Stakeholders in taxation and capital market in the country have asked the Federal Inland Revenue Service (FIRS) to get actively involved in all mergers and acquisitions a view to ensure that the country does not lose any tax revenue in the process.
They also called on the service to investigate all mergers and acquisitions in the recent past with a view to ensure that all due processes were followed and all tax revenues remitted to appropriate authorities.
They made the call in a communiqué issued at the end of the 2nd People’s Parliament and National Workshop jointly organised by Accers in collaboration with the Joint Tax Board (JTB) in Lagos recently.
The theme of the programme, which focused on tax policy, financial securities, collective investment schemes and tax administration, was ‘Capital Market and Taxation Subject Matter: Policy Review on the Taxation of Capital Gains on Shares and Stocks’.
After exhaustive deliberation on the matter, the stakeholders asked FIRS to investigate previous and current mergers and acquisitions processes to ensure that the tax payable to all tiers of government in the country are remitted accordingly.
“All issues relating to mergers and acquisitions should be thoroughly investigated by the Federal Inland Revenue Service. FIRS must be involved in all matters of mergers and acquisitions to ensure that the country does not lose tax revenue.
“FIRS must ensure that valuation of shares meet with the normal valuation for tax purposes. FIRS should investigate all previous mergers, acquisitions and take-overs and examine any actions that might have caused any loss of tax revenue to the country and bring the companies to book,” they said.
On Collective Investment Scheme (CIS), the stakeholders recommended a 100 per cent tax relief on individual investor’s contributions to the scheme, in order to stimulate participation and encouraged the Securities and Exchange Commission (SEC) to use CIS to ensure economic development in the Small and Medium Enterprises (SMEs).
They also want necessary laws enacted to prevent tax avoidance while imposing a 10 per cent tax on dividends accruing on investment.
Participants at the workshop also want SEC to make it compulsory for all co-operative societies and other similar funds outside its regulations to be brought under its purview and asked it to grant tax reliefs in the event of losses.
The stakeholders want Capital Gains Tax (CGT) reintroduced at a lower rate to the existing CGT rates in order to justify the canon of equity in taxation, adding that all activities on the Nigerian Stock Exchange (NSE) should be reported to the tax authorities whether there is gain or not.
In addition, they called on government to review the CGT Act to take account of all the intricacies of the capital market, arguing that this would plug identified loopholes in the tax system and avoid further manipulations of transactions.
Before now, the stakeholders condemned the federal government’s plan to bail out distressed stock brokers with taxpayers’ money, saying it was uncalled for. According to them, it was out of place for government to bail out private businesses that were out to profiteer by speculating on the performance of stocks on the floor of the Nigerian Stock Exchange (NSE).
They also alleged that government may have proposed the bail-out possibly to save owners of the broking firms who are people in government and top executives of relevant regulatory bodies in the country.