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New tax law prescribes stiffer penalties for evaders

By on February 29, 2012

With the signing into law of the Personal Income Tax (Amendment) Act, 2011 by President Goodluck Jonathan, tax defaulters will now pay stiffer penalties for different offences

A copy of the Federal Republic of Nigeria Official Gazette obtained by our correspondent on Tuesday showed that a person who engaged in banking business but failed to render returns, books, documents and information on demand within seven days was now liable to pay a fine of N50,000, as against the old penalty of N500.

The new tax regime, which will take effect from April 1, 2012, also prescribes N10,000, as against the previous N1,000 for offenders who make false statements in relation to tax payable or repayable.

Also, a person who engages in banking business but fails to render information about new customers within seven days of the following month will pay N50,000, as against the previous N500.

In the same vein, any corporate organisation that makes false statements and returns will be liable to pay N500,000 as penalty, compared to the previous N5,000 penalty.

Speaking at a press briefing in Lagos on Tuesday, the Chairman, Joint Tax Board, Mrs. Ifueko Omoigui-Okauru, said the tax amendment was designed in a way that those earning higher would pay more, while those earning lesser would pay less.

She added that some of the major changes in the new tax regime were expected to bring a more reflective and efficient personal income tax administration at the state and federal levels.

According to her, under the new income tax rate formulation, a first earning of N300,000 will attract seven per cent tax, while subsequent income of the same amount will be taxed at 11 per cent.

She added that those who earned N500,000 would be made to pay 15 per cent of the income as tax in the first instance, while 19 per cent would be charged on subsequent earnings of the same amount.

In addition, earnings of N1.6m will attract 21 per cent tax, while income above N3.2m will attract a tax of 24 per cent, according to the JTB boss.

However, under the old rates, an initial income of N30,000 attracted five per cent as tax and 10 per cent for the same amount subsequently. Also, 15 per cent was set aside as tax from earnings of N50,000 at first and 20 per cent subsequently.

“The new Act provides for a consolidated relief allowance of N200,000 plus 20 per cent gross income as deductible allowance from the income before computing tax on the balance, a method of calculation that replaces the outdated and cumbersome process of computing allowances under the old Act,” Omoigui-Okauru added.