•Says power of substitution in tax law is not new
CHIGOZIE AMADI
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has stated that the new tax laws require all employers of labour and individuals to file tax returns by January 31 and March 31, respectively, annually.
This is as he clarified that the recently debated “power of substitution” in Nigeria’s tax laws was neither new nor unusual.
He stressed that both employers and individuals must comply with the law.
He made this known during a webinar organised for HR managers, payroll officers, Chief Finance Officers (CFOs), and tax managers in collaboration with the Joint Revenue Board (JRB).
In the webinar, which was posted on YouTube over the weekend, Oyedele said many Nigerians remained non-compliant in filing self-assessment returns.
“In terms of filing returns, you need to file annual returns as employers for your employees. Many of you have likely already done that. If you haven’t, you have just a couple of days left to file those returns, including projections of how much you will pay your staff,” he said.
He added that individual taxpayers must also file their self-assessment, noting that compliance in this area remains very low.
“This is one area where we have been non-compliant in Nigeria. In many states, more than 90 per cent, even the most sophisticated states, cannot boast of 5% filing returns,” Oyedele said.
The tax reforms, he explained, clarified that employees could not assume that their obligations ended once employers deducted taxes from their salaries.
“Many people assume that if they are an employee and the employer has deducted pay, they don’t have to do anything. That is wrong. Both under the old and new tax laws, you must still file your returns.”
Oyedele assured Nigerians that authorities were working to streamline filing.
“I’m sure the tax authorities, joint revenue boards, and various state internal revenue services are working on how to make this process simpler and easier. All of us must file our returns, including those earning low income. You must file returns by 31st March of the year in respect of the previous fiscal year.”
He added that businesses enjoying tax incentives were required to disclose them in their returns.
“Under the new tax law, if you operate a business as an enterprise and you enjoy certain incentives, you have the obligation to disclose those incentives. There’s a disclosure requirement for tax incentives that is not available to everybody as a general rule for taxpayers—to disclose them when filing their tax returns or shortly after.”
Meanwhile, Oyedele clarified that the recently debated “power of substitution” in Nigeria’s tax laws was neither new nor unusual.
He explained that the power of substitution allowed tax authorities to act when taxpayers failed to file returns or when reported information was inconsistent with available intelligence, such as bank activity, property acquisitions, or overseas travel.
He said, “Some people thought it was problematic because they did not know it was always there in the law. For them, it’s new. But the reality is that this is not even new at all. It’s been there since sliced bread before some of us were born. It’s also not new to Nigeria. It’s common across the world. Some countries call it the garnishment order; some call it third-party agents.”
Oyedele, who described how the process worked, said: “But what does it really mean? It means you’re expected to conduct self-assessments. You did not do it. The taxman writes to you: either you haven’t filed your returns, or we have intelligence about you. You just bought a new car, built a new house, or travelled abroad, but the money isn’t showing on your tax return. Can you explain? You refuse to explain, or your explanation doesn’t make a lot of sense.
“They say, ‘Okay, based on what we have about you, we think you owe N5 million. You have 30 days to object.’ When you object, the tax man must look at your objection. He says, “Oh, ‘I will revise it, it is not N5 million, it’s N3 million.’ You are free to keep objecting until the tax man says, ‘I refuse to amend,” and sends you a notice of refusal to amend. At that point, it triggers an appeal. You have 30 days to appeal to the tax tribunal.
“You don’t like the outcome; you can appeal to the High Court. You don’t like that outcome, you can go to the Court of Appeal, and in some cases, the Supreme Court, before they determine the amount of tax you are owing. That’s why we call it final, conclusive, and payable. Even after the court has determined that you owe, let’s say N2.5 million, the tax man is required to tell you to pay within a specified period of time—10 days, 21 days, 30 days. When you fail to pay after that, the tax man has the power to ask anyone who has any money belonging to you—or that will belong to you—to pay the money to the government, including your bank.”
He dismissed claims that the tax authority could arbitrarily debit citizens’ bank accounts. He said, “It may not require your consent, but it requires your knowledge because they’ve been writing to you. There’s no way this will be done without your awareness.”
Oyedele noted that the power existed under prior tax laws and that the new tax legislation included stronger safeguards against abuse, including the ability to escalate disputes to tax tribunals.
On compliance, Oyedele said: “I’m sure the tax authorities, joint revenue boards, and various state internal revenue services are working on how to make this process simpler and easier. All of us must file our returns, including those earning low income. You must file returns by 31st March of the year in respect of the previous fiscal year.”
Speaking on the broad benefits of the reforms, Oyedele explained: “If we make these work, we’ll have a country we can all be proud of. It’s a collective responsibility. These reforms would help small businesses, large businesses, multinationals, and foreign investors. Everybody benefits. Households will also benefit from lower income taxes, which will increase disposable income. This reform also removes VAT on basic consumption.”
