With the new Act, the President, Vice President, governors and deputy governors will pay tax on all incomes like other Nigerian tax-payers.
Income from bonds issued by government and corporate entities will also be taxed henceforth.
Chairman of the Joint Tax Board, Ifueko Omoigu-Okaru, who briefed journalists on the implementation of the Act, hinted that the law also expanded the penalties for tax violation.
“One of the major reasons for the amendment of the Act was to bring the personal income tax act up to date with the existing realities of the Nigerian economy, especially in relation to how the Act impacted low and middle income earners.
And based on a new era, which is hinged on efficient and effective tax administration system with clear definition of jurisdiction between the three tiers of government, local councils may be stopped from collecting taxes.
The board is working out an arrangement where only state governments would have powers to collect such taxes and remit them to the councils. This is part of plans to eliminate double or multiple-taxation.
The board said there would not be any hiding place for defaulters anymore, as the law would come down hard on them. People are also now required to declare all their income sources.
The board also assured that low-income earners who declare the right taxes would realise that they are actually paying less than what they were paying before. High-income earners are however to pay higher taxes under the new regime.
A ‘tax calculator’ will also be installed on the website of the Federal Inland Revenue Service (FIRS) so that individuals can simply key in what they earn and the tax will be calculated automatically. This way, people are aware of what their exact tax obligations are and they are taxed correctly.
The FIRS has also sharpened its regulatory teeth. The use of the tax clearance certificate and its coverage has been expanded and would now be implemented to the letter.
“From the outset, therefore, it was conceived to ensure that personal income tax is administered equitably and that its major provisions reflected the focus of the overall tax reforms, which included introducing a more equitable tax system, simplification of laws empowering tax authorities and a shift from direct to indirect taxation by lowering of direct tax rates amongst others,” she said.
Okaru added: “With this new Act, government has demonstrated that it has a listening ear and reduced the overall burden on low and middle income earners, while recouping these from high networth individuals who will be expected to bear a higher burden given their level of earning. The amended Act also introduced an overall simplified process of compliance, which is expected to attract a higher rate of voluntary compliance and widen the tax-payers’ base of tax authorities. This in turn is expected to lead to higher yield in personal income tax collection.
“The provision of a defined, accessible and cost effective process of dispute resolution by the tax appeal tribunals provides an independent outlet for tax-payers’ complaints and resolution of such.”
She described the Act as a step in the right direction for the Nigerian tax system and one, which gives the nation a platform to work towards ensuring that taxation becomes the pivot of national development in Nigeria.
