Tax practitioners have criticised the Federal Inland Revenue Service’s (FIRS’) N10 million penalties against Reporting Financial Institutions (RFIs) for non-compliance with duty regulations under the Common Reporting Standards (CRS).
They said this during a one-day sensitisation on CRS regulations as adopted by Nigeria, organised by the Chartered Institute of Taxation of Nigeria (CITN).
They argued that such penalties would be challenging to taxpayers amid the government’s revenue drive considering Nigeria’s poor tax culture.
They said the penalties were beyond the extant laws imposed on RFI, emphasising the need to encourage taxpayers to widen the tax net.
The FIRS had prescribed an N10million penalty in the first instance, and an additional N1 million for every month the failure continued in an offence to comply with a duty obligation under the regulations.
CRS as a global reporting standard for automatic exchange of information (AEOI), is aimed at allowing tax authorities to obtain a clearer understanding of financial assets held abroad by their residents, for tax purposes.
With CRS regulations, RFIs are required to provide the financial information of non-resident taxpayers in Nigeria to FIRS.
It also charged a penalty of N5 million and any penalty prescribed in the Act for offence of false statement, report, declaration or information in any respect of information required to be included in an information return among other fines.
Part of the achievements, according to the FIRS, was the widening of the tax net to capture HNIs and persons earning income outside Nigeria.
Partner, Tax, Regulatory and People Services, KPMG, Nike James, who spoke from the practitioners’ perspective, commended FIRS for the successful implementation of the AEOI CRS Regulation in Nigeria.
She said the FIRS should reconsider the September 30, 2020 deadline, especially for low-income businesses that have to suffer the penalties.
She urged the FIRS to review the large volume of data, customer apathy towards providing information, revealing that a lot of banks have started sidelining customers.
Considering the cost of compliance, she recommended that bank staff should be trained to understand the CRS requirements.
A banker, Adewale Eyiowuawi, who spoke from the industry perspective of the regulation, asked for more time to file forms as most financial institutions have just started to get it right to sensitise their customers.
He said the filing of self-certification forms was a duplication of efforts on customers, as the majority of the information in the forms is the same as that in the current accounts forms.
He said FIRS should review this position and allow banks to merge the self-certification form, noting that financial institutions stand a big risk of defaults if the FIRS insists that the form should not be merged.
Managing Consultant, Pedabo Associates, Albert Folorunsho, who also spoke from practitioners’ perspective, said the implementation of the CRS would strengthen international efforts to increase tax transparency, accountability, and curb tax evasion and tax avoidance.
He said Nigeria might stand to benefit more from the CRS only if the FIRS keyed into its objectives, as it would add and expand the country’s tax base
Earlier in her remarks, President and Chairman of Council, CITN, Gladys Simplice, said the regulation came at a time when Nigeria is faced with a widening fiscal deficit.
Noting that Nigeria stands to gain a lot from the agreement, she said it was expected that the tax authorities would deploy available means, including the framework to increase revenue collection and curb tax evasion and avoidance.
It was gathered that CRS will also enable FIRS to request financial information about Nigerian taxpayers in all the countries that are signatory to the agreements.
This is to ensure that each jurisdiction gets its fair share of revenue in form of taxes from individuals and companies, regardless of where the financial assets are kept.
Source: The Guardian