To contain the effects of ravaging COVID-19 on businesses and the economy in general, the Chartered Institute of Taxation of Nigeria (CITN) has advised the Federal Government to approve tax cut and restructuring of tax repayments.
The move will save organisations and individuals battling with the headwind created by the dreaded COVID-19.
The CITN stated this in a release entitled ‘Government’s actions, tax implications and CITN’s recommendations’ signed by its President/Chairman of Council, Olajumoke Simplice.
The Institute said the recommendation was aimed at assisting the Federal Government find ways to salvage the economy from the ravaging effects of the COVID-19.
It further disclosed that the recommendation was in consonance with the principles of simplicity and certainty of taxation.
The professional tax administration body therefore recommended a reduction of the Company Income Tax (CIT) for 2020 as it affects various categories of companies. from 30 per cent to 20 per cent for large companies.
Specifically, the Institute advocated for reduction of CIT rate from 30 per cent to 20 per cent for large companies; and from 20 per cent to 15 per cent for medium companies liable under the 2020 Finance Act.
It also recommende suspension of the minimum tax provisions and extension of period of filing, tax returns and due date of payment by three months.
The CITN further recommended the review of the Emergency Economic Stimulus Bill to provide for the establishment of the Food and Nutrition Assistance Fund, tax rates reduction and extension statutory periods for tax payments.
The Institute emphasised that these would “provide direct benefits and far-reaching impact on companies than the proposed 50 per cent of Pay As You Earn as rebate for CIT”, noting that this would encourage companies to retain their employees.
Other recommendations by the Institute include “Grants and loans to be extended by CBN and commercial banks to manufacturing companies, SMEs and mandatory productive lending programme by the commercial banks to manufacturing companies, in order to stimulate economic activities post-COVID-19, support for the purchase of medical equipment and medical goods and services.
“Review of the management of the crude oil fiscal regime in Nigeria; and the review of government’s commitment to the development of solid minerals to boost the earning capacity of the country.”
According to the CITN, infrastructure development policy should be in place to, among other imperatives, address the infrastructural gap through concession of critical infrastructure such as refineries, road, sea-ports, electricity among others.
“This will release funds needed to finance critical sectors while allowing market forces to bring efficiency in the operations of these national assets,” the Institute stated.
It could be recalled that the CITN boss had late last year called on the Federal Government to reduce the number of taxes and make them broad based in order to allow for ease of compliance and enforcement.
She explained that tax had become very relevant to Nigeria’s economy due to the sharp decline in oil revenue and that the need to boost non-oil tax revenue through tax ought to be done with the urgency it deserved.
“Government must avoid the propensity to introduce earmarked taxes with the intention of raising revenues while neglecting the impact of such actions on businesses and economic activities.
“As a matter of fact the thinking in tax law that our taxes should be few in number, broad based and high revenue-yielding. In effect, the administration of taxes should be simplified for ease of enforcement and compliance”, the CITN president said at a forum of tax experts and relevant stakeholders in Lagos in November 2019.