Beginners Guide To The Provisions Of The Kaduna State Tax (Codification And Consolidation) Law, 2020

By M.N Ibrahim Esq

With the price of crude oil, the commodity Nigeria is most reliant upon as its major source of revenue dipping, the country has become cash stripped and must look for other means to augment its revenue streams. Most states in the country hugely depend on federal allocations and grants before being able to carry out functions even as mundane as paying salaries. The covid-19 pandemic has also underscored the need for the country and indeed all states to find alternative sources to boost the already dwindling resources.

Recently, Kaduna State passed its Tax (Codification and Consolidation) Law, 2020. The law consolidated all taxes, charges, fees and levies receivable and introduced novel approaches by the government aimed at bolstering and optimizing the state’s tax potentials, by drastically expanding its coverage of eligible taxpayers, and increasing the amount of taxes and levies payable in some instances. Prior to this stride, the state has been able to increase internal revenue generation from N11.8 billion in 2015 to a whooping N44.9billion in 2019. This miraculous achievement came at a time when the whole country was slow dancing in and out of the economic recession that ravage the country in 2017. However, this success was not unconnected to the drastic reforms taken by the Kaduna state government, which has centralised and automated tax collections in the State. With the repeal of the Kaduna State Tax (Codification and Consolidation) Law No. 3 of 2016[i], the new law which made upward review of some tax obligations and provided stiffer sanctions against defaulters, is hoped to further re-establish Kaduna State on its track of exceeding expectations in generating sufficient internally generated revenue to drive the commercially bubbling state.

The aim of this article is to briefly highlight some of the provisions/tax regimes of the Kaduna State Tax (Codification and Consolidation) Law, 2020 which intention is to accelerate governments revenue generation drive.

The Law established the Kaduna State Internal Revenue Service whose responsibility it is to consolidate, control and administer the various taxes, non-tax revenues and laws in the state. The law empowers departments, agencies, statutory authorities etc to demand tax clearance from any individual or body corporate before transacting any business with them including inter-alia: application for Governor’s consent to any real property transaction; application for registration as a contractor, consultant, service provider or supplier; application for award of contracts by government, its agencies and registered companies; registration of vehicles and change of ownership thereof.

The law further establishes for each Local Government Council of the State: The Local Government Council Revenue Committee. This committee shall carry out the assessment of all taxes, fines, rates, charges and other revenue under its jurisdiction. It shall be autonomous of the Council Treasury, responsible for the day-to-day administration of the Local Government Revenue.

The Law also establishes a Joint Revenue Committee which comprises of members of both the service and the Local Government Council Revenue Committee, tasked to work together and harmonize tax administration in the State.

TAX REGIMES UNDER THE LAW

PRESUMPTIVE TAX: This is imposed on all persons, whose income cannot be ascertained for purposes of tax assessment, because they do not keep financial records of their business. These are further categorised into micro, small and medium businesses based on the volume of turnover. The guides for assessment are as provided under the fourth, fifth, and sixth schedules of the law. Penalty for non-payment is a liability to pay the sum and a penalty equal to 5% per annum[ii].

LAND USE CHARGE: This a land-based charge which is imposed on all real property situated in the State, by the owner, after an assessment by the Director-General Kaduna Geographic Information Service, or caused to be done by him, with the exceptions of: a property owned and occupied by a religious body. and used exclusively for public worship, or religious education; Cemeteries and burial grounds; a recognized and registered institution, or educational institute certified by the Director-General Kaduna Geographic Information Service to be non-profit making; Property used as public library; any property specifically exempted by the Governor’s Order published in the Gazette, and all palaces, official residences of graded Emirs, Chiefs and District Heads in the State.

However, the Director-General Kaduna Geographic Information Service may by an order grant partial relief to properties occupied by non-profit making organization used for community, charitable/benevolent purposes and properties owned by the State Government, Local Government and Federal Government, and used strictly for public and non-commercial purposes[iii].

EDUCATION, HOTELS, RESTAURANTS AND ENTERTAINMENT TAX: The law imposes tax on any person who:

• provides private educational services in primary or secondary schools, or
• pays for the use of, or possession, or pays for the right to the use, or possession of any hotel, hotel facility, or events centre; or
• purchases consumable goods or services in any restaurant, whether or not located within a hotel in the State.

The monies subject to tax is the total fees payable for private educational services in primary and secondary schools and the total cost of facilities, consumable or personal services supplied to a consumer in, by or on behalf of the hotel, restaurant or events centre. The law further provides that for private educational services, the tax is five percent (5%) of total fees payable per child per annum[iv].

PROMOTIONAL LOTTERIES, GAMING, CASINO, SPORT BETTING AND TOMBOLA TAX: The law provides that anybody who desires or wishes to operate any promotional lottery, gaming, casino, sport betting or tombola facility, franchise or agency shall make an application upon payment of a non-refundable application fee for license of N400,000.00. It further imposes a 10% tax to be known as promotional lottery, gaming, casino, sport betting or tombola tax on every stake money and winning amount which shall be promptly deducted and remitted monthly to the Service by every Licensed person in the State[v].

RADIO AND TELEVISION TAX: The Law imposes a tax on the ownership and usage of devices or equipment capable of receiving radio and television broadcast content within the state. The rates for assessment are provided under the first schedule and may be reviewed by the Service from time to time through public notice, after due consultation with major stakeholders[vi].

ROAD TAXES: These are taxes imposed on private & commercial vehicles, out of series and re-validation of plate numbers, fancy plate numbers, motorcycles, drivers’ licence and road side parking fees[vii] etc.

BUSINESS PREMISES REGISTRATION/RENEWAL: The tax imposed is sub-categorised into self-ownership, partnerships, corporate bodies and several others[viii].

DEVELOPMENT LEVY: This levy is assessable by Local Governments in collaboration with Traditional Rulers and collectible by the Service. Here, every taxable adult resident in the State shall pay annual Development Levy of One thousand Naira only (N1,000.00) or as shall be reviewed by the Governor and published in the Gazette from time to time. Note that, the definition of a “Taxable Person”- includes an individual or body of individuals, firm, partnership, family, corporations, sole trustee or executor or a person who carries out an economic activity in a place, a person exploiting tangible or intangible property for the purpose of obtaining income by way of trade or business or person or agency of government acting in the capacity[ix].

FIRE SERVICE CHARGE: Includes Safety Certificates for Petrol Stations and an annual premises inspection fees of (bakeries, filling station sites, assembly plant)[x].

ACCREDITATION, REGISTRATION/LICENSING AND ANNUAL RENEWAL FEES FOR PRIVATE SCHOOLS: The fees are applicable to all Private Schools within Kaduna State which are to pay a one-off charge of about N250,000:00 and a yearly renewal fee.

OTHERS INCLUDE: Naming of Street Registration Fees; Service charges for Markets where State or Private Sector Finance is Involved; Environmental (Ecological) Fee/Levy; Environmental, Mining and Quarrying Fees; Community Development Associations; Traffic Offences and Penalties; Local Government Taxes; Fee Structure for Outdoor Installations and Adverts; Fee Structure for Masts; Borehole Charges; Personal Income Tax; Withholding Tax; Capital Gains Tax; Stamp Duties on Instruments Executed by Individuals.

To further ensure enforcement, the Law empowers the Chief Judge to designate in each Local Government, a Court which shall give priority to matters relating to the revenue of the State ‘Revenue Court’. And the Revenue Court shall have jurisdiction to adjudicate on all claims and try all charges emanating from this Law[xi].

Furthermore, The Law established a body of Appeal Commissioners called the Tax Appeal Committee and a taxable person who is aggrieved by an assessment made on him can appeal to the Committee within 30 days after the date of service of the assessment or notice of the refusal of the Service to amend the assessment as desired[xii].

Finally, apart from the specific penalties provided for flouting select provisions of the Law, the Law also provides that a person who contravenes any of the provision commits an offence and, where no specific penalty is provided shall be liable on conviction to a fine not less than N50,000.00 (fifty thousand Naira) or more than N10,000,000.00 (ten million Naira) or imprisonment for a term not less than 6 months or exceeding 3 years or to both.

With this development, the state government through the Chairman of the Kaduna Revenue Service has stated that it has developed strategies to generate N60 billion Internally Generated Revenue, IGR target for 2021[xiii].

If this is to be true, businesses and residents should expect to feel more heat as the service intensifies its efforts. It is the humble opinion of this writer that there is need for increased manpower and training of tax officials, massive taxpayer/stakeholders’ engagement in order to enlighten and educate them properly, and receive feedback.

M.N IBRAHIM ESQ, Nasirmohammad26@gmail.com,0813-737-4044

[i] Section 145, Kaduna State Tax (Codification and Consolidation) Law, 2020.

[ii] Sections 54-63 Kaduna State Tax (Codification and Consolidation) Law, 2020.

[iii] Sections 64-74 Kaduna State Tax (Codification and Consolidation) Law, 2020.

[iv] Sections 75-85 Kaduna State Tax (Codification and Consolidation) Law, 2020.

[v] Sections 86-97 Kaduna State Tax (Codification and Consolidation) Law, 2020.

[vi] Sections 98-102 Kaduna State Tax (Codification and Consolidation) Law, 2020.

[vii] FIRST SCHEDULE PART I ITEM 8 Kaduna State Tax (Codification and Consolidation) Law, 2020

[viii] FIRST SCHEDULE PART I ITEM 9 Kaduna State Tax (Codification and Consolidation) Law, 2020

[ix] Section 3, Kaduna State Tax (Codification and Consolidation) Law, 2020.

[x] FIRST SCHEDULE PART I ITEM 9(8) Kaduna State Tax (Codification and Consolidation) Law, 2020

[xi] Section 49 Kaduna State Tax (Codification and Consolidation) Law, 2020

[xii] Section 52 Kaduna State Tax (Codification and Consolidation) Law, 2020

[xiii] https://dailynigerian.com/kaduna-develops-strategies/