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<p>The chairman of the Federal Inland Revenue Service, Babatunde Fowler has insisted the deadline for the Voluntary Income and Asset Declaration Scheme, VAIDS, will not extend beyond the 31st of March.</p>


Transfer pricing in Nigeria: What you need to know

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<p>Nigeria&#8217;s Minister of Industry, Trade and Investment, Okechukwu Enelamah says the biggest challenge for taxation is the large informal economy. CNBC Africa’s Christycole Popoola caught up with him on the side-lines of the launch of Andersen Tax.</p>


Why taxing the informal economy might be a huge challenge – Enelamah

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<p>CNBC Africa&#8217;s Christycole Popoola caught up with Olaleye Adebiyi at the launch of Andersen Tax in Lagos.</p>


Andersen tax launches in Nigeria

<p>An increase in personal income tax rates and the marginal rate of tax for high income earners – which will more than likely be announced in this week’s National Budget Speech – will be a bitter pill to swallow in the short term. However, if this does happen, it will provide a good opportunity to boost long-term retirement savings.</p>
<p>This is the opinion of Jill Larkan, Corporate Liaison Executive at financial advisory and wealth management business GTC.</p>
<p>“Given the country’s growing revenue shortfall and the National Treasury’s limited options for raising income, commentators are expecting that personal income tax rates and the marginal rate of tax will be raised, with high earners likely to be affected the most.”</p>
<p>While higher taxes rates might be undesirable, she believes it may bring a silver lining for individuals’ retirement benefits.</p>
<p>“An increase in tax rates can be an excellent opportunity for boosting retirement savings – be it pension funds, provident funds or retirement annuities – because these long-term savings are tax-deductible,” she explains.</p>
<p>According to Larkan, contributions to a retirement fund can be deducted from individuals’ total tax liability, up to a rate of 27.5% of either their remuneration or taxable income (whichever is the greatest).</p>
<p>“This is a very attractive incentive from the government for individuals to increase their retirement contributions, so that more people can retire comfortably,” explains Larkan.   “Even though this deduction is capped at a maximum annual amount of R350 000 we believe it is one of the best ways to maximise the long-term benefits from current retirement contributions.”</p>
<p>She adds: “Most of the retirement funds in South Africa – including GTC’s umbrella fund range – allow for individuals to make additional voluntary contributions to retirement savings, in order for them to get the biggest advantage from increasing their contributions.”</p>
<p>Larkan believes pension fund options are also well-structured for investment growth.</p>
<p>“An additional advantage of retirement savings is that the fund’s investment growth does not attract income tax or capital gains tax, which means individuals get the maximum benefit from appreciation in the fund’s value.”</p>
<p>She adds: “Looking further down the line, individuals currently receive an amount of up to R500 000 tax-free from their total lump sum upon retirement, with the balance taxed at favourable rates, which is much lower than marginal rates.</p>
<p><strong>Other expectations ahead of the 2017 National Budget Speech</strong></p>
<p>Larkan does not expect the Minister of Finance to announce any changes regarding the tax-deductible limits, or the tax scales that apply to withdrawal, death, retirement and retrenchment benefits payable from retirement funds.</p>
<p>“These limits have recently been changed (with effect from 1 March 2016) so we anticipate this to remain unchanged for the time being.”</p>
<p>Larkan says they will keep an eye on developments regarding the government’s proposed treatment of provident fund benefits, following opposition from trade unions last year.</p>
<p>“It would be interesting to see if there are any announcements regarding the future annuitisations of provident funds after 1 March 2018, considering developments between the government and trade unions,” she concludes.﻿</p>


Personal Income Tax

Transfer pricing in Nigeria: What you need to know

Why taxing the informal economy might be a huge challenge – Enelamah

Andersen tax launches in Nigeria

Will S.A's 2017 Budget bode well for retirement savings?

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Personal Income Tax

Transfer pricing in Nigeria: What you need to know

Why taxing the informal economy might be a huge challenge – Enelamah

Andersen tax launches in Nigeria

Will S.A's 2017 Budget bode well for retirement savings?

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