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Global Tech, Digital Giants Won’t Escape Tax in Nigeria- FG

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Federal government has vowed big technology and digital companies with a significant economic presence in Nigeria, though without physical offices, won’t escape tax payments henceforth.

Global Tech, Digital Giants Won’t Escape Tax in Nigeria- FG

The government said it would rely on the provisions of the Finance Act 2019 to ensure that they no longer escape such payments.

It noted its decision was in tandem with ongoing international talks in Paris on global standard rules for governments to receive taxes from technology and digital firms with a significant economic presence in foreign countries.

Vice President Yemi Osinbajo stated this during an interaction with a delegation from the Chartered Institute of Taxation of Nigeria (CITN), led by Mr Adesina Adedayo, its president, at the Presidential Villa.

Osinbajo’s spokesman, Laolu Akande, made this known in a statement on Sunday in Abuja.

“While the Federal Government will not be raising tax rates at this time, based on the Finance Act 2019, it is already empowered to widen the tax net.

“This includes collecting taxes on the Nigerian income of global tech giants with a significant economic presence here, even if they have not established an office or permanent establishment, and are currently not paying taxes in Nigeria.

“In this regard, Section 4 of the Finance Act 2019, provides that the finance minister, may by order of the president, determine what constitutes the significant economic presence of a company, other than a Nigerian company.

“We have had severe economic downturns, which of course implies that we may not be able to collect taxes with the aggressiveness that would ordinarily be expected.

“I think the most important thing is that we must widen our tax net so that more people who are eligible to pay tax are paying,” Osinbajo said.

Akande siad in the statement that the vice president also noted that several efforts had been made in that regard.

“I am sure you are aware of the initiatives including the Voluntary Assets and Income Declaration Scheme (VAIDS), which was also an attempt to bring more people into the tax net, including those who have foreign assets.”

According to the vice president, the Federal Government has also recently taken a step with respect to a lot of the technology companies that are not represented in Nigeria, but who do huge volumes of business in the country.

He said that the Finance Act had shown that Nigeria was prepared to ensure that the big technology companies did not escape without their fair share of taxation in Nigeria.

“Many of them do incredible volumes here in Nigeria and in several other parts of the region.

“We have drawn up the regulations and we are prepared to go, and I think that we are at least in a good place to tap into some of the tax resources we can get from some of these companies.

“Besides the Federal Government, a recent Bloomberg news article reported that “Governments around the world are grappling with how to modernise their legal frameworks to account for the global reach of the digital economy, reshaping how policymakers think about issues as varied as monopoly power, taxation and workers’ rights.”

He said that international talks were currently ongoing in Paris on global standard rules for governments to receive taxes from such digital and technology firms with a significant economic presence in foreign countries.

Osinbajo gave further explanations on legal provisions for the subject matter.

“In Nigeria, according to the Finance Act 2019, a company will pay taxes if it transmits, emits or receives signals, sounds, messages, images or data of any kind by cable, radio, electromagnetic systems, or any other electronic or wireless apparatus to Nigeria.

“This in respect of any activity, including electronic commerce, application store, high-frequency trading, electronic data storage, online adverts, participative network platform, online payments and so on, to the extent that the company has significant economic presence in Nigeria and profit can be attributable to such activity.”

He said that the Federal Government had no plans to raise taxes currently in reference to arguments that tax rates were too low, comparing Nigeria to other places in the region where the rates were much higher.

“So we have had to balance all of these issues because clearly, higher tax rates can be a disincentive to businesses and investments.

“In terms of domestic resource mobilisation, we are trying to do the best we can given the present circumstances and I believe that there is room for improvement.

“Actually, under the Finance Act 2019, the Federal Government has reduced taxes for small companies – companies with less than N25 million in annual turnover are charged Zero Company Income Tax, CIT.

“Also CIT for Companies with revenues between N25 million and N100m (described in the Act as “medium-sized” companies) has been reduced from 30 percent to 20 percent.

“Besides, Nigerians making minimum wage income are not to pay tax at all,” he said.

He said that under the 2020 Finance Act, there was also an exemption of small companies from payment of education tax under the Tertiary Education Trust fund (TETFUND), meaning companies with less than N25 million turnover were eligible.

Osinbajo added there was a 50 per cent reduction in minimum tax; from 0.5 per cent to 0.25 per cent for gross turnover for financial years ending between Jan. 1, 2020, and Dec. 31, 2021.

Earlier in his remarks, Adedayo commended the leadership of the vice president in the implementation of key government interventions in the economy.

“We acknowledge your great zeal and commitment to the Nigeria project,” he said.

Adedayo said the visit became necessary given the enormous work the administration had done towards addressing the huge fiscal challenges in the polity, public financing reforms, and sustained efforts towards addressing infrastructure deficit.


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Court Orders Belemaoil to Pay Over $21m, ₦10Bn Contract Debts to BGP/CNPC

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A High Court in port Harcourt, Rivers State, has ordered Belemaoil Producing Limited (Belemaoil) to pay the sum of more than $21 billion and another nearly N11 billion to BGP/CNPC International Nigeria Limited being an unpaid balance of services rendered for an executed contract.

Court Orders Belemaoil to Pay Over $21m, ₦10Bn Contract Debts to BGP/CNPC

BGP/CNPC, a limited liability company incorporated in Nigeria, had in Suit No. PHC/3442/S/2022 against Belemaoil, claimed that by a tripartite contract No. BPL055017-00063 signed on 04/02/2019, that they were contracted to provide onshore and swamp seismic acquisition services in respect of OML 55 for a period of three years, effective 24/04/18 and to lapse on 23/04/2021.

The suit noted that the contract sums with a payment split of 40% payable in Naira, while 60% payable in United States Dollar and that the firm had between November 2019 and January, 2021, it sent several invoices to Belemaoil for payment of work done, all of which Belemaoil duly received, acknowledged and did not dispute at all material times.

The firm claimed that it wrote several demand letters to Belemaoil, which were also duly received, without objecting to same, adding that Belemaoil had given its bankers (Sterling Bank PLC and Access Bank PLC) letters of irrevocable payment instructions in favour of BGP/CNPC and its co-contractor for payment of 90% of its anticipated cash call inflow from his senior partner NAPIMS but that no payment was made.

BGP/CNPC opined that several meetings were held by the parties wherein the outstanding sums were reconciled and agreed upon, and Belemaoil reiterated its commitment to paying the debt and agreed on a time line schedule for payment of the part of the debt that may not be accommodated by NAPIMS cash call contribution.

The firm noted that despite the agreement and repeated demands, Belemaoil failed to pay the debt which impacted negatively on their business and ability to meet its financial obligations, thereby initiating the suit through a summary judgment procedure, exhibiting tendering 32 copies of invoices, letters of demand, minutes of meetings and others documents.

But, Belemaoil in opposition to summary judgment admitted that BGP/CNPC was actually engaged to execute the contract and was issued some invoices wherein some discrepancies were discovered and several meetings were held to reconcile the differences in the amounts quoted by BGP/CNPC.

Belemaoil stated further that the sum of the invoices submitted by BGP/CNPC was a total of $28,008,170.07 and N 6,413,890,343.91, out of the said amount, Belemaoil made payment of the sum $7,578,365.67 and N 1,768,718,772.48, adding that the outstanding invoices issued by BGP/CNPC is $22,358,185.12 and N 5,053,732.656.30, but could not be attended to due to non-compliance with the terms of the contract by BGP/CNPC, for refusing to release data on work done to Belemaoil.

They told the court that all the invoices submitted have no certificate of job completion, and that BGP/CNPC is entitled to payment only upon the complete delivery of all seismic products and all data related deliverables, stating that it is not indebted to BGP/CNPC and urged the court to dismiss the application for summary judgment brought by BGP/CNPC.

Meanwhile, Belemaoil had during the pendency of the suit, sought the leave of court to settle the matter out of court and leave was granted by the court, and paid to BGP/CNPC the sum of N 2,440,000,000.00, and $500,000.00 out of the outstanding indebtedness, but failed to pay the balance.

However, delivering his judgment, Justice G. O. Ollor, presiding judge, held that in accordance with the Rules of court, judgment would be entered against a Respondent who is unable to show that he has a good defence to the claim.

Ollor noted that upon a careful perusal of all the processes filed by the parties and the application for summary judgment in particular, the affidavits, Exhibits and submission of both learned Counsels, he is not in doubt that BGP/CNPC was engaged by Belemaoil to provide onshore and swamp seismic acquisition works in respect of OML 55 which BGP/CNPC issued its invoices to Belemaoil, and that Belemaoil also admitted its indebtedness to BGP/CNPC in several meetings and in the documents before the court and that there is no bona fide evidence that the debt owed to BGP/CNPC is disputed by Belemaoil.

Ollor held further that the letters issued by Belemaoil, the irrevocable payment instruction to its banks (Access Bank and Sterling Bank) in respect of its indebtedness and resolutions reached at meetings with Belemaoil, BGP/CNPC and IDSL wherein Belemaoil admitted its liability to BGP/CNPC, reveals the fact that Belemaoil does not dispute any part of the claim being asserted by BGP/CNPC, even as Belemaoil did not dispute that work was done by BGP/CNPC nor the invoices that were issued.

The court held:“The Defendant/Respondent having failed to pay within the sixty days (60) period prescribe by the contract, the Defendant/Respondent has deprived itself of the benefit of the Naira to USD exchange rates applied in the unpaid invoices. Allowing the Claimant/Respondent to benefit from its own wrong will be unjust and contrary to equity.

“It is a settled law that summary judgment procedure is for the plain and straight forward, not for the devious and crafty. I find that the instant suit is plain and straight forward and this application for summary judgment by the Claimant/Applicant is apt, because the Defendant/Respondent has no good defence to this suit of the Claimant/Applicant.

“Accordingly, I hold from the above findings that the application of the Claimant/Applicant for summary judgment in this suit is meritorious and it is granted as prayed”.

The Court, however, ordered Belemaoil to pay to BGP/CNPC, the sum of N10,810,270,635.00, and $21, 858,185.12, being the balance outstanding of the invoices issued by BGP/CNPC to Belemaoil for work done.

The Court also ordered Belemaoil to pay post judgment interest at the rate of 10% per annum from the date of judgment until final liquidation of the judgment, while setting down the claims with regards to cost of action and pre-judgment interest for full trial. A cost of N200,000.00 was also awarded against Belemaoil and in favour of BGP/CNPC by the court.


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Ogun HoS says ICT Adoption is Crucial to Driving Government’s Plans, Policies

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Mr Kehinde Onasanya, the Ogun State Head of Service, has urged information managers to embrace Information Communication Technology tools for effective information dissemination, which is central to mobilising and ensuring the success of government programmes and policies.

Onasanya made this call in a statement released to the media while declaring open a two-day training programme titled “Upscaling Public Information Management through Strategic Public Relations” for Information/Public Relations Officers in government Ministries, Departments, and Agencies.

The training, organised by the Bureau of Establishments and Training under the Office of the Head of Service, was held at the Obas’ Complex, Oke-Mosan, Abeokuta.

The Head of Service emphasised the importance of the training in improving the practices of Information/Public Relations Officers to enhance effective governance in Ogun State.

He also expressed gratitude to Governor Prince Dapo Abiodun for his investment in the capacity building of the entire workforce.

He said: “We must all realise that the world of information management for government institutions has changed dramatically compared to how it was practised in the pre-ICT era.”

“The participants in this training must learn to utilise the transition from the industrial age to the knowledge age, which is driven by technology and social media as its by-product, to perform their duties with competence despite operational challenges.”

Onasanya noted that the training also aimed to promote efficiency and effective work ethics among media managers, addressing core areas of information management, including the creation of a robust feedback mechanism to bridge the gap between the government and the governed.

Kayode Akinmade, Special Adviser to the Governor on Information and Communication, in his address, said the training was necessary, as a significant information management gap had been identified in the state.

Akinmade explained that the gaps ranged from a lack of requisite knowledge and expertise to the limited roles played by information handlers. He added that the training would provide participants with the necessary skills to excel in their statutory duties.

He encouraged participants to ensure the government remains in constant touch with the public through the media, warning that any media space left unused would be exploited by detractors.

Earlier, Permanent Secretary of the Bureau of Establishments and Training, Mrs Lydia Fajounbo, highlighted the agency’s primary responsibility of building workforce capacity for excellent service delivery.

Fajounbo stressed the importance of training in projecting the government’s image through accurate reporting of its programmes and policies, adding that media managers must be equipped with the necessary skills to meet today’s demands for optimum performance.

The Permanent Secretary of the Ministry of Information, Mr Waheed Adesina, thanked the governor and the Head of Service for the opportunity to train the information officers, ensuring they are fully prepared to carry out their statutory duties of positively and promptly projecting government activities.

Other speakers at the training included Dr Niran Malaolu, former Commissioner for Information in the state, Mr Demola Badejo, a former Permanent Secretary/Clerk of the Ogun State House of Assembly, Chief Fassy Yusuf, a former Commissioner for Information, Hon Tunde Tella, Chairman of the House Committee on Establishments and Training, and his counterparts from the Information and Education committees, Hon Segun Kaka.


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Private Employers Paying Below N70,000 Risk Jail – FG

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Federal government has said that private employers who pay their workers less than the new minimum wage of N70,000 risk facing jail time.

Private Employers Paying Below N70,000 Risk Jail - FG

This warning was announced by Alhaji Ismaila Abubakar, permanent secretary, federal ministry of labour and employment, at the 13th Annual General Meeting of the Employers Association for Private Employment Agencies of Nigeria.

According to Abubakar, the minimum wage is now a law, and paying less than N70,000 is a punishable crime. Employers are expected to make it compulsory in any contract that their workers earn at least the minimum wage, after all deductions.

The Nigeria Labour Congress (NLC) has also weighed in on the issue, with Funmilayo Sessi, chairperson of the Lagos State Council, calling on private employers to pay the N70,000 minimum wage. She noted that the current economic realities make it difficult for workers to survive on lower wages.

It’s worth noting that there is some ambiguity surrounding whether the N70,000 minimum wage is net or gross, with Dr. Olufemi Ogunlowo, president,  Employers Association for Private Employment Agencies of Nigeria, calling for clarification on this issue.

 

 


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