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Tax: ‘Time running out for Nigerian companies’

By News Express on 18/10/2016

Views: 1,872


With Nigerian tax authorities under pressure to find new sources of revenue, companies that do not yet comply with tax regulations must work fast to get their books in order and pay their tax dues.

That’s according to Magnus Nmonwu, Regional Director for Sage in West Africa, who says federal and state tax authorities are taking a hard line towards non-compliance as they race to bring in new tax revenues to compensate for falling oil revenues. Companies should respond by putting in place systems and processes that enable them to report accurately on revenue and expenses and to streamline tax submissions, he said in a statement issued on Tuesday in Lagos.

The Federal Inland Revenue Service (FIRS) recently said it has been able to add 700,000 companies to the tax base by deploying inspectors armed with notebooks to register businesses and individuals. These companies are then audited to check whether they have paid their taxes. The FIRS has also approved a 45-day tax waiver window on penalty and interest accruing from outstanding tax liabilities for the period, 2013 to 2015.

Those businesses that have not complied to date may benefit from this waiver to get their affairs in order. This means companies would only need to pay the principle amount of tax they owe, which could save them a substantial amount of money.

However, those that don’t comply are bound to face stiff penalties, including fines, punitive interest, and possible criminal prosecution of CEOs and board members, and closure of their offices. “To take advantage of this golden opportunity, many companies will need to put in place systems and processes that enable them to get better visibility into their finances at a fast pace,” Nmonwu said.

Zero tolerance

Nmonwu said that the tough tone from Nigeria’s tax authorities shows that companies can no longer risk non-payment of tax or incorrect remittances of taxes to the relevant government agencies, whether the reason is deliberate evasion or an accidental oversight.

He noted that one of the most common reasons for non-compliance is that many organisations don’t have automated systems for accurate recordkeeping, precise calculations and deductions, and preparation and submissions of necessary statutory returns.

Nmonwu gave examples of employee-related tax obligations Nigerian companies face to include the following:

•Filing annual returns of all remuneration paid to their employees and taxes deducted and remitted to the tax authorities on or before 31 January of every year. Failure to do so carries a maximum penalty of N500,000 for the employer and N50,000 for individuals.

•Remittance of Pay-As-You-Earn (PAYE) tax each month for each employee to the relevant state internal revenue services, on or before the 10th day of the following month.

•Contributions of 10% and 8%, respectively, of their employees’ monthly remuneration to Nigeria’s contributory Pension Scheme.

•Statutory payments, such as the Employee Compensation Scheme (formerly known as the Workmen’s Compensation Act), Development Levy, National Housing Fund and  Industrial Training Fund.

Automated solutions make it easy to comply

Against the backdrop of growing regulatory complexity, organisations need to realise that spreadsheets and other manual methods are no longer sufficient to meet their needs. Companies must instead implement solutions that streamline capturing of transactions, automate payroll calculations, processes and put visibility of the business in the hands of managers to enable them comply easily.

Such solutions also make it simpler to keep track of annual changes to tax regulations that impact on payroll tax calculations and various changes in legislation, Nmonwu said. These solutions help organisations to manage other challenges such as reducing the risk of internal fraud and getting better insight into business performance.

What’s more, the ability to generate tax certificates, reports and electronic payslips with the click of a button is a major timesaver. Nmonwu pointed out that Nigeria’s federal and state governments are eager to expand their tax bases, and are investing heavily in modernising and streamlining tax administration.

This will help address some of the complexity Nigerian businesses face in paying tax. Nigeria aims to move from its current position of 181 out of 189 countries to top 50 on the Ease of Paying Taxes World Report – which means that we will see a lot of reform of the tax system in the years to come, says Nmonwu.

“Today’s technology gives Nigerian companies the power to control their businesses from the palm of their hand. We connect our customers to accountants and partners with real-time and intuitive information about their business,” he said. “Using technology streamlines compliance so companies can focus on their core business operations.”

•Photo shows Magnus Nmonwu.

Source News Express

Posted 18/10/2016 2:27:34 PM

 

 

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