*Says Allegations Of 70% Investor Withdrawal From Free Trade Zones Unfounded
The Chairman, Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, yesterday assured that the controversial inheritance tax, which has continued to generate debate across the country, would be expunged in the tax reform bills currently before the National Assembly.
The Sharia council, Kano State government and other stakeholders Wednesday kicked vehemently against the inclusion of the disputed law in the tax reform bills.
However, Oyedele while speaking at the ongoing public hearing on the tax reform bills organised by the House of Representatives Committee on Finance explained that it was Section 4(3) that was being misinterpreted as inheritance law.
This came as a renowned tax and customs expert, Okey Ibeke, cautioned that the tax reform bills have the potential to undermine the Nigeria Customs Service (NCS) specialised operations, which remained crucial for the country’s revenue drive.
He stressed that NCS’ duties which are highly technical and extend far beyond revenue collection could be eroded unless relevant concerns relating to the bills are addressed.
Ibeke’s remarks came against the backdrop of a public hearing on tax reform bills organised by the House of Representatives Special Committee on Tax Reform Bills.
Nonetheless, Oyedele said, “The Section of the law that is being interpreted as introducing inheritance tax is Section 4(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 tax laws since independence.”
He said, “As we speak today, this provision is in the Personal Income Tax Act, Section 2, Sub-section 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.”
Continuing, he said, “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?”
Oyedele also refuted allegations by some stakeholders in the free trade zones that 70 per cent of investors have withdrawn their cash due to unfavorable policies.
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 N4 trillion. It’s meant to be outside the banking system. That’s what they used to pay for molue or to buy pure water…. So, nobody’s withdrawing money to run from Nigeria.”
Also, President of the Manufacturers Association of Nigeria (MAN), Francis Meshioye commended the government for the courage to introduce the bills, but expressed concern over the lack of incentive for members who manufacture for export.
He, however, kicked against the idea of allowing 100 sails into the Export Free zones, saying there is no country in the world allowing such sail except Nigeria, adding that Ghana only allows 30 percent sail.
The association proposed that the law allow only 25 per cent sail of goods into the free zone.