the change in VAT because they could not go and tell customers that have paid earlier to pay additional 2.5 percent VAT.
“There is need for clarity because there are still some ambiguities in Finance Act. There is need for us to create a middle ground between the tax authorities and the taxpayers especially in the areas where the guidelines are yet to come out,” she said.
Citing example, she pointed out that there are a lot of ambiguity around agriculture, adding that it is presently difficult to determine when farm generated produce or plant milled products can be called a production.
Tom Isibor, head, ACCA Nigeria, who confirmed that ACCA and CITN are strategic partners that have existing MoU that agreed on holding joint events, said the Finance Act is a very topical issue that has considerably influence for the managers of the economy
