The Federal Government recently released a statement mandating all bank account owners in Nigeria - individuals and companies - to obtain a self-certification form from banks, which the government said is for tracking tax diligence among Nigerians and companies.
The directive was heavily criticised by Nigerians as the statement mandates a visit to every bank each person or company has an account. The government was condemned for approving such an initiative when the Bio Verification Number (BVN), National Identity Number (NIN), and other personal information portals are available to extract needed information.
And to worsen the situation, the government said individuals or companies who fail to fill and submit the Self-certification form will be financially sanctioned. The Federal Inland Revenue Service (FIRS) had also tried to clarify the statement, but both the FG's and FIRS' statements have been trailed by criticism.
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The self-certification form doesn't concern every Nigerian, company, or account holder. The form is only meant for non-resident or individuals or companies whose income is not from Nigeria but live within Nigeria.
So majority of Nigerians don't need to fill the form, because a large percentage of Nigeria's population earns their income from Nigeria. The government has now apologised and retracted its previous statement.
Also, the form is for information gathering on non-resident individuals or companies and will be shared with countries from where the revenue or income comes from. It enables countries to track individuals or companies earning from their country but not paying necessary taxes - it is referred to Automatic Exchange of Taxpayers Information between Nigeria and other countries.
While reacting to the confusing statement from FIRS, former Director-General of the Bureau of Public Service Reforms in Nigeria, Joe Abah, said, "So, in essence, your (FIRS) press statement, relayed by the Nigerian government, only concerns non-residents and those with tax residence in more than one country.
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"It doesn’t concern majority of citizens. If so, both your press statement & the tweet by the Nigerian government were misleading and unnecessary." Abah who is also the current Country Director of DAI stated.
Another tax expert and PWC country tax leader, Taiwo Oyedele, explained in a tweet that, "The information required is to enable reporting financial institutions determine [sic] the tax residency of their customers to know which countries to share your information with."
Oyedele further explained that "Many people are justifiably angry about this development. Here is my take; The exchange of information initiative is good. It will enable govt to obtain information from other countries regarding financial information about Nigerian residents.
"In exchange, Nigerian govt must provide information about persons in Nigeria who are tax resident in other jurisdictions to the relevant countries. The FG could have done a better job of simplifying the process and communicating more effectively.
"A simple analogy is like asking everyone to make a self-declaration so that govt can determine how many Nigerians have attended a foreign university onsite when a simple information filtering will show that we need not bother 99% of Nigerians about it," Oyedele said.
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Oyedele condemned the method government tried to obtain the information. With several data platforms in the possession of the government, the requirement for Nigerians to visit their banks is unnecessary. Oyedele said the government poorly handles data management.
"The mere fact that govt is asking Nigerians to provide this declaration is a reflection that the country poorly handles data management. The same reason why many countries were able to easily administer palliatives to their citizens during this pandemic and we couldn't.
"My 2 cents (or kobo): Your bank has an interest in getting this right so you can wait until they reach out to you. Banks have done a similar thing before under the US FATCA and they didn't ask everyone to make a declaration. I am hopeful that banks will be able to do the same this time around," Oyedele said.