- Says it’s unlawful + anti ease of doing business
By Franklin Ocheneyi
“THERE already exists a plethora of property valuation based taxes in Nigeria. The Land Use Charge payable in Lagos State which is being replicated across the country is based on property valuation.
The Governor’s consent fees payable on alienation of interest in property across the Country is based on property valuation. Capital Gains tax payable on disposal of property is somehow influenced by property valuation. Rent payable on lease of real estate property is subject to withholding tax deduction.
Furthermore, the properties of our member companies are also subjected to valuation pursuant to the provisions of the Companies and Allied Matters Act Cap C20 Laws of the Federation for the purposes of Company Annual Accounts leading to payment of tax on their profits.”
That was the reaction of the Organised Private Sector (OPS) to Federal Inland Revenue Service (FIRS) Property Valuation & Assessment and Tax Demand Notice to Member-Companies.
The OPS is an umbrella organization of the Manufacturers Association of Nigeria (MAN), Nigeria Employers’ Consultative Association (NECA), Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigeria Association of Small Scale Industries (NASSI) and Nigeria Association of Small and Medium Enterprises (NASME).
In the position document, OPS said: “Our attention was drawn to the Federal Inland Revenue Service (FIRS) Property Valuation and Assessment as well as the on-going Tax Demand Notice being issued to our member-companies.
“Our member Companies pay huge sums of money to State Governments under the above heads of taxation, which we believe the States are utilizing efficiently for the benefit of all.
Using the value of the property housing the offices of companies to generate figures that will be charged as Company Income Tax is wrong as some companies are tenants in their buildings.
Having identified the issue which is the Federal Inland Revenue Service (FIRS) Property Valuation & Assessment and the subsequent Tax Demand Notice thereon to our tax member-companies, we wish to state as follows:
“We strongly believe that this exercise is not backed up by an extant legislation and is therefore not within the mandate of FIRS. If allowed, it will amount to multiple taxations. Section 30 of Companies Income Tax Act from where the FIRS purported derived its power for the above measures is no longer in force pursuant to its deletion by section 12 of Companies Income Tax (Amendment) Act 2007. The FIRS is very much aware that is a fundamental principle of our tax jurisprudence that the power to impose any tax on a citizen must be derived from an enabling legislation.
“FIRS intention to value and assess the same property for tax purposes expressly negate the Federal Government’s objective of improving the Ease-of-Doing-Business recently initiated.
It is capable of discouraging new private investments and would place existing companies in precarious situations which may lead to their closing down their businesses. Unfortunately, as companies close down, Government tax revenue will be adversely affected. Already, Nigeria’s tax-to-GDP ratio is abysmally small at 6%, this will further dip.“