NSE collaborates with FIRS to enforce tax compliance by publicly quoted companies
Deloitte Tax Alert
In response to information provided by FIRS, NSE has sent letters to publicly listed companies, who were purportedly identified by FIRS as non-compliant.
The Nigeria Stock Exchange (NSE) has teamed up with Federal Inland Revenue Services (FIRS) to raise the level of tax compliance by publicly listed entities. In response to information provided by FIRS, NSE has sent letters to publicly listed companies, who were purportedly identified by FIRS as non-compliant. In some very subtle way, NSE raised allegation of non-compliance as reported by FIRS and directed affected companies to ensure full compliance with their tax obligations under the various tax laws.
In the letters, NSE indicated that this move is part of its advocacy roles with the Federal Government and other regulatory agencies towards implementing a sustainable and equitable tax regime for listed companies and Nigerian Capital Market Operators. It is also stated to be related to efforts by NSE to secure tax rebates and benefits for quoted companies.
We understand that this development is a direct consequence of the efforts being put in place by FIRS to collaborate with other government agencies in expanding the tax net and ensuring enhanced tax compliance by all taxpayers.
This nature of inter-agency cooperation is a welcome development. However, care must be taken to avoid wild claims and unsubstantiated allegations. From the review of letters sent to various entities, it was apparent that the list of non-compliant taxpayers might have been hurriedly collated or sent well ahead of statutory deadlines for filing of tax returns. There also appear to be a mix-up in the nature of tax obligation for which the recipients were being held accountable. In some of the letters, defaults were cited regarding non-compliance with States taxes, when the allegation was purportedly coming from FIRS, a federal tax agency. It was not clear if the Chairman of FIRS, who also doubles at the Chairman of Joint Tax Board (JTB), provided the information in his capacity as the JTB Chairman or head of the federal tax agency.
It is our expectation that NSE will not mete out any sanctions on the affected companies without confirming the validity of FIRS’ list. This notwithstanding, the affected companies are encouraged to take immediate steps towards confirming their tax compliance status to FIRS and NSE.
Without doubt, the country’s economic and fiscal realities call for support from all and sundry. The culture of non-compliance should give way for voluntary compliance. Responsible corporate citizenship requires compliance with statutory obligations.