The Federal Inland Revenue Service (FIRS) has raised the alarm that several multinational companies operating in Lagos state have not paid Company Income Tax (CIT) since 2011.
The Executive Chairman of the FIRS Mr. Muhammad Nami made the disclosure when he visited the Lagos state governor in his office.
According to Nami, “a number of multinational companies operating in Lagos State have not paid CIT since 2011 as they appeared to have perfected the illicit act of profit shifting to escape paying tax.”
He stated that “the FIRS and the Lagos State Government need to collaborate to map out strategies to tax these tax-evading multinational companies whose goods and services we all consume or patronize and who also use public infrastructure to do their business but yet repatriate their profits home.”
Nami insisted that “we need to tax these multinational companies so that we can have the fund to combat insecurity, build and maintain public infrastructure and provide social amenities for Nigerians.”
The FIRS boss also charged all tax collecting agents in the public and private sectors to make correct collection and prompt remittance of all collectable taxes their priority.
He tasked collecting agencies to deduct stamp duty, withholding tax and CIT from their contractors “at the point of payment and promptly send these to the FIRS” in lump sum, rather than staggered payments as is the current practice.
This, he said, “is better for everybody as we would all have to do less reconciliation and enforcement activities, and we can therefore use the saved time to expand the tax net.”
Mr. Nami also clarified that outstanding VAT on contracts invoiced before the February 1, 2020 commencement date of the 2019 Finance Act should be paid on the old VAT rate, stressing that all collecting agencies in default in this regard should clear this up immediately.
The FIRS chief urged National Airspace Management Agency (NAMA) and similar collecting agencies to increase their diligence in collecting offshore taxation from service providers based outside Nigeria.
According to him, “if you don’t take offshore tax from them, they will take it back to their countries and pay it there. But we need this money more in Nigeria to fight insecurity, build public infrastructure and provide social amenities for our people.”
Mr. Muhammad Nami said correct collection and prompt remittances have become important so that Nigerians can derive maximal benefit from the 2019 Finance Act.
In his presentation to Governor Jide Sanwo-Olu, Mr. Nami gave a broad overview of the palliatives available to taxpayers in the 2019 Finance Act, to include a reduction in Company Income Tax for Small and Micro Enterprises (SMEs) from 30% to 20%; exemption of SMEs who make a turnover of less than #25 million from paying value added tax (VAT) and a further cut by 2% for corporate and individual taxpayers who file their CIT or Personal Income Tax (PIT) returns three months before due date.
Nami also canvassed a closer collaborative effort between the FIRS and the Lagos State Government, especially in the area of information sharing, tax audit, correct collection and prompt remittance of CIT, PIT, Withholding Tax and Stamp Duty.
He stressed that Lagos and other states should do this as a patriotic duty and in self-enlightenment since these taxes “still come back to you through budgetary allocations”.
Responding Governor Sanwo-Olu said the Nigerian economy has the capacity to generate more than the N8.5 trillion the FIRS has been mandated to collect.
According to the Lagos state governor, “when we look at our economic indices, and we need this money, it is only when the FIRS does well that we can get this money through the FAAC. We in Lagos pledge to work even closer with you in the FIRS to meet your target.”
“We also pledge to use the money judiciously in the service of the public when it comes back to us as allocation,” he said.