New cash withdrawal limits will expose tax evaders: Oyedele


Tax policy partner and African tax leader at one of the country’s leading consultancy firms, PwC, Mr. Taiwo Oyedele, has said that new cash-out limits introduced by the Central Bank of Nigeria (CBN) would expose tax evaders, individuals and micro, small and medium enterprises (MSMEs) in Nigeria.

in a series of tweets seen by trade publicationThe tax maverick said that with restrictions on cash withdrawals, many people would be forced to transact using electronic payments, and small businesses that currently operate primarily with cash would be visible to tax authorities.

The Apex bank had been informed on Tuesday. moved to limit the amount of cash withdrawals Nigerians can make with landmarks placed on multiple channelsincluding over-the-counter, point-of-sale (POS) and automated teller machines (ATMs).

He explained that the policy would trigger various tax obligations, including income tax, value added tax (VAT) and income payment for small businesses and individuals.

On income tax, he wrote that “if your business is registered as a company, you may be subject to CIT depending on your annual turnover (i.e. no CIT if your turnover is less than N25 million, 20 per cent if your turnover is less than N25 million). is between N25 million and N25 million). 100 million naira (30 per cent if your turnover is over 100 million naira) plus education tax at 2.5 per cent.

“If your business is not registered as a company, then it will be subject to personal income tax based on graduated bands of taxable income between 7 percent and 24 percent.”

On VAT, he explained that “all businesses must register for VAT and collect 7.5 percent on their goods and services, except those with an annual turnover of less than N25 million.”

For PAYE, Mr. Oyedele explained that employees who earn more than N30,000 per month are subject to PAYE, which the employer must deduct and pay to the tax authority on a monthly basis.

To this, he noted, “you may also be subject to other statutory contributions, such as pension, depending on the strength of your staff.”

For individuals, he noted that as they transact more, this will make them susceptible to transparency, as it will make it easier for the government to track down tax evaders.

“The more transactions you conduct electronically, the more intelligence tax authorities will gain to track your income and net worth, making it easier to spot if you are a tax evader.”

He then advised small business owners to register with the relevant tax authorities, such as the Federal Internal Revenue Services (FIRS) and the state internal revenue services where they operate.

In addition, the PwC official called on SME operators to open a separate bank account for their business, “or dedicate one for that purpose if they already have a business account) and not mix business with personal transactions.”

The government, for its part, he said, needs to sensitize the general public, especially small business owners, adding that the CBN must ensure proper dealings with tax authorities.

“For example, the conditions for excess cash withdrawals could include the Tax Identification Number,” he opined.




Please enter your comment!
Please enter your name here