By Johnson Umishi
Chairman, Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has emphasized that the inheritance tax would not be reintroduced in the new tax bills before parliament for consideration.
He was reacting to submissions that inheritance tax had been reintroduced during a hearing on the four tax reform bills organised by the House of Representatives Committee on Finance, headed by Hon James Faleke.
He said, “So the section of the law that is being interpreted as introducing inheritance tax is section 4 subsection 3, of the Nigerian tax bill. Now this section is talking about family income.
“If as an individual, you own a property and you rent it out, you pay tax on your rent. But a family can also own a house and rent it out. Should they not pay tax? If we say they should not pay tax, I guarantee you, all the houses in Nigeria will turn to family houses, and nobody will pay the tax.
“Income is different from inheritance. Inheritance is to do with assets, wealth, and cash. In accounting, when you say income, income is external to the family. It comes in from the outside. So this provision is not even new. It has been in our tac laws since independence.
“As we speak today, this provision is in the Personal Income Tax Act, Section 2, subsection 5.
“If you have family income, you can tell us it belongs to the father or the son. The father or the son will pay the tax. But if you earn family income and you cannot attribute it to any member of the family, then you would impose tax on that family.
“In fact, there’s a tax on villages. There’s a tax on communities. You can have a community town hall, and you’re renting it out. You need to pay tax. So this provision is not new. Also, it is not in any way introducing inheritance tax.
“Otherwise, this law was already in place when in 1979, the military introduced inheritance tax. If this was sufficient, they would not have introduced another law to impose inheritance tax.
“And in 1996, that capital transfer tax that imposed inheritance tax was repealed. And we have not in any way, directly or indirectly, attempted to bring it back. And by the way, this is the income of the state, not the federal government. Why would we want to do that?”
Chairman of the Federal Inland Revenue Service (FIRS), Zach Adedeji, criticized a situation were investors produce in free zones which have a different tax system, from and try to get their products into Custom areas.
He said a responsible country would not accept this.
“No responsible government will open its eyes and allow some people that have not read the law or they have read it halfway to now say they want to have litigation, they want to go out of the country. What is their total investment that they want to use to destroy those people
that are in the Custom area that we are collecting taxes from, and then you produce and you rush it, you dump it into the Custom area to destroy the country. A responsible country will not be like that. We will not be like that,” Adedeji said.
Also reacting to allegations by some stakeholders in the free zones that 70 of investors have withdrawn their cash due to unfavorable policies, Oyedele said this was false.
He said, “There is what we call cash in circulation. That’s the currency you have in your pockets and in your wallet. In Nigeria, it’s about four trillion naira. It’s meant to be outside the banking system. That’s what they used to pay for molue or to buy pure water.
The most supply in Nigeria is over 100 trillion Naira. And it’s still there. The value of digital transactions last year was N1.08 quadrillion. So nobody’s withdrawing money to run from Nigeria.
He said there was no law that permitted that a free zone entity can sell to the custom territory competing with people who are paying taxes.
“That’s the best way to create economic distortion. And that is not the intention,” he said.
President of the Manufacturers Association of Nigeria, Otunba Francis Meshioye, regretted that the Tax Bill excluded tax waivers on profits from manufactured exports.
He said between 2019 and 2023, the value of manufactured exports deteriorated from $6.7 billion to $1.6 billion partly due to inadequate incentives for our exporters.
The Oil Producers Trade Section of the Lagos Chamber of Commerce said that if the tax bills is passed as currently drafted, some of the VAT gains for the oil and gas sector will be lost especially when it concern petroleum profit tax.
Its representative said the incentives for oil production should be codified under the proposed tax reform, adding that of section 87 of the bill is allowed, stabilisation fund will not be available for companies currently captured under the Petroleum Industry Act, adding that in such situation, when anything happen, they will be on their own.
He said in passing the bills, there is need to be careful not to increase the cost of doing business in the country so that businessmen will not be pushed into investing in other clime.
He said the OPTS supports the principles b hind the bills, while expressing the hope that all areas of concern will be addressed.
President of the Manufacturers Association of Nigeria (MAN), Francis Meshioye commend the government for the courage to introduce the bills, but expressed concern about the lack of incentive for members who manufacture for export.
He also kick against the idea of allowing 100 sail into the Export Free zones, saying there is no country in the world except Nigeria that allow such sail, adding that Ghana only allow 30 percent sail.
The association proposed that the law allow only 25 percent sail of goods into the free zone.
He commended the government for the planned reduction of company income tax as contained in the bills, adding that across the global, it is a common practice to reduce company income tax to boost production and the economy.
