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Thank you @taiwookuns of @DeloitteTaxNG for the details explanation of the TAT rulings on this case. #tax101 #askdeloitte
1. The Tax Appeal Tribunal (‘TAT’ or ‘the Tribunal’), sitting in Lagos on 19 June 2019, delivered a judgment in favour of Nexen Petroleum Nigeria Limited (‘Nexen’ or ‘Appellant’) in a case with Lagos Internal Revenue Service (‘LIRS’ or ‘Respondent’) #AskDeloitte
24. While section 10(4) of PRA refers to exemption/taxability of income on VPCs, it is not expressly stated whether this would be in the hands of the “employee contributor” or "the Fund administrator/custodian" #AskDeloitte
23. Secondly, the comment by TAT that the PRA exempts any income earned on any VPC from tax where withdrawal is not made before expiration of five (5) years of voluntary contribution is flawed #AskDeloitte
22. Thus, the employer has no further responsibility to act as an agent of the tax authorities for any future actions of its employees with respect to their VPCs #AskDeloitte
21. Firstly, the Tribunal rightly ruled that the role of employers is limited to deduction and remittance of PAYE on emoluments paid to employees and such role is merely an administrative duty/task #AskDeloitte
19. Lastly, TAT ruled that the obligation on an employer to request evidence of non-withdrawal of VPC from employees' retirement savings account for a period not less than 5 years is not specified in the PRA #AskDeloitte
18. TAT opined that the use of deemed income for the expatriates where documents supporting actual income have been provided by Nexen violates the principle of taxation #AskDeloitte
17. TAT also rejected LIRS’ use of discretion in adopting deemed income as the gross emoluments of the expatriates without considering supporting documents provided by Nexen #AskDeloitte
16. TAT concluded that since PITA and PAYE Regulations clearly stipulate that an employer is an agent of government for the purpose of withholding PAYE taxes, Nexen is discharge of further responsibility of any future action of its employees #AskDeloitte
14. Deduction is not limited to only mandatory pension contributions. Therefore, VPCs made by employees into their retirement savings account, premised on the provisions of section 4(3) of PRA, is also allowed as tax deduction for employees #AskDeloitte
13. Section 10 of the PRA provides that all pension contributions shall form part of tax deductible expenses. This means both employers and employees are allowed to enjoy tax deductions for amounts contributed #AskDeloitte
12. TAT noted that employer’s obligation to deduct and remit accurate PAYE taxes to the relevant tax authorities as provided by section 81(1) of Personal Income Tax Act (PITA), after considering employee's pension contribution #AskDeloitte
11. In delivering its judgment, the TAT analysed each fact of the case and ruled accordingly; citing relevant sections of the law and evaluating precedents set in various decided cases #AskDeloitte
10. ...and "whether the PRA require an employee to provide evidence of non-withdrawal within 5 years in order for the employer (in this case, Nexen) to oblige a VPC request #AskDeloitte
9. Other issues submitted for determination include: "whether LIRS acted within its powers to issue best of judgement assessment on the expatriate’s emoluments without recourse to the documentation provided by Nexen #AskDeloitte
8. The third issue is "whether VPC should remain a tax deductible contribution where Nexen acts as an agent of LIRS" #AskDeloitte
7. The second is "whether Nexen had fulfilled its statutory obligation of deducting and remitting PAYE tax due on employees’ income during the period, therefore exonerating itself from any additional tax obligation with respect to VPC" #AskDeloitte
2. The key issue for determination was whether Nexen is obliged to deduct and remit pay-as-you-earn (PAYE) taxes on the voluntary pension contribution (VPC) withdrawals made by its employees before the timeline stated in the Pension Reform Act, 2014 (PRA) #AskDeloitte
1. The Tax Appeal Tribunal (‘TAT’ or ‘the Tribunal’), sitting in Lagos on 19 June 2019, delivered a judgment in favour of Nexen Petroleum Nigeria Limited (‘Nexen’ or ‘Appellant’) in a case with Lagos Internal Revenue Service (‘LIRS’ or ‘Respondent’) #AskDeloitte
Thank you for joining me in today's session. I will be examining the conclusion reached by Tax Appeal Tribunal on the applicability of tax on voluntary pension contribution in a recent case between Nexen Petroleum Nigeria Limited and Lagos Internal Revenue Service #askdeloitte
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