TAX-MANAGEMENT OVERVIEW - NIGERIA

TAX-MANAGEMENT OVERVIEW - NIGERIA

Tax-Management Overview - Nigeria - is all about, problems of taxation in Nigeria, historical background of taxation in Nigeria, Nigerian tax system and administration, Nigerian tax system ,taxation law in Nigeria,types of taxes in Nigeria, problems of taxation in Nigeria,tax administration in Nigeria,

Again,thanks for visiting this website again. This website has the obligation of letting you have top business information that will help your business grow. One of the business information you need to grow your business is this - Tax Management.


 A lot of you get into trouble with tax authorities for lack of good understanding about Tax management, and even when you know, how to go about it becomes another issue. You think that the little amount of money you pay to a consultant is a waste. Now tell me, if you pay a tax consultant N200,000 to save N6,000,000 in tax ( tax savings) and to loose the N6,000,000 to tax payment  which one is cheaper. 


In this article you will get to know who the tax consultant is and what he does for you. You will also get to know his relationship with tax management. Added in this article is a comprehensive list of existing tax laws in Nigeria. In subsequent write-ups I shall deal with, tax administration in Nigeria, discuss the administrative machinery and income tax regulation in Nigeria, tax system in Nigeria challenges and the way forward, Nigerian tax system and structure .

TAX-MANAGEMENT OVERVIEW - NIGERIA

In my years of tax practice , I have found out that a lot of you out there do not know much about tax management,who the tax consultant is and what he can do,and the relevant tax laws and these are why you get one form of tax quarry or the other from time to time from the tax authority. In this article I will tell you what Tax Management is. I will explain to you the benefits of Tax Management and how it is done. 

That is to say that,after reading this article you will be able to spearhead Tax Management processes in your business or organisation and for yourself who is a sole trader or a worker who pay tax through the office and still have other investments outside the office income.

 I know that it will also be of great benefits to those in the academic world. In my write-ups like this I always try to carry along members and students of Institute of Chartered Accountants of Nigeria (ICAN), and those of Chartered Institute of Taxation of Nigeria (CITN) and Association of National Accountants (ANAN) , because that is my constituency.

TAX-MANAGEMENT OVERVIEW - NIGERIA

WHAT IS TAXATION?

Firstly, I want you to know what taxation is. Taxation is a compulsory contribution imposed by governments by legislation on her corporate and individual citizens in order to generate revenue to provide public goods and services and to regulate the economy. I want to tell you that every compulsory activity like this needs to be managed properly. This is because compulsory obligations always have legal backings with terms of penalties for disobedience embed in it.

READ ALSO: Only 14m Nigerians Pay Tax

What is Tax Management


TAX-MANAGEMENT OVERVIEW - NIGERIA
TAX PLANNING

TAX-MANAGEMENT OVERVIEW - NIGERIA


As a tax payer  that is assessed to tax  you need to manage your tax processes. Tax management relates to management of finances for payment of tax, assessing the advance tax liability to pay tax in time. Tax management has nothing to do with planning to save tax, it is just related with operational aspect of payment of tax i.e. while managing your taxes you ensure that you make timely payment of your taxes without running out of  money and that you  comply with all the provisions of such tax law.
  
Tax management therefore involves good knowledge of tax legislation, tax treaties, Integrated Tax Administration System (ITAS) e-filing platforms, tax payment processes, tax return forms, and tax payers guide.  All of these boarder on voluntary compliance. Voluntary Compliance in tax management means that you will have to work out your tax liability by yourself. This regime trusts that tax payers will be able to do what is right about their taxes. 

 It is also statutory that the relevant tax authority will come around you every two your for tax audit. Tax audit is to confirm that the tax you paid under the voluntary compliance regime is correct, adequate, and paid as when due. If the tax you paid is not adequate, it means you will be made to pay more. If it is not correct you will be corrected, and if that error is a deliberate action penalty follows it. Payment as when due means you have to pay your tax within the statutory time stipulated for payment of such tax. So you may have paid correct and adequately but paid after such stipulated time, you will be penalised for late payment.

As you can see, there are a lot to be done in tax management. You have to decide whether you can do it on your own or not.  But I wish to advise that you look for tax consultants. That is what tax experts are trained and licenced for. The complications involved in tax management is beyond what you can do if you are not so trained. Tax Experts handle clients' tax management system in the best professional manner, which ensures that clients comply with every regulatory framework necessary. You may wish to Contact  cfmclimitd@gmail.com and your tax processes will be so well managed.

TAX-MANAGEMENT OVERVIEW - NIGERIA

Tax Management Gist:

Let me give you this gist to broaden your understanding on this subject matter!
THE Federal Inland Revenue Services (FIRS), has identified voluntary compliance and stakeholders’ collaboration as major factors that would strengthen tax administration in Nigeria, as well as eliminate bottlenecks and conflict areas from  the tax system.

The Acting Executive Chairman, Babatunde Fowler, who spoke on “FIRS’s Proposal for achieving operational efficiency in managing taxpayers” at the Tax Breakfast Meeting and Launch of the Tax Risk Management Survey Report organised by KPMG in Lagos some time ago, noted that FIRS is currently engaging stakeholders in the ecosystem so as to effectively achieve operational efficiency in the sector.

“Voluntary compliance is the best approach for achieving operational efficiency and effectively managing taxpayers and our efforts are aimed at creating a system which ensures that the cost of non-compliance is far higher than that of voluntary compliance"
“We will therefore continue to collaborate and engage with stakeholders so that our message of voluntary compliance as the first line approach for managing taxpayers is understood and internalised by tax consultants, taxpayers and all other stakeholders.”

READ ALSO: The Uses of Tax Clearance in Nigeria

TAX-MANAGEMENT OVERVIEW - NIGERIA

Read on please!

He pointed out that the challenge in the sector cannot be addressed by tax authority alone, noting that it must involve collective efforts to tackle the problem. To effect this,he disclosed that FIRS has planned series of strategies geared towards engaging stakeholders so as to find a way forward for the sector and boost the country’s economy in the face of struggling economy.

Fowler stated that the tax authority was working on “Integrated Tax Administration System (ITAS), which will automate core tax administration processes”.
Going forward, fowler maintained that  there would be greater emphasis on the role of the tax consultants in ensuring compliance by their clients.

WHO IS A TAX CONSULTANT/ADVISER? 

Tax consultants, also referred to as tax advisers, are in recent time university graduates who are in addition trained in tax law. They understand the regulations regarding business and individual taxes and advise clients on how to comply with both federal and state tax legislation especially in this era of multiple taxation in a constantly changing tax regimes.

Most tax consultants are professional accountants and so are capable of providing their clients with financial and tax-related advice. They meet with clients over the phone and in-person to discuss their clients' tax situations. They educate their clients on tax options, including how to legally lower tax liability ( known as tax avoidance) or how to compute taxes based on their investments – sector based tax incentives. 

Tax consultants might prepare and complete client tax returns and assist clients in finding the right deductions, credits and adjustments based on their financial situation – e.g with-holding tax issues. Consultants must stay up-to-date on the latest federal and state tax requirements, consult tax law handbooks and look for bulletins regarding common and atypical tax procedures.

TAX-MANAGEMENT OVERVIEW - NIGERIA

Tax advisers/consultants are experts in providing commercially-focused tax advice and tax services to a wide range of clients who operate in all sectors of the economy. This involves devising tax-efficient strategies for clients in diverse business situations, including mergers, takeovers and corporate reconstructions. Tax consultants work continually to help ensure that their clients make the best business decisions in the light of fiscal changes and

development. They monitor and anticipate changes to tax legislation and respond quickly with advice specific to their clients’ particular commercial requirements.

Work schedule of the tax consultant:

Tax Planning: Helping businesses and individuals create strategies for dealing with tax and prepare for their future in the financial market

• Tax Avoidance: Advising and consulting with clients in order to provide advice about tax legislation, eg ensuring businesses and assets are properly structured to minimise the incidence of taxation

• Advising on employee tax incentive schemes, eg share options, share ownership trusts, tax-efficient employee benefits and the creation of employee benefit trusts

• Advising on aspects of property transactions, including acquisitions of foreign property, and the use of tax efficient structures in property deals, including the effective use of partnerships and co-ownership structures

• Calculating tax liability, ensuring compliance is completed speedily and efficiently, and submitting tax returns and associated documents by the appropriate deadlines.
All these activities of the tax consultant in collaboration with the tax payer is what is called Tax Management.

READ ALSO:  Purpose of Financial Statements

TAX-MANAGEMENT OVERVIEW - NIGERIA

EXISTING TAX LEGISLATION IN NIGERIA AS AT 31/12/2016

The following is curled from FIRS – Nigeria website. The knowledge of the existence and contents of these tax laws is necessary to both the tax payer and the tax consultant. This is the basis of all the jobs/assignments that the tax consultants do for you.

Tax legislation is the act or process of enacting tax laws and the body of laws that provide for the levying of taxes and tax administration.


The following are the existing tax legislation in Nigeria, as at 2016:
  1. Associated Gas Re-Injection Act
  2. Capital Gains Tax Act
  3. Companies Income Tax Act
  4. Deep Offshore and Inland Basin Production Sharing Contracts Act
  5. Tertiary Education Trust Fund Act
  6. Federal Inland Revenue Service (Establishment) Act
  7. Income Tax (Authorised Communications) Act
  8. Industrial Development (Income Tax Relief) Act
  9. Industrial Inspectorate Act
  10. National Information Technology Development Act
  11. Nigerian Export Processing Zones Act
  12. Nigeria LNG (Fiscal Incentive Guarantees and Assurances) Act
  13. Oil and Gas Export Free Zones Act
  14. Personal Income Tax Act
  15. Petroleum Profits Tax Act
  16. Value Added Tax Act
  17. Stamp Duties Act
  18. Taxes and Levies (Approved List for Collection) Act
  19. Casino Act

TAX-MANAGEMENT OVERVIEW - NIGERIA

Reviews, amendments and modifications to tax legislations are continuous, evolving with global best practices and in keeping with the local socio-economic realities. The review and amendment of tax legislation is in keeping with the formal tax amendment process as provided for in the Nigerian constitution.

As a result of the need to continuously review and amend tax legislation, the following tax laws were amended in the respective years indicated here-under:

Companies Income Tax Act - 2007

Value Added Tax Act- 2007

Personal Income Tax Act – 2011

The Petroleum Industry Bill (PIB) is presently before the National Assembly and when passed into law will replace the Petroleum Profits Tax Act. In addition, there is an on-going process to overhaul all existing tax laws and the Service has consequently initiated the Tax Law Redrafting Project to achieve this.


READ ALSO: Tax Evasion VS Tax Avoidance

TAX-MANAGEMENT OVERVIEW - NIGERIA

What does Tax Management involve? and Why Tax Management is so important?

Tax management is making conscious efforts to manage the tax processes for tax payers benefits. It involves  mastering the tax laws and by that knowing:
  1.  Which taxes are payable and period covered,
  2.  The time for payment,
  3.  Where to pay,
  4.  Which tax authority to pay to,
  5.  Relevant laws, regulatory bodies, and professional standards,
  6.  Relevant penalties ( if defaulted)
  7.  Relevant incentives and how to claim them,
  8.  When, why, and where to make objections, etc.

Going through the above list on tax management involvement you can see that you may need a tax consultant  who will:

  1. Ensure you have your TIN, ( Tax Identification Number) 
  2. Ensure you have your VAT registration number 
  3. Keep your tax payment time table, 
  4. Make your tax computations, 
  5. Make your tax returns, 
  6. Obtain your Tax Clearance Certificates, 

Make necessary tax planning on how to:
  • Avoid multiple taxation,
  • Keep your list of approved taxes,
  • Claim tax incentives
  • Manage fixed assets for tax purposes,
  • Advice you on investment strategies(where and which sector to invest in) for tax  purposes,
  •  Educate you on donations issues etc.
Tax management will also involve  Managing your Corporate Income Taxes such as:  
  1.  Company income tax,
  2.  Education tax
  3.  Petroleum profit tax,
  4.  Solid mineral Tax
  5.  Royalties,
  6.  P.A.Y.E and statutory deductions,
  7. with holding taxes,
  8. Stamp Duties etc.


    Your International business relations have tax implications which will require professional management. On this are:
    1. Transfer pricing matters,
    2. Double taxation issues,
    3. E-commerce taxation
    4. How you can avoid tax penalties,
    5. Manage your pioneer process/status,
    6. Liaise with relevant tax authorities in event of tax audit or investigation


    It is necessary that a tax payer like you  get a coach (tax consultant) to be able to manage your taxes properly.

    This blog is dedicated to Top Business Information that will make your business survive and grow. These information are also needed by you the students. It is an avenue to inform you about business implications of the various news or ideas you have from time to time. If you can make contributions to this process by submitting articles for publication or asking questions that I will answer or drop comments after reading the articles I shall appreciate you so much.


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