FG TO REDUCE PERSONAL INCOME TAX
Following a proposal of a Bill for an Act to Amend the Personal Income Tax, the Federal Government through the Federal Inland Revenue Service (FIRS) may soon implement a shift from direct to indirect taxation.
This is even as professional bodies such as the Nigerian Bar Association (NBA), Nigerian Society of Engineers (NSE), Institute of Chartered Accountants of Nigeria (ICAN) among others would be expected after the passage into law of the Bill, to pay tax returns to the government.
The proposed law would empower the FIRS to exempt revenues earned from income tax; bonds issued by federal, state and local governments and other agencies, bonds issued by corporate bodies including supra-nationals; and interest earned by holders of the bonds short-term securities.
Minister of Finance, Mr. Olusegun Aganga, who was represented by the FIRS Chairman, Mrs. Ofueko Omogui-Okauru, announced the government's position at a Joint National Assembly Public Hearing on a Bill is for an Act to Amend the Personal Income Tax Act, said that the Bill aimed to replace the Body of Appeal Commissioners with Tax Appeal Tribunal under Section 59 of the FIRS (Establishment) Act and deletion of other relevant sections.
Mrs. Omogui-Okauru noted that the bill seeks to introduce a presumptive tax regime applicable to persons within an income threshold as well as redefining the time threshold for Residency Rule with respect to expatriates working in Nigeria.
The Chairman told the Joint Public Hearing organized by the Senate and House of Representatives Committees on Finance that the bill also seeks to empower tax authorities to call for returns from professional associations and bodies in a prescribed format. She noted that the passage of the bill into law would be in line with the provisions of the National Income Tax Policy to bring it in line with the ongoing reforms of the tax system.
According to Mrs. Omogui-Okauru: 'Overall, it would further demonstrate the commitment of the current administration to creating a responsive tax system, which enables government administer taxes efficiently and also impose minimal burden on tax payers in terms of compliance with tax laws and reduction of tax burden on taxpayers.'
The objectives of the tax reform programme, according to the FIRS boss, include; the increase in the level of voluntary compliance through equitable tax system through the introduction of realistic tax rates, efficient and effective tax administration system with clear definition of jurisdiction between the three tiers of government, simplification of tax system and relevant computations and elimination of double and multiple taxation.
However, Lagos State Government, represented by the Special Adviser to the governor, Mr. Ade Ipaye, said that while it might be easy to reduce Personal Income Tax, such a move would drastically affect the Internally Generated Revenue (IGR) of the states.