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Published On  Oct 09,  2011
   
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MoFED to Draft TAX, VAT Law Amendment

Finance Ministry to look for consultants for study and proposals

 

Sofian Ahemd,Ministry of Finance and Economic development

The Tax and VAT proclamations are to be amended this year as the Ministry of Finance and Economic Development (MoFED) wants to see some provisions changed. Drafts of the two laws are among four, along with Mining Tax and Financial Reporting Proclamations, it is planning to send to the Council of Ministers.

MoFED wrote a letter to the Council of Ministers two weeks ago listing the four proclamations as the ones it will draft and table to the Council of Ministers. The details of the amendments are not yet clear, according to sources inside MoFED. However, the ministry is looking for consultants to do a study and come up with proposals for the three tax laws.

Some of the provisions of the income tax law have been a bone of contention between the tax authority and tax payers, of which tax dispute settlement is a major issue.

It was raised during the first public-private dialogue forum where many of the major tax payers and senior officials of the tax authority, including the director-general, attended in February, 2010.

The Review Committee appointed by the tax authority and Appellate Commission accountable to the Ministry of Justice (MoJ), where taxpayers can take their disputes over tax decisions, after depositing half of the amount in dispute with the latter, has raised issues of impartiality for many tax payers.  

The other area of disputation is the amount of VAT (15pc) to be paid, which many would like to see reduced. Some experts argue that the amount should be reduced and the tax base broadened considering the rate of inflation. However, authorities argue that the VAT is the average for African countries and have shown reluctance to discuss the issue at various meetings held with tax payers last year. The African average for VAT is 15pc, with Nigeria having the lowest rate of five per cent, according to a tax policy survey conducted in sub-Saharan Africa in 2009/10.

The ministry also wants to see some amendments on the mining tax law that was passed in 1996.

The financial reporting bill, which is being drafted and is under review by experts, is a new law the finance ministry plans to table to the Council of Ministers.  It is aimed at making companies comply with the international financial reporting and auditing standards adopted by two international professional organisations: the International Accounting Standards Board and International Public Sector Accounting Standards Board.

By MAHLET MESFIN
FORTUNE STAFF WRITER

 

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