A major hurdle in tax administration in Nigeria is about to be crossed, as the Federal Inland Revenue Service (FIRS) has been mandated by law to refund excess taxes paid by individuals and companies within 90 days.
Taxpayers who have “tax credits” to their account, having overpaid as a result of administrative procedures, have often experienced acute delay in getting refunds—a development that is globally acknowledged as an impediment to voluntary tax compliance.
The FIRS said at the weekend that companies and individual taxpayers would now get refunds within three months in accordance with the FIRS Act 2007.
For the refund, a dedicated account would be opened by the Accountant-General of the Federation, to be administered by the FIRS.
Before the Act came into being, taxpayers usually waited endlessly for refunds which could take up to a year, owing to a very slow and cumbersome process.
As has been the order of the day, taxpayers’ excess funds—in Companies Income Tax, CIT, for example—are treated as tax credits and reflected on such taxpayers’ Kalamazoo cards, and balances were usually carried forward to the following year.
According to Section 23 of the new Act, “There shall be refunded to taxpayers, after proper auditing by the Service, such overpayment of tax as is due.
“The Service shall decide on who is eligible for the refund mentioned in sub-section (1) of this section subject to such rules and conditions as may be approved by the Board.
“Any tax refund shall be made within 90 days of the decision of the Service made pursuant to subsection (2) of this section, with the option of setting off against future tax by the tax payer.
“For the purpose of tax refund, the Accountant of the Federation shall open a dedicated account into which shall be paid monies for settling such refunds.
“The Service shall administer the dedicated account as created by virtue of Section 23 (4).
“For the purpose of the dedicated account, the Service shall prepare an annual budget for tax refund to be funded from the Federation Account as may be approved by the National Assembly.”
Throwing more light on the development, Special Adviser, Communications to the FIRS Executive Chairman, Mr. Wahab Gbadamosi, explained that refund could arise from Withholding Tax (WHT) and Value Added Tax (VAT) deductions—particularly in transactions with government establishments, remittances from VAT, as well as in inter-bank transactions—where tax for VAT could be wrongly credited as Personal Income Tax (PIT).
Pointing out that the refund process differed from the old structure in some respects, he said one of these is that “the FIRS could now determine how much refund is due to a tax payer after auditing and determining the tax liabilities of such taxpayer.”
He recalled that a taxpayer’s quest for refund used to “course at snail speed” through the FIRS, office of the Accountant General of the Federation, before the nod by the Minister of Finance and payment from the Federation Account.
Similarly, the FIRS Act 2007 has criminalised the usage of fake documents for any transaction under the Act.
The development, the FIRS said, has signaled a regime of enforcement of stern sanctions for the production, transmission and usage of fake Tax Clearance Certificate, TCC for all forms of business transactions and processes.
The provision is in Section 43 of the Act on Counterfeiting documents, which reads: “Any person who: counterfeits or falsifies any document which is required by or for transaction of any business under this Act or any law listed in the First Schedule to this Act; Knowingly accepts, receives or uses any document so counterfeited or falsified; Alters any document after it is officially issued; Counterfeits any seal, signature initial or other mark or used by, any officer for the verification of such a purpose relating to tax; or being an employee of the Service conspires, connives, or participates in the commission of any of the offences in paragraphs (a) to (d) of this Section, commits an offence and shall be liable on conviction to a fine not exceeding N200, 000 or imprisonment for a term not exceeding three years or both to such fine and imprisonment.”
Gbadamosi noted that “the issuance of Tax Clearance Certificates, TCC, earned national attention this year, when the FIRS requested that the Independent National Electoral Commission, INEC allow it to access the TCC submitted by politicians seeking elective office, to ascertain their genuineness.”
Both chambers of the National Assembly passed the Bill for an Act to establish the FIRS as an autonomous service in February this year. Former President Olusegun Obasanjo signed the bill into law on April 16 2007.
Three other bills signed into law on the same were an Act to amend the Companies Income Tax Act, an Act to amend the Value Added Tax, VAT, an Act to amend the National Automotive Council Act, NACA.
The FIRS Act and the three other amendments to existing tax laws were the first set of Acts and amendments to tax laws by a civilian regime in two decades. All past amendments to tax laws were by military governments. Eight bills were sent to the National Assembly in May 2005.
The Special Adviser said the new FIRS Act gives the service oversight functions over all taxes and levies accruable to the government of the federation, including those taxes accruable to other agencies. The legislations to be administered by the FIRS according to the First Schedule of the FIRS Act are: “Companies and Income Tax Cap 60 LFN, 1990; Petroleum Profits Tax Act Cap 354, LFN,1990; Personal Income Tax Act No 104, 1993; Capital Gains Act Cap 42 LFN, 1990; Value Added Tax Act 1993 No 102, 1993; Stamp Duties Act 411 LFN, 1990 and; Taxies and Levies ( Approved List for Collection) Act 1998. No 2 1998.”
According to him, “the FIRS is expected, to administer all regulations, proclamation, government notices or rules issued in terms of these legislations, all tax related rules/enactments by the National Assembly, taxes and levies within the Federal Capital Territory, FCT as well as all taxes, levies and fees collected by other government agencies and companies.
“Such fees, says the First Schedule of the FIRS Act, include “signature bonus, pipeline fees, penalty for gas flared, depot levies and licences, fees for Oil Exploration Licences (OEL) Oil Mining Licence (OML) Oil Production Licence (OPL), royalties, rents (productive and non productive), fees for licences to operate drilling rigs, fees for oil pipelines, haulage fees, and all such fees prevalent in the oil industry but not limited to the above list.”
Gbadamosi disclosed that under the new Act, banks must provide to FIRS, on demand, all transactions of N5 million by individuals and N10 million by corporate bodies.
Also, according to the new FIRS Act, to strengthen the ability of the service to do its duty, the Search and Seizure procedure has changed.
“Under the new Act, warrants will now be issued by a judicial officer. This could be the Chief Justice of the Federation, President of the court of Appeal, Chief Judge of the Federal High court, Grand Kadi or Kadi of the Sharia Court of Appeal of the Federal Capital Territory, FCT, Abuja or of a state, President or judge of the Customary Court of Appeal, FCT, Abuja or of a state. The FIRS Chairman issued warrants under the old law,” he explained.




-by Kunle Aderinokun in Abuja

Securities and Exchange Commission (Sec) has said it introduced e-bonus and e-dividend in a bid to address the delay associated with the verification of proceeds of public offers as well as delay encountered by investors in getting returns on their investments.
Mr. Lanre Oloyi, head of media relations of the commission said investors’ protection was one of the major functions of the commission and it would do everything possible to sustain it.
He said the commission was committed to zero tolerance in the capital market, adding that Sec, the apex regulatory body of the capital market had sanctioned some operators who defrauded investors in the market.
Oloyi said the commission did not think such issues should be brought to the notice of members of the public because of the sensitive nature of the capital market and the need to sustain investors interest in the market, especially now that it (stock market) has begun to attract foreign investors because of the positive impact of Federal Government economic policies on the market.
Sec had in 2004 given approval to the Nigerian Stock Exchange (NSE) for electronic distribution of bonus shares to shareholders, adding that it will in due course be followed by electronic initial public offers (e-IPOs).
Also, owing to delay encountered by shareholders in getting their dividends because of poor postal system, signature irregularity and inability to open current accounts with banks, Sec also directed that dividend should be paid through e-dividend to shareholders who have accounts with the Central Securities Clearing System (CSCS) besides those who have mandate accounts.
Following the agreement among the key stakeholders in the market, the NSE recently begun implementation of the e-bonus by using Afribank and Intercontinental Bank as pioneers to pilot the scheme.
Mr. Farooq Oreagba, head, strategy and derivate market of the NSE said in Atlanta, Georgia in the United States of America (USA) last year that non-issuance of bonus certificates was now possible, adding that Afribank of Nigeria Plc and Intercontinental Bank Plc have successfully concluded e-bonus transfers to their shareholders under the new scheme.
The introduction of e-bonus in the capital market in 2004 became imperative because of the need to allow shareholders to maximize returns on their investments.
Until then, when a company declared bonus shares and after it has been approved by its shareholders, some of the companies were reluctant to release the share certificates because of anticipation that it might lead to a glut of their shares in the market because some shareholders might want to sell some of their shares to maximize returns on their investments.
This is because before a company announces the declaration of bonus shares, information about such would have filtered into the market. This development usually leads to increase demand for the shares of such a company as well as appreciation of its share price as demand for its shares exceed supply in the market.
The implementation of the new policy will enhance the use of the facilities of the CSCS as more investors will have to deposit their shares in its custody.
Also, it will improve efficiency and confidence in the capital market as the problems associated with issuance of share certificates will be eliminated.

By Friday Atufe
Financial Standard

Left: Mr. Emmanuel Nnorom, director, group executive office, UBA Plc and Mr. Ganiyu Ogunleye, managing director, Nigeria Deposit Insurance Corporation (NDIC) at the handover ceremony of City Express Bank (in-liquidation) by NDIC to UBA in Lagos.

The Nigerian Stock Exchange (NSE) yesterday issued listing criteria for the third-tier securities market preparatory to the take-off of the new financial window created for indigent but viable indigenous small and medium enterprises.
The third-tier is designed to supplement the second-tier and to provide soft landing for small and medium enterprises that could not meet the listing requirements for the second and first tiers.
The introduction of the third tier makes the NSE as a three-tier market with three different listing requirements for each category of companies. The second tier was created in 1985.
In the listing requirements released by NSE for the third tier, a company must be wholly indigenously promoted and registered as a public limited liability company under the Companies and Allied Matters Act 1990 while the company must submit to the NSE financial statements and business records for the past two years with the date of the last audited accounts not later than nine months.
Other requirements are: prospective companies for the third tier listing must have at least 50 shareholders, not less than 10 per cent of its share capital must be offered to the public, the shares must be fully paid up at the time of allotment while un-allotted shares must be sold on the floor of the NSE.
Also, third tier companies must submit half-yearly and annual accounts after listing and must graduate to the second tier within six to 18 months of listing on the third tier.
Companies on the third tier can raise as much as N100 million and will not pay yearly quotation fee in addition to free professional advice and consultation from experts on the NSE.
Dr. Ndi Okereke-Onyiuke, director general, NSE, said the decision to create the third tier was based on the discovery that less than one per cent of companies registered with the Corporate Affairs Commission (CAC) were quoted due to their poor operating status and financial conditions which do not meet listing requirements for the main tier and second tier.
She said the NSE decided to focus on SMEs because of their strategic importance as engine of growth and to deepen the market by grooming future blue chips.
She noted that the development of the SMEs would generate more employment, encouraged infrastructure development in host communities to these companies as well as build a strong economy that will not depend solely on the export of oil.
She urged the federal government to provide monetary and fiscal incentives to boost the growth of SMEs, and to also consider tax incentives and waivers for SMEs.
Okereke-Onyiuke enjoined banks and other financial institutions to place emphasis on the potential and prospects of SMEs rather than their current state while analysing and appraising the companies for investments.
“On the part of these companies, we expect that the promoters will take adequate steps to ensure that there must be free flow and timely availability of relevant information about the company’s activities. The promoters must ensure proper record keeping for an objective assessment by interested parties”, Okereke-Onyiuke advised SMEs.
She said Nigerian SMEs promoters should demonstrate willingness to accommodate prospective partners by putting in place requisite administrative and financial structures in line with good corporate governance.


By
Taofik Salako
FINANCIAL STANDARD

This is a historic day for our nation, for it marks an important milestone in our march towards a maturing democracy. For the first time since we cast off the shackles of colonialism almost a half-century ago, we have at last managed an orderly transition from one elected government to another.

We acknowledge that our elections had some shortcomings. Thankfully, we have well-established legal avenues of redress, and I urge anyone aggrieved to pursue them. I also believe that our experiences represent an opportunity to learn from our mistakes. Accordingly, I will set up a panel to examine the entire electoral process with a view to ensuring that we raise the quality and standard of our general elections, and thereby deepen our democracy.

This occasion is historic also because it marks another kind of transitional generational shift when the children of independence assume the adult responsibility of running the country at the heart of Africa.

My fellow citizens, I am humbled and honored that you have elected me and Vice President Jonathan to represent that generation in the task of building a just and humane nation, where its people have a fair chance to attain their fullest potential.

Luckily we are not starting from scratch. We are fortunate to have been led the past eight years by one of our nation’s greatest patriots, President Obasanjo. On behalf of all our people, I salute you, Mr. President, for your vision, your courage and your boundless energy in creating the roadmap toward that united and economically thriving Nigeria that we seek.

Many of us may find it hard to believe now, but before you assumed the presidency eight years ago, the national conversation was about whether Nigeria deserved to remain one country at all. Today we are talking about Nigeria’s potential, to become one of the 20 largest economies in the world by the year2O2O. That isa measure of howfarwe have come. And we thank you.

The administration of President Obasanjo has laid the foundation upon which we can build our future prosperity. Over the past eight years Nigerians have reached a national consensus in at least four areas: to deepen democracy and the rule of law; build an economy driven primarily by the private sector, not government; display zero tolerance for corruption in all its forms, and, finally, restructure and staff our government to ensure efficiency and good governance. I commit myself to these tasks.

Our goal now is to build on the greatest accomplishments of the past few years. Relying on the 7-point agenda that formed the basis of our compact with voters during the recent campaigns, we will concentrate on rebuilding our physical infrastructure and human capital in order to take our country forward. We will focus on accelerating economic and other reforms in a way that makes a concrete and visible difference to ordinary people.

Our economy already has been set on the path of growth. Now we must continue to do the necessary work to create more jobs, lower interest rates, reduce inflation, and maintain a stable exchange rate. All this will increase our chances for rapid growth and development. Central to this is rebuilding our basic infrastructure. We already have comprehensive plans for mass transportation, especially railroad development. We will make these plans a reality.

Equally important, we must devote our best efforts to overcoming the energy challenge. Over the next four years we will see dramatic improvements in power generation, transmission and distribution. These plans will mean little if we do not respect the rule of law.

Our government is determined to strengthen the capacity of law enforcement agencies, especially the police. The state must fulfill its constitutional responsibility of protecting life and property.

The crisis in the Niger Delta commands our urgent attention. Ending it is a matter of strategic importance to our country. I will use every resource available to me, with your help, to address this crisis in a spirit of fairness, justice, and cooperation.

We have a good starting point because our predecessor already launched a master plan that can serve as a basis for a comprehensive examination of all the issues. We will involve all stakeholders in working out a solution.

As part of this effort, we will move quickly to ensure security of life and property, and to make investments safe. In the meantime, I appeal to all aggrieved communities, groups and individuals to immediately suspend all violent activities, and respect the law. Let us allow the impending dialogue to take place in a conducive atmosphere. We are all in this together, and we will find a way to achieve peace and justice.

As we work to resolve the challenges of the Niger Delta, so must we also tackle poverty throughout the country. By fighting poverty, we fight disease. We will make advances in public health, to control the scourge of HIV/AIDS, malaria, and other diseases that hold back our population and limit our progress.

We are determined to intensify the war against corruption, more so because corruption is itself central to the spread of poverty. Its corrosive effect is all too visible in all aspects of our national life. This is an area where we have made significant progress in recent years, and we will maintain the momentum.

We also are committed to rebuilding our human capital, if we are to support a modern economy. We must revive education in order to create more equality, and citizens who can function more productively in today’s world.
To our larger African family, you have our commitment to the goal of African integration. We will continue to collaborate with fellow African states to reduce conflict and free our people from the leg chains of poverty. To all our friends in the international community, we pledge our continuing fidelity to the goals of progress in Africa and peace in the world.
Fellow citizens, I ask you all to march with me into the age of restoration. Let us work together to restore our time-honored values of honesty, decency, generosity, modesty, selflessness, transparency, and accountability. These fundamental values determine societies that succeed or fail. We must choose to succeed.

I will set a worthy personal example as your president.

No matter what obstacles confront us, I have confidence and faith in our ability to overcome them. After all, we are Nigerians! We are a resourceful and enterprising people, and we have it within us to make our country a better place. To that end I offer myself as a servant-leader. I will be a listener and doer, and serve with humility.

To fulfill our ambitions, all our leaders at all levels whether a local government councilor or state governor, senator or cabinet minister must change our style and our attitude. We must act at all times with humility, courage, and forthrightness. I ask you, fellow citizens, to join me in rebuilding our Nigerian family, one that defines the success of one by the happiness of many.

I ask you to set aside negative attitudes, and concentrate all our energies on getting to our common destination. All hands must be on deck.

Let us join together to ease the pains of today while working for the gains of tomorrow. Let us set aside cynicism and strive for the good society that we know is within our reach. Let us discard the habit of low expectations of ourselves as well as of our leaders.

Let us stop justifying every shortcoming with that unacceptable phrase 'the Nigerian Factor' as if to be a Nigerian is to settle for less. Let us recapture the mood of optimism that defined us at the dawn of independence, that legendary can-do spirit that marked our Nigerianess. Let us join together, now, to build a society worthy of our children. We have the talent. We have the intelligence. We have the ability.

The challenge is great. The goal is clear. The time is now.

•Inaugural Address of Umaru Musa Yar’adua, President of the Federal Republic of Nigeria and Commander-In- Chief of The Armed Forces, May 29, 2007.

The $100 has already been tested in many countries
Chip-maker Intel "should be ashamed of itself" for efforts to undermine the $100 laptop initiative, according to its founder Nicholas Negroponte.
He accused Intel of selling its own cut-price laptop - the Classmate - below cost to drive him out of markets.

Professor Negroponte, who aims to distribute millions of laptops to kids in developing countries, said Intel had hurt his mission "enormously".

Speaking to US broadcaster CBS, Intel's chairman denied the claims.

"We're not trying to drive him out of business," said Craig Barrett. "We're trying to bring capability to young people."

Mr Barrett has previously dismissed the $100 laptop as a "gadget".

Speaking to the BBC News website earlier this year Professor Negroponte said: "The concept has received a lot of criticism and yet after that criticism they are either copying it or doing things perfectly in line with the concept.

"Yes people laugh at it, then they criticise it, then they copy it."

Business practice

Both Intel and Professor Negroponte's not for profit organisation, One Laptop per Child (OLPC), have developed a low cost, robust laptop aimed specifically at school children in the developing world.


Intel's Classmate PC runs Microsoft Windows and Linux

There are various differences in both the hardware and software, but Professor Negroponte believes the main problem is that his machine uses a processor designed by Intel's main competitor, AMD.
culled from BBC NEWS