BY MICHAEL EBOH
Chief Financial Officers, CFO, of banks in Nigeria, yesterday, decried the multiplicity of tax audit on their finances, saying that if something urgent is not done to address this issue, it will attain a worrisome dimension and continually erode the profitability of banks.
Speaking at the KPMG Banking Chief Financial Officer Forum in Lagos, the CFOs expressed displeasure with the rising desire of almost all tiers of government, including the National Assembly, to organize different tax audits under different names, a development that is negatively affecting the banks.
According to the CFOs, the Lagos State Government, recently indicated it preparedness to undertake a tax audit of the banks, prior to the banks’ year end, this, if it comes into effect, will make it the third tax audit conducted by the state on the banks.
“The Senate also released a long list of companies that it intends to investigate over tax issues. If the Senate is not stopped, this will add to the long list of audits currently conducted on the banks.
Majority of these tax audits conducted by a number of these governments’ agencies, and other institutions of governance are ridiculous and unnecessary.” they said.
The CFOs also decried the increasing tax burden on the banks, and advocated the setting up of a committee to engage the government on the need to reduce the tax burden on the banks.
In his own view, Mr. Ayodele Othihiwa, Partner & Head, Financial Services, KPMG, advised the banks that as a short term palliative to the increasing tax burden, they should have a review of their results, especially in the dividends they declare.
He, however, disclosed that caution should be applied in reviewing the results and dividends, saying that the banks will have to communicate effectively with all stakeholders on this issue.
On the long term, he said the banks should resort to advocacy, setting up a committee that will parley with the government and other stakeholders, beginning from the National Assembly and other key government officials.
Mrs. Nike James, Tax, Regulatory and People Services, KPMG, said the advocacy group when set up by the banks, should seek waivers, exemptions and dispensation on the excess dividend tax among others.
She further stated that the advocacy group should be able to lobby the Federal Ministry of Finance and the Federal Inland Revenue Service, FIRS, for waivers and exemption
She also emphasized the need for the banks to understand and effectively manage risks associated with taxation, saying this can be achieved through a clear tax strategy that is easily understood by all internal stakeholders and members of the tax.