Some economic experts have lauded the newly developed withholding tax application (WHT APP), saying it would ease tax filing system, encourage tax transparency, expand tax net and generate more revenue for government. The experts made the assertion at an interactive webinar organised by the Joint Tax Board (JTB) and the National Employment Consultative Association (NECA) […]
Some economic experts have lauded the newly developed withholding tax application (WHT APP), saying it would ease tax filing system, encourage tax transparency, expand tax net and generate more revenue for government.
The experts made the assertion at an interactive webinar organised by the Joint Tax Board (JTB) and the National Employment Consultative Association (NECA) on Tuesday.
Supreme reports that the WHT APP, which was developed for the Federal Inland Revenue Service (FIRS), will become operational this year.
Mr Bismarck Rewane, Chief Executive Officer, Financial Derivatives Limited, said Nigeria’s tax to Gross Domestic Product (GDP) and revenue ratio was one of the lowest in Africa.
Rewane said that the new withholding tax app is convenient, easy and accessible.
He said that the software would address inefficient tax collection system and improve government revenue to fund infrastructural and other projects instead of borrowing.
“The four major components of the economy, which are the government, households, corporate and investors are all struggling to get back to pre-pandemic level of the economy.
“Government revenue is currently inadequate to meet its objectives and if we continue borrowing with the current revenue, it would be a major problem.
“The whole rigmarole of trying to manually pay, get receipt, and all that needs a solution that can save time and address inefficient tax collection.
“Taxes must be neutral, easy to administer, fair and accountable.
“All hands have to be on deck to ensure that revenues are well collected, and properly spent and administered,” he said.
Mr Olufemi Oguntade, Managing Partner, O.M Associates, said the deployment of the WHT App which would be hosted on the JTB website, would avail companies the opportunity to deduct and remit withholding tax with ease from any convenient location.
Oguntade said many companies in the Fast Moving Consumer Goods (FMCG), Multi-Level Marketing (MLM) and Gaming Sectors do not deduct withholding tax appropriately from the commissions and rebates paid to their distributors and agents.
This, he said, was principally because of the cumbersome nature of paying all the revenue agencies in the country.
Oguntade said that it was in the light of the situation that a software was developed for ease of doing business and deepening of tax inclusiveness for all eligible taxpayers.
“Tax inclusiveness can only be achieved when the process of paying tax is made easy for all stakeholders and in particular, organizations that act as collecting agents for revenue authorities.
“Tax inclusiveness will also ensure that the burden of tax is not limited to the organized sector alone but rather those in the informal sector also compliment the organized sector in contributing to tax revenue,” he said.
According to him, most, if not all companies in the FMCG sector, do not deduct withholding tax from the commissions ‘rebates ‘bonuses paid to their distributors.
This, Oguntade said, was in contrast to clause 3.8 of FIRS Information Circular No.2006 02 of February, 2006.
It states that “..Income accruing to the manufacturer will not be liable to Withholding Tax (WHT) as it is regarded as transaction in the ordinary course of business, but the commission earned by the distributors, dealers will be subjected to WHT.”
Oguntade said that FIRS recently released a publication where companies in organized private sector were notified of the deployment of Automated Tax Administration Solution (ATAS)
“With the advent of ATAS, it behooves on every organization to ensure that withholding taxes are deducted from every stakeholders that earn revenue from their stable on which they are also accountable to revenue agencies.
“Revenue agencies on their part must see to it that the process is made easy for collecting agents to deduct and remit such withholding taxes with ease,” he said.
Also speaking, Mr Muhammad Nami, Chairman FIRS, reminded tax practitioners of penalty for failure to remit or deduct withholding tax.
He urged JTB to collaborate with the National Identify Management Commission (NIMC) to leverage on the National Identification Number (NIN) to make sure it is incorporated as a tool for tax purposes.
For Ayodele Subair, Chairman, Lagos Internal Revenue Service, the App is coming at a time when engaging citizens to comply with tax filings had proven daunting.
He said the initiative, which was a very welcome development, “seeks to bring automation to transaction thereby sanitizing the tax system and ensuring that the standards of transparency and compliance are upheld.
“Rather than go through the rigors of several tax audit, we are presenting people with automation straight from their homes.
“I am pleased to confirm that Lagos strongly identifies with this initiative and affirms with the state government’s commitment to proper account for its revenue,” he said.
Mr Richard Ayibiowu, Chairman, Finance Committee, NECA, expressed concerns in areas of data privacy, data confidentiality and data protection, particularly for private sector players.
He called for improved infrastructure in the area of technology to ensure that the privacy of businesses were not in any way compromised.