BusinessDay 12 Apr 2018

38 BUSINESS DAY
C002D5556
Thursday 12 April 2018
NEWS
Nigeria’s fiscal space gets boost as oil hits 4 year...
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FG extends VAIDS to June...
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taxpayers.”
The President however
warned that no further extension
of time will be approved
after June 30.
The President added that a
new date was also given, based on
the conviction of the Ministry of
Finance that the overall objective
to increase compliance will be
attained, and additional revenue
will accrue.
The statement also said that a
fresh Executive Order will be made
to give legal backing to the new
timeline.
According to Buhari, “for a nation
of people who are competitive
driven it is not a thing of pride that
we are the lowest performer in tax
to GDP, not just in Africa, but in
the world.”
“Hiding monies overseas, evading
taxes by manipulation, and
other unwholesome practices,
have never developed a country,
and for Nigeria to attain her true
potential, these must stop.”
Nigeria’s tax-to-Gross Domestic
Product (GDP) ratio at just
6percent is one of the lowest in
the world compared to India (16
supply from the Middle East in
the near future, which is affecting
the price of crude oil,” Afimia said
by mail.
The global oil marker rose as
much as 3.9 per cent to $71.34 a
barrel, blowing past its recent January
peaks to reach a level last seen
in December 2014. The change
marks the biggest one day gain for
the gauge since September.
“The higher crude oil prices we
are currently witnessing simply
means more income for both
OPEC and non OPEC producing
countries which they should take
advantage of,” Abayomi Fawehinmi,
an energy analyst at a Lagosbased
consulting firm said.
The West Texas Intermediate
benchmark advanced as much as
3.8 per cent to $65.84 a barrel, closing
in on its recent January high of
$66.66 a barrel.
“Also, the Middle East has the
highest concentration of the major
oil producing countries, so any issues
or tensions there will affect oil
supply,” Fawehinmi said.
Prices have firmed on escalating
tensions in the Middle East as US
President Donald Trump and its allies
are considering military response
against Syrian President Bashar
Assad’s forces over alleged chemical
weapons attack in western Syria.
Also, France, Britain and Middle
Eastern allies, including Saudi Arabia,
have publicly acknowledged
internal deliberations on how to
address the suspected poison gas
on Saturday in the rebel-held western
Syrian city of Douma, which
the Syrian American Medical Society
has said killed over 48 people.
Syria is not a major oil producer
itself, however the wider Middle
East region is the world’s most
important crude exporter and
tension in the region tends to put
oil markets on edge.
“Russia vows to shoot down any
and all missiles fired at Syria. Get
ready Russia, because they will be
coming nice and new and “smart”.
You shouldn’t be partners with
a Gas killing Animal who kills his
people and enjoy it,” Trump tweeted
on Wednesday by 11.57 am.
Russia and Syria swiftly reacted
to Trump’s threat on Wednesday.
Syria’s Foreign Ministry said it
was not startled by the US’ “reckless
escalation” via Trump’s tweets, the
state-run news agency SANA reported,
while Russian Foreign Ministry
spokeswoman Maria Zakharova said
in a Facebook post that “smart missiles
should fly toward terrorists, not
the legal government that has been
fighting international terrorism for
several years on its territory.”
There are also concerns that the
US could renew sanctions against
Iran, a major Middle East oil producer
with daily oil production of
about 3.8 million barrels.
Saudi Arabia’s foreign minister
Adel al-Jubeir said on Tuesday it was
uncertain whether talks concerning
Europeans and the United States
would be sufficient to fix the Iran
nuclear deal’s flaws, and that Tehran’s
“vision of darkness” had to be stopped.
U.S. President Donald Trump gave
an ultimatum to the European powers
on January. 12, saying they must
agree to “fix the terrible flaws” of the
2015 agreement or he would refuse to
L-R: Segun Oloketuyi, MD/CEO, Wema Bank plc; Yinka Davies, legendary entertainment personality; Joseph Edgar,
producer of widely acclaimed stage play Isale Eko; Ademola Adebise, deputy managing director, Wema Bank plc,
and Moruf Oseni, executive director, retail bank, Wema Bank plc, at the Wema Bank head office in Marina, when the
production crew of Isale Eko paid the bank’s management a courtesy visit.
percent), Ghana (15.9 percent),
and South Africa (27 percent). Most
developed nations have tax-to-
GDP ratios of between 32 percent
and 35 percent.
The International Monetary
Fund (IMF) in a recent country
report on Nigeria blamed the nation’s
revenue administrators for
the low tax collection in Africa’s
largest economy.
“The very low tax collection
rates in Nigeria are a direct reflection
of weaknesses in revenue
administration systems and a high
level of systemic noncompliance,”
the IMF noted.
“Estimates of tax potential from
the literature suggest that a nonoil
tax capacity of 16 to 18 percent
would be optimal for a country
with Nigeria’s economic structure
and per capita income levels. This
estimate implies space for additional
tax collection of 12 percent
of GDP.”
The Voluntary Asset and
Income Declaration Scheme
(VAIDS) is a time-limited opportunity
for taxpayers to regularise
their tax status relating to
previous tax periods and pay any
taxes due.
The Federal Government aims
extend the U.S. sanctions relief on Iran.
Speaking to reporters after talks in
Paris, Foreign Minister Adel al-Jubeir
said he believed France, Britain and
Germany agreed that Iran’s ballistic
missile program and regional activities
had to be addressed, but they
disagreed with the United States,
Saudi Arabia and Israel on the need
to revamp the accord.
“The present US government
is currently showing the world
that it’s not a country that honours
agreement, so it won’t be a surprise
if they don’t honour the agreement
which will likely increase the price
of oil,” Luqman Agboola, head of
research at Sofidam Capital said.
Saudi Arabia Energy Minister
Khalid al-Falih said on Wednesday
that Saudi Arabia will not allow
another supply glut, meaning that
the de-facto leader of Organization
of the Petroleum Exporting
Countries (OPEC) would continue
to suppress supply.
Also, US crude inventories rose
by 1.8 million barrels in the week to
April 6 to 429.1 million, according to
a report by the American Petroleum
Institute (API) on Tuesday, compared
with analysts’ expectations
for a decrease of 189,000 barrels.
to raise at least $1 billion into its
coffers as tax revenue while bringing
in 4 million new tax payers into
the tax net.
Aso Rock had engaged a leading
international Asset Tracing and Investigation
Agency (Kroll), to trace
and track illicit flows and assets.
The data mining efforts of the
Federal Ministry of Finance domiciled
in ‘Project Lighthouse’ is
also meant to help identify a new
batch of more than 130,000 high
net worth Nigerian individuals and
companies that have potential tax
underpayments.
“We have properties worth N2
trillion belonging to Corporate
entities that do not pay tax and we
have begun the process of selling
them off. At the federal level, about
N20 billion has been raised and
we have received over 262 applications
through VAIDS,” said Tunde
Fowler, Executive Chairman,
Federal Inland Revenue Service
(FIRS).
“We are compiling all the information
and data so we can
have a central data base to ensure
adequate security for people’s
information,” Fowler said.
Tax authorities have collected
data from a number of sources including
land registries of the Governments
of Lagos, Kaduna, Kano and
Adding to rising storage levels,
the US Energy Information
Administration said on Tuesday
that it expects domestic crude oil
production in 2019 to rise by more
than previously expected, driven
largely by growing US shale output.
In its monthly short-term energy
outlook, the agency forecast
that US crude oil output will rise
by 750,000 barrels per day (bpd) to
11.44 million bpd next year.
Last month, it expected a
570,000-bpd year-over-year increase
to 11.27 million bpd.
That will likely make the US the
world’s biggest oil producer by 2019,
surpassing Russia which currently
pumps out almost 11 million bpd.
Rising oil prices would be welcome
by the cash strapped Muhammadu
Buhari-led government which
campaigned in 2015 on the bases of
stopping all forms of subsidy payments
on petroleum products but
has however been secretly doling out
billions of naira annually as subsidy
under the disguise of “underecovery”
on petrol alone to oil contractors
and their cronies in the NNPC.
•Continues online at www.businessdayonline.com
Ogun States as well as the Federal
Capital Territory (FCT) and also have
been able to request and receive data
from a number of nations including
traditional tax havens.
For the overseas data the Federal
Government has used exchange
of information protocols. Under
these protocols, information relating
to bank records and financial
filings for tax purposes is obtained
from tax havens like British Virgin
Islands and Mauritius that are
signatories to information sharing
agreements.
The FIRS has also been unearthing
tax payer’s data using Bank Verification
Number (BVN), foreign exchange
(FX) application, land registry,
company dividends, car registration,
Corporate Affairs Commission, and
foreign property ownership.
“The focus right now is on those
that make substantive amount in
Nigeria that have not declared or
are underpaying their taxes,” according
to the FIRS chairman.
Nigeria has signed the Multilateral
Competent Authority on Common
Reporting Standards, which
allows for exchange of financial
account information.
“We need to stop relying on oil
and rebuild our revenue base. In
order to achieve this we have to
fulfill our tax obligations. This is
Buhari meets...
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Gadaffi of Libya. When he was
killed, the gunmen escaped with
their arms. We encountered some
of them fighting with Boko Haram.
Herdsmen that we used to know
carried only sticks and maybe a cutlass
to clear the way, but these ones
now carry sophisticated weapons.
The problem is not religious, but
sociological and economic. But we
are working on solutions.”
President Buhari lamented that
“irresponsible politics” has been
brought into the farmers/herders’
crisis, but assured that enduring
solutions would be found, and
justice done to all concerned.
On Leah Sharibu, the schoolgirl
from Dapchi still being held by
insurgents, reportedly because she
refused to renounce her Christian
faith, the President said:
“We are managing the matter
quietly. Making noise would not
help. We are collecting as much
intelligence as possible, working
with the Red Cross and other international
organizations. There
are too many fraudulent people
around, who claim they can do this
and that. We won’t deal with them.
That was how we got the Dapchi
girls back, and the Chibok girls.”
Archbishop Welby said it was
always a delight to see President
Buhari, “whom I have tremendous
respect for,” adding: “You have my
best wishes on your recent decision.
I read your declaration speech. We
are neutral as a church, but we will
pray for you. Great statesmen are
those who run for the good of their
country. We will be praying for you.”
Japaul losses hit...
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interest expense spiked by 118.01
percent to N4.61 billion in December
2017 from N2.11 billion as at
December 2016.
The company’s share price
gained 7.55 percent to close at 57
kobo per share while market capitalization
stood at N3.57 billion.
Japaul Oil & Maritime Services
Plc provides marine offshore construction,
marine equipment leasing,
and oilfield marine support
services.
something we must all get right,”
said Kemi Adeosun, Nigeria’s Minister
of Finance.
The President urged Nigerian
companies and individuals to
join government in the rebuilding
mission, “and do the right thing by
taking this window of extension to
regularize.”
He added that the right thing
may not be convenient or comfortable,
“but in the long run, we will all
have a nation we can be proud of.”
President Buhari further urged
tax authorities to use the extension
window to perfect plans to prosecute
those who fail to regularize
their tax status.
President Buhari had last year
launched the Economic Recovery
and Growth Plan (ERGP), and the
VAIDS tax amnesty a first in the
series of reforms that will transform
the tax system and provide sustainable
predictable funding for all tiers
of government.
The IMF however says the
current strategy of relying on
strengthened collection efforts
and one-off initiatives such as
the Nigerian Voluntary Asset
and Income Declaration Scheme
(VAIDS) as a first level intervention,
“may not be that effective in
delivering higher revenues in a
sustainable manner.”