NECA Faults FIRS on its Call for advance Payment of Taxes
It is a known fact that businesses were facing numerous challenges before the advent of Covid 19 even with the privilege of full time working hours. Thus, the Pandemic has further compounded the challenges because of limited hours of work and increased over-head.
The FIRS request of companies for advance payment of taxes is additional pressure on businesses. This is a time where governments globally are finding ways to support businesses to ease their burdens and our country should not be an exception. The FIRS has not taken into consideration the holistic nature of industries operating within the global context, the constraints imposed by Covid-19, and its attendant collateral damages on businesses and economies.
Reacting to Federal Inland Revenue Service (FIRS) circular requesting corporate organizations to commence payment of their Annual Returns earlier than their due dates. We believe, that, this action by FIRS connotes that the Service’s pronouncement was ill-timed, as against a situation when companies were virtually closed due to the lockdown as a result of the pandemic.
While we appreciate the need for the FIRS to generate income to facilitate cash flow because of the tumbling prices of oil, there is an erroneous assumption that some companies were experiencing a boom during this time of economic lockdown. It is pertinent to note that there is the interconnectivity of sectors so hardly does any sector, formal or informal get exonerated. All the sectors of the economy have felt the effect of the Covid lockdown and some companies are on the verge of closing shop.
It is noteworthy that Corporate organizations know when to file their annual returns according to the relevant tax laws, and should only be reminded, and not be harassed by such circular, not even minding the current predicament that endangers livelihoods and businesses, wherein sectors were clamoring for further palliatives to support the sustainability of businesses.
Furthermore, the assumption of the FIRS is misplaced and does not have a basis in any economic theory. Many of the supposed booming sectors are actually struggling under the weight of added responsibilities arising from the need to provide additional measures to keep their businesses running. The challenges of logistics and increased overheads have made it impossible for the Supermarkets to compete with operators in the informal sector and the numerous “emergency/opportunistic” street and home businesses that the Pandemic have thrown up. The low purchasing power of the consumers have further made the FIRS assumption suspect and worrisome
It is appalling that the reason for the ‘appeal’ by the FIRS is “to ease some of the cash flow gaps being experienced by governments.” If the Government is experiencing the cash crunch effects of the lockdown as admitted by the Circular, then Businesses should be worst off. The government should stop considering the private sector as a “cash-cow”. Rather, Governments look towards inwards on how to cut governance costs
The FIRS is not well informed or aware of the practicality in the private sectors as there are zero operations for Businesses, who had to obey the lockdown directives of the Federal Government. Businesses in Lagos State have experienced about 5 weeks lockdown as directed by the Federal Government and Lagos State Government.
There were zero operations in several sectors, such as the Iron, Metal and Steel, Hospitality, Aviation, Tourism, Transportation, etc. For example, Supermarkets operated at 30% capacity, which created problems for the supply chain of the organization. Sales dropped by 70% due to lack of supplies, few hours of working and controlled social Distancing, etc
We, therefore, urge Government to emulate its counterpart in other countries, and to put in place more palliative measures to cushion the effects of the pandemic on Corporate Nigeria rather than putting more pressure on them
The FIRS will do well to focus on supporting the Real sector to be sustainable into the Post Covid 19 era, as it would prevent loss of jobs which would in turn contribute towards economic growth through payment of appropriate taxes.