The Federal Inland Revenue Service has promised to address controversial tax issues in the insurance industry.
The Partner and Head, Tax Regulatory and Peoples Services, KPMG, Wole Obayomi said this during a lecture on Voluntary Asset Income Declaration Scheme, which was organised by the Chartered Insurance Institute of Nigeria in Lagos.
He also said that during a meeting he had with the FIRS Chairman, Mr. Babatunde Fowler, he told him that the FIRS would always give the insurers the necessary consideration on tax issues when submitting their reports.
Underwriters have been pursuing an amendment to the Companies Income Tax (Amendment) Act 2007 to relieve insurance companies of the heavy tax burden they grapple with. The President, CIIN, Mrs. Funmi Babington-Ashaye, expressed appreciation to the FIRS and the KPMG for their partnership in driving the growth of the insurance industry.
She said that VAID was introduced by the government for a number of reasons such as the unstable price of oil in the global market, which had serious negative implications on government revenue and its ability to meet its budgetary needs; many who owned assets from which they earned taxable income, but deliberately refused to disclose such additional sources of income for purposes of tax; and some persons who just refused to pay tax because they argued that they were not getting any direct benefits from the previous taxes they paid.
“What the government has done with VAIDS, therefore, is to provide a window for all tax defaulters or evaders to voluntarily declare their hidden or previously undeclared assets and income over which they have not paid taxes so that they can be appropriately taxed,” she said.
In taking this decision, Babington-Ashaye added that the government wanted to forgive their previous sins of not paying taxes, as well as waive the associated sanctions. “Let me stress the fact that the payment of tax is a legal requirement and, therefore, it is mandatory for all persons to pay taxes on their legitimate income,” she said.
According to her, although there may not be any direct relationship between the amount of taxes a citizen pays and the benefits received or enjoyed, payment of taxes is a civic obligation.
“It is the citizens’ contribution to the running of government and not an exchange process. With higher tax revenues, the government will be better placed to meet the needs of Nigeria’s growing population. If we pay tax, we can then hold the government accountable”