- Safiu Kehinde
The House of Representatives have approved the passage of the tax reform bills for third reading.
Members of the Green Chamber agreed on the passage of the controversial bills during plenary on Friday.
Following a six-day retreat and a public hearing, the House Committee on Finance, led by Chairman James Abiodun Faleke, presented a comprehensive report for consideration.
According to report, one of the key recommendations from the committee include the appointment of six Executive Directors for the Nigeria Revenue Service, to be selected by the President, alongside one representative from each of the 36 states to ensure fair representation.
The committee also recommended that Value Added Tax (VAT) collection and distribution should focus on the actual place of consumption, regardless of where the tax returns are filed or the company’s headquarters is located.
“For the purpose of attribution or distribution, the committee recommended that the place of consumption of taxable supplies will be irrespective of where returns are filed. In other words, all companies located in Lagos, Port Harcourt or anywhere- despite the fact that returns are filed where ever they are located.” Faleke said.
With the current 7.5% VAT rate retained, the committee recommended 55% and 35% sharing formula between state and local government respectively.
While 50% will be distributed equally; 20% to be distributed based on population; and 30% will be distributed based on consumption.
The Committee also held that all companies must give access to the Federal Inland Revenue Service (FIRS).
“The present system where companies file returns without FIRS actually knowing whether they made that money, this bill is proposing that we deviate from it.
“For example Mr. Chairman, most of our supermarkets that take it on behalf of government, they don’t remit. And when they want to remit, they remit maybe 30 percent.
“We believe that if this is introduced by the FIRS to all commercial entities, Nigeria will start to benefit.
“We added that all companies must give access to FIRS.” The Committee Chairman said.
Also, every transaction from N50 million, as recommended by the committe, must be reported by the bank. The returns must be filed to the revenue service.
The House Committee also proposed that tax is paid in the currency of the transaction.