TAX WATCH – LAGOS TO REVIEW ITS TAX POLICY SOON

TAX WATCH – LAGOS TO REVIEW ITS TAX POLICY SOON

                                                                                             

‘Wale Folorunsho

The Lagos State Internal Revenue Service, LIRS, has announced a review of its tax policy.

The review will identify contentious areas with a view to improving the ease of doing business in the city.

It explained that the development would simplify the complexities and also bridge the gap between the tax laws and everyday practice.

LIRS in statement said the objective of the exercise was to ensure “adherence to existing provisions by creating ease in different dealings including relief on voluntary pension contributions, allowable interest deductions on owner-occupied residential houses, exemption of compensation for loss of employment, and Pay As You Earn on employee outsourcing arrangements among others.

“It is believed that these reviews will address the myriad of tax disputes that arise between the LIRS and taxpayers or their representatives, whilst strengthening its position as an efficient revenue earner that provides high quality and transparent customer oriented services.

Sequel to the above, Lagos state Internal Revenue Service yesterday 21st August, 2017  issued a public notice to all employers, Tax Consultants, employees and other members of the public on the Voluntary Pension Contributions which is additional savings for an employee. Withdrawal of this (tax free benefits) savings can however be opted for at any time subject to the conditions set by section 16 of the pension Reform Act, 2014. They noted that any payments made to any individuals that do not meet the relevant conditions set in section 16 of the PRA, 2014 will be considered to fall outside tax exempted income. i.e shall be taxed accordingly.

In another development but on the same day, The Joint Tax Board JTB also noted with displeasure, the practice of deducting unlimited and arbitrary amounts as Voluntary Pension Contributions from the salaries of employees and treating same as tax exempt items. They noted that this practice is not in line with Section 16 of PRA and Section 5(8) of the Labour law as applicable which states that ‘Notwithstanding any other provisions of this Act, the maximum the total amount of deductions that may be made from the wages of a worker in any one month shall not exceed one third of the wages of the worker for that month.’ They therefore noted the need to stop and stop for good, the practice.

To take full advantage of this exercise of policy review, Lagos taxpayers and of course, Nigerians at large are enjoined to stay current by looking out for more details on this page in the coming days.

For further enquiries, Please contact Habile Consulting on Tel: 0818 564 1411 or email: partners@habileconsulting.com