Self assessment can drive growth in 2013

Economic Confidential
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Many tax jurisdictions now rely on self-assessment as the major means of tax collection; it has become a tax modern administration trend. Indeed it is now a measure of how up-to-date a tax authority is.
By way of definition, it is a tax regime whereby the taxpayer is granted the right, by law, to compute his own tax liability, pays the tax due (at a designated bank, as is the case in Nigeria) and produces evidence of tax paid to the Tax Office, at the time of filing tax returns, on due date.
On the part of the tax authority, it accepts the tax returns as filed, subject to completeness, and carry out audit in due course. Very much unlike an administrative assessment were the tax authority raises an assessment where a taxpayer has failed to file returns and pay taxes due on or before the due date or where there is an understatement of tax in the returns filed.
With the taxpayer’s assumption of the role of assessing self, an obligation arises for the tax authority to ensure that the taxpayer understands the procedures involved in tax administration and how to compute tax liabilities and complete tax returns (if the option is self-service).
In addition to taxpayer enablement, it is the responsibility of the tax authority to ensure compliance with all tax administration processes especially accuracy of declarations made and the timeliness of tax returns.
In Nigeria, the Federal Inland Revenue Service (FIRS) introduced the self assessment regime in 1992 following the enactment of the appropriate law in 1991. The FIRS Board, in exercise of the powers conferred on it by Section 61 of the Federal Inland Revenue Service (Establishment) Act 2007, with the approval of the Minister of Finance gazetted a Regulation dated 19 December 2011 modifying the processes and procedures for self assessment returns. The Regulations cover tax returns under the Companies Income Tax Act (CITA), Education Tax Act (ETA), Petroleum Profit Tax Act (PPTA), Personal Income Tax Act (PITA), National Information Technology Development Act (NITDA), and Value Added Tax Act (VATA).
However the method has not been as successful as envisaged. Many will argue that risk based audit which is a major feature of self assessment has not been not been fully optimized. Risk based audit assist in risk identification, analysis, assessment, evaluation and prioritization, with the pre-determined risk ratios drawn from a risk framework, every tax return is subjected to risk analysis and assessment.
This in itself is a departure from the government assessment of best of judgement where time and capacity impeded 100% audit. Under risk based audit, resources are applied to areas of risk in the order of the weight attached.
Fundamentally, automation of the filing process will encourage taxpayers to file their returns independently instead of using the outdated administrative assessment or best of judgement. In this regard the Integrated Tax Administration System (ITAS) project being undertaken by the FIRS will play a key role. FIRS will need to fully exploit technology to endear efficiency in the process of Self-Assessment.
Also for the benefits of Self Assessment to be fully optimized a more robust mechanism whereby compliance checks are conducted through risk based case selection for audit; In which case, all Tax returns have equal chance of being selected for audit.
This approach is a demonstration of transparency in tax administration and is expected to encourage self disclosure and clearer disclosure benchmarks also need be to put in place. Another key driver will be to have a strong Audit and Compliance department that can ensure the validity of disclosure.
Using the Australian Tax Office (ATO) as a global case study of the self-assessment system, the claims a taxpayer makes in their tax return are accepted by the (ATO), usually without adjustment, and an assessment notice is issued. Even though we may initially accept the tax return, the return may still be subject to further review.
To ensure the integrity of the tax system, the law provides the ATO with a period where it may review a return (and make sure all income has been included) and may increase or decrease the amount of tax payable.
The ATO has powers to amend an assessment up to two years (or four years for taxpayers with more complex tax affairs) after tax become due and payable under the assessment. Where anti-avoidance provisions apply, the period is four years. Where the avoidance is due to fraud or evasion, there is no time limit on amending the assessment. If the FIRS can push such laws through it will certainly ensure and endear voluntary and honest filing of returns.
Generally speaking, the adoption of self assessment principles reflects a desire to move away from in-house administrative assessment procedures in favour of more comprehensive and targeted approaches to providing help and assistance to taxpayers, and to the systemic verification of reported tax liabilities through risk-based desk and field audits and computerized matching of income reports.
In countries where self-assessment has been adopted, it has generally been initiated with the objective of improving overall compliance with the laws and increasing operational efficiency by collection of tax revenue on time, streamlining the system of returns processing and reducing the incidence of disputed assessments.
Self-assessment ultimately reduces administrative costs for tax authorities and aided by modern technology, most economies have adopted the principle to drive down cost and ensure timeliness in filling return and Nigeria can benefit from this trending revenue collection system.
Self-assessment also reduces the discretionary powers of tax officials and reduces opportunities for corruption. However, self-assessment needs to be properly regulated and implemented, with transparent rules, an automated reporting process, and penalties for noncompliance and risk based assessment procedures for audit procedures.
Also, the FIRS need to embark on media sensitization campaigns to achieve a change in behaviour of both taxpayers and tax officials in favour of a taxpaying culture through strict application of sanctions. This way non-compliance will be dealt with timely and will be deterred. Internal and external stakeholders’ engagements will key in implementation and success of Self-Assessment regime.

Nelson Mandela: An Embodiment of Public Relations

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Nelson Mandela: An Embodiment of Public Relations
“Mandela was filled with humility, forgiving spirit and the ability to unite people, sharply contrasted with the utterances of some politicians who speak as if ‘Nigeria is their bedroom’ from where they make proclamation and intimidate others.” Goodluck Jonathan of Nigeria.
When President Goodluck Jonathan made the above praises after the demise of Nelson Mandela, the weight of the message was not realised until after a leakage of a letter addressed to him from former President Olusegun Obasanjo.
Meanwhile in his tribute Chief Olusegun Obasanjo stated that “we all have the opportunity to act nobly in whatever position we find ourselves.  When we teach our children the lessons for tomorrow, let us be reminded of the lessons Mandela gave the world in forgiveness and forbearance.”
Those who read between the lines, considering the rapid turn of events within the period, would realise by now that beneath the tributes are political grandstanding and Public Relations (PR) strategies by leaders in their deliberate effort be relevant and be so recognised. President Barak Obama of America seemed to outshine others in his tribute and actions during the memorial on Mandela in South Africa.
Nelson Mandela was an embodiment of great public relations: charming, charismatic, eloquent and convincing in his approaches. While protecting the interest of his people, he was harassed and jailed for 27 years before his eventual freedom and election as President of his nation.
He was a great communicator who used his power of oratory and conviction to mobilise and move his people to action. He dignified himself in and outside the office, such that he eased the task of reputation managers. Ironically, in other climes such reputation managers who go with such titles of spokespersons or media advisers deserved to be managed from wrecking havocs on the image of their principals.
Going by the International Public Relations Association (IPRA) code of Conduct, the anti-Apartheid icon, who died at the age of 96, exemplified all the attributes of PR person. The IPRA Code is an affirmation of professional and ethical conduct for communicators. The new Code which was adopted in 2011 consolidates the 1961 Code of Venice, the 1965 Code of Athens and the 2007 Code of Brussels.
The code urges communicators to observe the principles of the UN Charter and the Universal Declaration of Human Rights and act with honesty and integrity at all times so as to secure and retain the confidence of their people. During his life time, Nelson Mandela insisted on the human dignity and respect for human right which engineered his struggle for the emancipation of his people from colonialism.
While PR communicators are enjoined to establish the moral, cultural and intellectual conditions for dialogue, and recognise the rights of all parties involved to state their case and express their views, Mandela garnered more friends as he embraced his adversaries wholeheartedly. It was indeed ironic that all those who had fought him and called him terrorists were among those singing his praises while he was alive and after his death.
While IPRA urges its members to be open and transparent, and to avoid any professional conflicts of interest, Mandela’s reluctant to seek for extension of tenure was one of the indicators that he had no hidden agenda. In some countries, especially in Africa leaders perpetuate themselves in office for immunity from prosecution for their misconducts. He was a selfless leader, who rather than making money for himself as a lawyer and politician, he was busy counselling the world on the necessity of living peaceful.
The IPRA code of conduct strongly admonishes communicators to honour confidential information provided to them. As a former President of South Africa, Mandela must have had the privilege of accessing information on those involved in his incarceration and the killing of blacks during the war against apartheid and colonialism. He never allowed those privilege information to influence his sense of judgement as a leader who was neither petty nor vindictive.
Deception and misleading information for political patronages are attributes of propagandists who led their followers and communities astray, Nelson Mandela was a sincere and honesty communicator who bare his mind openly without any aura of arrogance and intellectual supremacy.
Mandela avoided unnecessary controversies as a man of peace. He was very mindful of his utterances, actions and the kind of friends and allies he related with during his sojourn on earth. As a global role model, every word he uttered was loaded with lessons and power to mobilise people to good causes.
He is being celebrated not only for being a freedom fighter but for his spirit of public relations and communication skills. We can obtain any qualification such as Law, Accounting, Medicine, Engineering, journalism, architect, politics among others, but we may need to imbibe elements and principles of Public Relations like Nelson Mandela to communicate truthfully and convincingly to win the supports of our targets.
Indeed Mandela, the pride of African and black race was truly a PR Man of the Century.
Yushau A. Shuaib
Abuja

Jonathan’s incomplete response to Obasanjo

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Jonathan’s incomplete response to Obasanjo
President Goodluck Jonathan began his responses to Chief Olusegun Obasanjo’s blistering letter with a series of excuses – excuses that are wholly unnecessary. What I was expecting was a line-by-line rebuttal. And to, in the end, put a political noose around Obasanjo’s neck. Or, for Jonathan to confess and then resign or be impeached. But of course, nothing of such happened.What then is the truth? Nigerians deserve truthful answer to every one of those allegations. Otherwise, Obasanjo should be compelled to retract his damming allegations.
The way I see it, responding only to the “most serious of the charges which question my sincerity, personal honour, and commitment to the oath which I have sworn,” is not enough. At the very least, Jonathan needed to show that he was above board, incapable of the social, economic and political atrocities Obasanjo alleged. And even if he was capable of such iniquities, he was innocent of the charges.
To the President’s credit, he recognised the gravity of the Obasanjo’s letter when he said: “The purpose and direction of your letter is distinctly ominous, and before it is too late, my clarifications on the issues need to be placed on record.” Unfortunately, he responded to just a few charges  and then went on to plead that he “cannot possibly find the time to offer a line-by-line response to all the accusations and allegations made in your letter while dealing with other pressing demands of office and more urgent affairs of state.” Really?
As I read Jonathan’s response, I couldn’t help but wonder if at all the Special Adviser on Media and Publicity to the President, Dr. Reuben Abati, was directly involved in crafting the letter. If you read it the way I read it, you’d detect three-five voices and styles. Overall, the tone and style were somewhat baffling. A sitting President – striving to prove his mettle and with the power of the Presidency — ought not to respond in such a timid and contrite matter. Frankly, too much respect was shown to Obasanjo.  But if Abati was not directly involved, well, he may have decided that the never-ending wahala between the mentor and the mentee was a party affair, an internal matter.
On the other hand, Abati may be the kind of fellow that does not want his head used in cracking coconut, or his hands used in catching the serpent. For such a young and brilliant man, there is life after politics. Abati is also aware of a simple constancy in Nigerian politics: When it is all said and done, the accused and the aggrieved will kiss and make up and go about “sharing and chopping.” Naïve and gullible foot-soldiers will lose out. Remember what Jonathan himself said: “At the heart of all the current troubles in our party and the larger polity is the unbridled jostling and positioning for personal or group advantage ahead of the 2015 general elections.”
There are parts of the letter where Jonathan supporters may rightly say, “Well done…great job!”  For instance, we see Jonathan calling Obasanjo a liar, a hypocrite, a naysayer and an ignoramus who enjoys blackmail. But more than that, Obasanjo was painted as a man incapable of independent and unalloyed judgment while at the same time misleading the nation. The President also made it known that Obasanjo was a man filled with inordinate ambition and selfish interest — a man whose careless and unpatriotic actions brought Nigeria to where it is today. And in an indirect manner, the letter tells us that Obasanjo is a rumour-monger who peddles fear and wholesale lies, hence, he should never be trusted.
President Jonathan also made it clear that in spite of his gallant and progressive policies, he has, since assuming the Presidency, been a victim of the “high and mighty” that have directly and indirectly ruled Nigeria. Alluding to the myriad problems and challenges facing the country, Jonathan demurred: “Goodluck Jonathan was not the President of the country then… to present these problems as if they were creations of the Jonathan Administration is most uncharitable.” And in particular, he posited that Obasanjo’s eight years in office was basically that of miscalculations, wastes, futility, excesses, rascality, and military adventurism and was prone to unmeasured violence.
On the issue of corruption, Jonathan was not shy at all. He took Obasanjo to the cleaners: He totally, and without mercy, rubbished Obasanjo — reminding him that “your kinsman, the renowned Afrobeat maestro, Fela Anikulapo-Kuti, famously sang about it during your first stint as Head of State.” In other words, Olusegun Mathew Okikiola Aremu Obasanjo was and continues to be the High Priest of corruption and depravities. What’s more, Jonathan asked us not to forget the most recent Siemens and Halliburton scandals. Obasanjo, he reminded us, was the man who refused to retire and or sack corrupt officials in the 1970s and who also refused to follow through with the Gen. Murtala Muhammed’s  house-cleaning exercise.
In great contrast to Obasanjo, Jonathan portrayed himself as measured, compassionate, introspective, reasonable, diplomatic, and highly favoured by God and other divine forces. Hence, while Obasanjo was an election-rigger –rigging in Shehu Shagari and rigging out Obafemi Awolowo – he, Jonathan, has been honest and impartial and has taken the wishes of Nigerians into consideration. On the current state of anarchy and insecurity, he averred that they “were sown under previous administrations” and that he is working “assiduously to overcome” them.
As I said earlier, the Jonathan’s response was not sufficient and not at all compelling. There is a sense of ambivalence and too much deference for the former president. When your private and public honour and motives are being questioned, you do not hold back. You go all out! Now, was this a calculated attempt on the part of the President not to overheat the political space, or perhaps, he is afraid of Obasanjo? We may never know. Either way, Nigerians have been short-changed. They are worse off for it.
Sadly, in a couple of days or weeks, another scandal or political bomb will explode. And as usual, Nigerians will move on. Collective amnesia will set in. Men such as these will rebrand themselves. And our so-called men of God will point to one or the other and say, “There goeth the anointed.” The charade will continue. That’s the way it’s been so for decades. That’s the Nigerian way.

CBN’S oil receipts may expose fiscal impunity

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Lamido Sanusi, the CBN Governor, has since withdrawn his earlier allegation that NNPC did not repatriate the sum of $49.8bn revenue from crude oil sales into the federation account.  Subsequently, in contrast to the Finance Minister, Dr. Ngozi Okonjo-Iweala’s figure of $10.8, Sanusi later insisted that $12bn of crude revenues still remain unaccounted for!
However, even if the lower figure is more accurate, the discrepant magnitude of $10.8bn (about N2tn), does not reflect best practice in management of public funds; besides, protracted resolution of such a huge deviation  would most certainly have impeded successful capital budget implementation, with inevitable adverse impact on our social welfare!
Nonetheless, the thrust of today’s article is the impact of the fiscal contribution of over N6tn (i.e. $38.6bn) revenue that CBN readily admitted receiving from NNPC and other agencies involved in the oil sector between January and December 2012!
Fortuitously, the receipts of N6tn from oil are in addition to over N4tn also consolidated as internally generated revenue, under the excellent management of Ifueko Omoigui-Okauru, the erstwhile Federal Inland Revenue Service Chairman; furthermore, the Customs Service similarly generated about N400bn, thus bringing total revenue collected from oil related sources, FIRS and Customs Service to a whooping possible total above N10tn in 2012.
Consequently, if over 56 per cent of above consolidated fund goes to the federal government as per constitutional provisions for revenue sharing, then the Federal treasury was a happy beneficiary of over N5tn income, which is surprisingly in excess of total expenditure budget of about N4.7tn in 2012.
Ironically, therefore, in spite of apparent surplus of well over N300bn, the Debt Management Office (DMO) and the CBN still, inexplicably, additionally borrowed over N1tn at excessive  cost, primarily from banks, to inappropriately fund a prior contrived budget deficit, as well as to feed CBN’s compulsive borrowing to reduce ‘surplus’ money supply, and stem inflationary threat in 2012!
Consequently, the National Assembly and well-meaning Nigerians should insist on forensic audit to determine the net actual accounts position after consolidating all incomes against actual expenditure in the 2012 budget; it certainly makes no sense whatsoever, to consolidate ‘surplus’ funds, above budget benchmark, and simultaneously also additionally spend over N1tn ($6bn) borrowed at oppressive double digit rates of interest, especially when such risk-free sovereign debts should normally attract lower digit cost of funds.
Surprisingly also, in spite of the legislators’ observation of less than 70 per cent implementation of 2012 capital budget, undiminished debt accumulation in 2013 suggests that last year’s unspent revenue was surprisingly, probably not carried forward to reduce projected deficit in 2013 budget.
Besides, the 2013 budget also exhibits a similar reckless fiscal strategy as, once again; total expenditure projection of about N4.92tn also accommodated a deficit above N800bn triggered by the projected reduced revenue from the application of a conservative and unrealistic oil price benchmark of N74.5/barrel.
In contradiction, however, the table of revenue inflow attached to Sanusi’s letter of September 25, 2013 to President Jonathan,  on unremitted $49.8bn, confirms that oil consistently sold above $100/barrel and that over $22bn was received as oil revenue income between January and July 2013; consequently, we may reasonably expect that actual oil revenue accruals should exceed $40bn by December 31, 2013.
Indeed, $40bn translates to a ‘handsome’ naira equivalent of well over N6tn!  Additionally,  internally generated revenue of about N4tn was also received from the FIRS and the federal customs service which were presumably further consolidated with unspent funds from 2012 budget; thus, actual available revenue should be well in excess of N10tn by December 2013!
However, the federal government’s Constitutional share of over 56 per cent of total revenue would provide well over N5.5tn i.e. over N500bn in excess of the 2013 expenditure budget of N4.92tn.  Curiously, however, despite this handsome surplus, the DMO and CBN, as usual, succeeded in borrowing and adding over N1tn to our already oppressive debt burden in 2013!
Regrettably, the 2014 budget and the 2014-16 Medium Term Expenditure Framework are founded on the same obnoxious fiscal model that accommodates borrowing with extreme costs to fund inappropriate deficits in spite of the availability of surplus funds to cover the projected total expenditure budget of about N4.6tn.
It is worrisome that the determination of appropriate crude oil price benchmark has been reduced to political bargaining rather than an inclusive process of determining realistic revenue benchmarks to support progressive and sustainable fiscal planning.
It is surprising that after the controversial Paris Club debt exit in 2006, when our existing debt value of about $36bn was considered to be crisis level, which therefore, necessitated over $18bn payout to exit, our indebtedness has since grown from an external debt of about $3.5bn and N1tn domestic debt respectively, to current oppressive level of about $7bn external and almost N54tn ($90bn) domestic debt.
Incidentally, the appropriation bill is probably the most important enactment of the legislative year, as it determines issues relating to how available government funds can be optimally and judiciously utilized to address infrastructural enhancement and also best improve social welfare of citizens.
Instructively, a constitutional breach is not just a political aberration, as it also carries impeachment as a potential sanction; thus, an Appropriation Act must not be frivolously violated.
It is, undoubtedly however, a constitutional breach when budgets are not fully implemented in spite of surplus funds or even when surplus funds are spent without appropriation, as has been the case with regular cash augmentations from an illegally contrived Excess Crude Account to supplement actual budgeted monthly allocations to the three tiers of government!
Regrettably, official revenue receipts from CBN and other Agencies confirm that appropriated revenue limits were grossly violated in the recent past, and that such violations appear subsisting, since the same obnoxious seeds of fiscal impunity have already been sown into the fabric of the 2014-16 MTEF, with the adoption of $77.5/barrel, a very conservative crude price benchmark which, will inappropriately feed an unconstitutionally consolidated Excess Crude Account, inspite of subsisting deficits and  increasing debt between 2014 – 2016!  SAVE THE NAIRA, SAVE NIGERIANS!!

Nigeria, Germany strengthen economic ties through trade facilitation

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Nigeria, Germany strengthen economic ties through trade facilitation

Nigeria and the Federal Republic of Germany are set to partner on trade facilitation and Micro, Small and Medium Enterprises development as part of efforts to strengthen the already existing  economic ties  between the two countries.

The Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, confirmed this after a meeting with the German Ambassador to Nigeria, Dorothee Janetzke-Wenzkel; and the Country Director, German Cooperation (GIZ), Dr. Thomas Kirsch, in Abuja on Friday.

 Aganga said his ministry would work together with the German government to boost industrial skills development and improve access to finance for MSMEs across the country, in line with the focus of the National Enterprises Development Programme (NEDEP).

He said, “The meeting with the German Ambassador, which dwelt on a number of growth issues, was a fruitful one. Nigeria has always had a strong economic and trade relationship with Germany. They have been very helpful and played active roles in critical sectors of the Nigerian economy, such as the power sector where we have a large number of German companies.

“But specifically, today’s meeting focused on trade facilitation in terms of how we can partner to make it cheaper and quicker to export goods from Nigeria to other African countries by removing the barriers that impede trade. What the German government has done is to design an Information and Communications Technology system that will help improve the non-trade barriers, which cause delay in movement of goods and also the cost and time of doing business in Nigeria. So, we are collaborating on how we can improve trade facilitation within the region.”

The minister added, “Another area where we will be working together, which is very important to us, is the area of skills development. They have one of the most robust internship programmes which is highly regarded and respected worldwide. The idea is to see how they can work with the Industrial Training Fund in the area of skills development. The last area we talked about was access to finance for Micro Small and Medium Scale Enterprises, to see how they can support the National Enterprise Development Programme. I am very optimistic that we will get a lot out of this collaboration.”

 Also speaking after the meeting, the German Ambassador to Nigeria said Germany was ready to work with Nigeria to improve the ease of doing business and boost skills acquisition among Nigerians.

She said, “The basis of the meeting with the Minister of Industry, Trade and Investment, was to find out how much Germany is doing in terms of partnering with Nigeria on trade issues. We discussed the Bi-National Commission which Nigeria has with Germany, focusing particularly on energy but also on economic issues as a whole.

“Germany is also partnering Nigeria on vocational training in order to boost industrial skills acquisition and bridge skills gap in Nigeria. Most times, people don’t get the jobs because they lack the skills even when the jobs are there. We want more Nigerians to be trained so that they can use their skills to work. We also discussed specific projects that the German International Company for Co-operation in Nigeria is doing. We have looked at some businesses coming up which will be focusing on the informal sector of the Nigerian economy”.

Bolaji O.Kazeem

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