EXCLUSIVE: Documents, Findings contradict tax evasion claim against traders in Nigeria’s Kwara

Rather, poor understanding of Harvard reviewed IAS creates discriminatory tax system against trade association

Available documents gathered in Ilorin, state capital of Kwara, north central, Nigeria, rather than support claims of tax evasion by Igbo traders in the state as alleged by tax officers puts the alleged offenders in the clear, DDM can exclusively report.

While there are no clear evidence of being tribally targeted, too, as claimed by some of the traders, higher authorities in Kwara Internal Revenue Service, KWIRS, may also need to re-examine the basis upon which some of the traders’ businesses were closed by a mobile tax court last Friday.

Also, as findings suggest, the tax officers tasked with overseeing revenue generation by KWIRS may not have shown proper understand of the Igbo trading and business model.

KWIRS, as suggested by stakeholders in the state, may need to develop broader and more effective strategy to capture various shades of businesses in its tax net to avoid future misunderstandings like it occurred last week.

As at Monday morning, the shops closed by the state’s revenue courts still remained shut while talks behind the scene were still being held on the matter.

a mobile revenue court, created by the state government to curb excessive tax evasion prevalent in most parts of Nigeria, moved in on the business premises of Chuppet Stores and Top Biz Nigerian Enterprise, all within Taiwo Road, a major business and commercial hub of the state, and closed the shops.

Tax receipt from one of the traders contradicts claim by KWIRS.

The action riled the traders in the area who believed they have had a cordial relationship with KWIRS for long through their umbrella body, the Kwara Igbo Traders Association, KWAITA.

Other traders in Ilorin Metropolis had closed their shops in protest.

Earlier inquiry by the online publication from KWIRS showed that there were alleged tax infractions against the traders concerned.

Against Top Biz, for instance, KWIRS, in a later dated 19, February, asked the enterprise to pay the some of N9,728,360.00.

According to the agency, the figure captures personal income tax, PIT, owed to the state for the years 2016 to 2023.

Invariably alleging tax evasion of seven years.

KWIRS, KWAITA once enjoyed cordial relationship.

“The above is premised on the service of required Statutory Notices on you which is in accordance with the provisions the Personal Income Tax Act 2004 (as amended) and the Kwara State Revenue Administration Law, 2015 (as amended),” KWIRS wrote in its official letter signed by Shehu Abdullahi, Director, Legal and Compliance.

But contradictory documents obtained from Top Biz tends to put the alleged offender in the clear on the said claim.

DDM was availed with documents that not only showed tax payments by Top Biz in the period under review, but also showed that the business proprietor has been paying tax to the state since 1989.

The business man had also obtained tax clearances on three separate occasions.

“These documents are necessary for me to get loans from banks and obtain clearance from Corporate Affairs Commission in Abuja,” explained Sir Theophilus Agunwa, owner of Top Biz.

Sir Ezezue: Igbo traders have nothing to hide.

In one of the ‘revenue receipt’ copy shown to DDM (see attached picture) for instance, Top Biz made payment of N25, 000 paid for his PIT on 29, November 2023, one of the years under scrutiny by KWIRS.

There were others.

There was those dating 1989. Then there were others of payments of tax for 2016, 2017, 2018 and so forth, copies which were given to DDM.

None indicated that they were part payments or were any outstanding stated in the receipt issued to the business man.

The other trader, Peter Ekemezia, owner of Chuppet, alleged same treatment.

On the day Chuppet Stores were sealed, the tax officers allegedly ignored entreaties to tarry a while to allow the trader’s lawyer present receipts and missives between him and KWIRS in his defense.

But going by what happened to Sir Agunwa, any presentation of documents at the mobile court wouldn’t have changed anything.

“I brought all my documents showing that I have been paying taxes in Kwara since 1989 but the officers wouldn’t listen to me,” explained a flustered Sir Agunwa to DDM.

Though KWIRS is yet to speak to DDM as at the time of writing this report, a back channel source in the agency confirmed that the matter had to do with personal income tax, PIT.

According to KWIRS, the offenders had been underpaying in the tax category.

“Chupet and Top Bliz have been hiding under association and paying minimal amount as PIT.

“We had for years told them that they cannot be assessed like that and written severally too.

“They were also notified of the mobile court coming up today on the same matter,” the back end source told DDM.

But Igbo traders have long remitted taxes through Kwara State Igbo Traders Association, KWAITA.

Under the arrangement, the least paid PIT by traders is N7, 000, followed by N15, 000 and N45, 000 per annum.

According to records made available to DDM, these appear to be an upgrade from what they used to pay as far back as 2016 when KWAITA and KWIRS had their understanding.

Nwora: KWIRS tax needs to understand our business model

Back then, traders paid N3, 000, N4,500, 7, 000 and N10, 000.

In a minor survey conducted by the online news portal in other markets in the city like Oja Gboro, Oja Tuntun, Mandate Market, equally big marketing hubs in Ilorin, traders tend to pay lower with a mean payment of N2, 000 per trader.

KWAITA officers said that many of their members have consistently opted to pay under any of this other markets rather than the Igbo traders as association if it means paying far less.

KWIRS is insisting on assessing each of the traders individually and not through the trade association, and then assigned them corresponding taxes.

But explaining what appears to be wrong with the proposed arrangement by KWIRS, Aloysius Nwora, Chairman, Building Material Association,  BMA, Kwara State, and coordinating chairman on tax remittances for all 22 zones of BMA (under KWAITA), said that the tax officers do not have a proper understanding of how the Igbo trading business is structured.

“Most of the multimillion naira goods and merchandize in the shop of a trader don’t belong to him,” he explained.

“He might not own more than a small fraction of the merchandise,” he added.

According to Nwora, a trader obtains capital for his business through various legitimate means which must be put into consideration before being taxed.

“Also, you might have just one shop but with five to six different people running complementary services, either as haulage, marketer etc.

“How do you get to tax these other people after taxing the owner of the shop,” asked Nwora.

He also explained that most of the goods in the shops of traders are mostly obtained, not by loan, but through the Igbo Apprentice System, IAS.

“An importer in Lagos gives his kin commodities to sell and make remittances after deducting his own profit.

“Taxing that trader in Ilorin based on what you see in his shop would be unfair,” explained Nwora.

Also, there are those like Sir Agunwa who make a duty to pay taxes, obtain tax clearances both on landed properties and PIT as a means of securing loans from banks to do business.

“Federal government deducts VAT (value added tax), banks takes its interests and makes other deductions.

“Would KWIRS put all these into consideration while assessing the trader,” asked Nwora.

In support of Nwora’s view, IAS is well recognized business module that has intrigued economists and policy wonks in recent times.

For instance, Harvard Business Review, HBR, a global influential policy and economic advisory, described IAS as ‘stakeholder capitalism,’ where businesses are expected to prioritize the interests of not just their shareholders, but also communities, workers, consumers, and the environment.

It is a predominant practice among Igbos, South East Nigeria, but exported outside their region into far flung territories of the West African sub region.

The system involves successful businesses mentoring and supporting new ventures, even to the extent of giving away customers and capital to help these new businesses grow.

HBR found that the practice leads to a situation where few businesses become overly dominant, as they continuously share their market share, resulting in a more equal community where everyone has opportunities.

KWIRS, in the past, appeared to have had an understanding of IAS in the past.

Aside allowing KWAITA act as its agent sourcing tax remittance of its members, it also give it 10 percent agency for whatever is remitted to further assist them in their revenue drive.

In 2018, KWIRS awarded KWAITA a plaque of recognition as the “Most Responsive Association”.

So what might have changed?

KWIRS is yet to speak officially on the matter despite entreaties by various media including DDM, but back channel comments suggests that the tax agency believes that some members of the trade association ought to be migrated from their informal business status to formal.

“Under the informal sector, they are not being taxed appropriately,” explained a KWIRS source.

But responding, Sir Emma Ezezue, president of KWAITA said that his members are all too willing to open their books for proper assessment.

“It is just not fair to judge my income by the size of the goods you see in my shop without doing a proper audit of what percentage of it all are mine,” he said.

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