Epunchng - Most read newspaper in Nigeria 13th-September-2017 - Page 29

WEDNESDAY, SEPTEMBER 13, 2017 29 appointments & management PwC seeks review of pension law, Labour Act Ife Ogunfuwa P RicEWATERhouSEcooPERS Nigeria says a lasting solution to the perceived and real abuse of voluntary pension contribution can be found in the amendment of the Labour Act and the Pension Reform Act. Analysts at the consulting firm added that the recent notice issued by the Joint Tax Board and the Lagos State internal Revenue Service was an indication of the quest by the government to block tax leakages and improve revenue generation. The JTB and LiRS had in a public notice sought to limit the amount that could be made by an employee as voluntary contribution to one-third of the employee’s salary based on the provisions of Section 5(7) of the Labour Act. in an analysis of the notice, Pwc Nigeria said that the PRA 2014 did not prescribe any specific limits regarding the amount that of voluntary contribution and conditions for withdrawal of such contributions. The firm, however, said the restrictions in the Labour Act regarding deductions from monthly salaries, was only applicable to blue collar workers and did not affect people in administrative, executive, technical and professional positions. The group of analysts led by the head of Tax and Regulatory Services, Pwc, Mr. Taiwo oyedele, said that some of the contributors had taken advantage of the opportunity to set aside significant portions of their incomes as voluntary contributions. it said some withdrew their contributions within a short period, suggesting that the main purpose was not savings for pension or retirement, but to avoid taxation. it added, “The notice references the conditions for withdrawal of mandatory contributions under Section 16 of the PRA. This is, however, not applicable to voluntary contributions, which are covered under Section 10. “This section only imposes tax on income earned on voluntary contribution withdrawals made within five years of contribution. As such, taxing all withdrawals made from the voluntary contribution as indicated in the public notice would be inconsistent with Section 10 of the PRA.” According to the firm, the artificial provision in the Personal income Tax Act is a more tenable basis for the public notices, adding that Section 17 (3b) of the PiTA gave the tax authorities broad powers to classify some deductions as fictitious. it advised the relevant authorities to indicate a minimum period after which withdrawal of voluntary contributions would not be considered as artificial transactions. The Petroleum and Natural Gas Senior Staff Association of Nigeria had warned the JTB and some state boards of internal revenue from taxing withdrawals from voluntary pension contributions. 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