A Chat with Omosebi, Olajide Ademola – A Lawyer and Tax Risk Manager

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Lawyers are the only learned people! We have constantly tried to justify the correctness of this phrase with the position, that lawyers are equipped to know, understand and appreciate all knowledge-based areas of life. OMOSEBI, Olajide Ademola is one of such people, he has conveniently merged his expertise firstly as a Lawyer with Tax. He is a Lawyer and a Tax Risk Manager, Tax is no doubt an area heavily regulated by statute, he has been able to utilize his knowledge of law in advising Startups on compliance with the relevant Laws on Tax. In this conversation with ‘Tosin Ajose Popoola he shared his thoughts on the Finance Act, 2019 , the Stimulus Bill awaiting legislative procedure and a host of other issues, he  can be reached vide: Olajideomosebiandco@yahoo.com

DNL L & S: You are a Tax Risk Manager; tell us briefly about that?  What does that mean? What do you do?

OLAJIDE: As a Tax Risk Manager, I help corporate bodies and high net worth individuals plan their affairs and manage risks that erupt from non-compliance. Depending on the type of corporate vehicle (Business Name, Ltd, Plc, NGO) opted for at incorporation and business decisions made on a daily basis, there are bound to be avoidable tax risks. These risks can be proactively managed in-house through tax planning. And, most often, companies, due to improper planning or advice, expose themselves to avoidable tax penalties from the relevant Tax Authorities.

DNL L & S: What does it take to be a successful Tax Risk Manager?

OLAJIDE: Due to the kind of work we do at my firm and engagements with relevant Tax Authorities, I believe a Tax Risk Manager must have a firm grasp of the tax laws and how they affect businesses. Tax is a practice, driven only by laws and no one can be taxed outside the law. To manage tax risks, you must understand the tax laws, plan and engage the relevant Tax Authorities.

Managing tax risks, comes with experience and specialization in different areas of tax. It must be mentioned that though tax is a special area of practice, there are also areas within tax too. So, with experience in a given area of tax, you can manage the risk in that area.

DNL L & S: We understand that you founded a Startup Support and Tax Advisory Firm; What led to that? Was there a gap in the industry you were trying to bridge?

OLAJIDE: I believe startups are the keys to unlocking prosperity in Africa. Startups like traditional companies need professional services but struggle to engage big professional firms due to the high cost of these firms’ services. As a firm, we are bridging the gap by providing these services without digging too deep into their pockets. Also, by focusing on startups, we are better able to add value to them.

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DNL L & S: Do you think our Startups have developed to a stage where the services of a Tax Advisory Firm would be sought?

OLAJIDE: Regardless of the phase a company is in, quality tax advice is an essential recipe for sustainability and growth. Every business needs a tax advisor to receive advice on minimizing avoidable risks and compliance.

DNL L & S: So, you’re first a Legal Practitioner before a Tax Risk Manager, is there any conflict between the two roles? Is there an edge?

OLAJIDE: Tax is entirely statute driven and there can be no tax without a statute. My background in law is surely an edge in my tax practice. In fact, I will encourage any lawyer looking to specialize to consider Tax.

DNL L & S: What are the core values of a Tax Risk Manager?

OLAJIDE: The core values are integrity and professionalism. A Tax Risk Manager must rightly advice his client on compliance and not advice on means of evading tax.

DNL L & S: Has your Regulatory Body been able to successfully manage the Practitioners in the Industry to ensure that these core values are maintained at all levels?

OLAJIDE: The effectiveness of a professional body can be judged by how many cases of flouting by its members, it has recorded. We have not recorded many cases of tax practitioners breaching the rules to the best of my knowledge. However, it is doubtful if CITN makes its disciplinary procedure public like NBA does. So, it might be difficult to estimate. However, every rule being manmade are never perfect. There would always be loopholes.

DNL L & S: The Finance Act, 2019 introduced a lot of innovations to our Taxing System, which of the innovations do you consider most beneficial to Startups? Do you consider it a good law? What are your thoughts please?

OLAJIDE: The Finance Act, 2019 has given startups with less than N25,000,000.00 (Twenty Five Million Naira) turnover a tax exemption under the Companies Income Tax and the Value Added Tax. It is expected that this tax holiday will encourage more investors to invest in startups and hopefully, individuals will think up tech-driven  solutions in the areas of Education, Healthcare and Agriculture.

DNL L & S:  If you had the opportunity, would you call for a review?

OLAJIDE: As it stands, the Finance Act,2019 is relatively new and will surely, like every other law have its loopholes; many of the issues that will come as a result of the Finance Act will hover around implementation. With better engagement and collaboration among practitioners and administrators, we can identify the loops and stage a case for reform.

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DNL L & S: Is it effectively solving identified problems in the laws we had? If yes, an example or illustration please.

OLAJIDE: In Nigeria, if we consider the cost of doing business and the profit, it could be highly discouraging. The initial 30% from the companies’ profit after all allowable deductions with respect to companies who are yet to break even or recoup their capital, was seen as somewhat discouraging and encouraged non-compliance. Hence, the current exemption will encourage considerable compliance among startups.

DNL L & S: The Taxing system is quite confusing, with different laws regulating each area, you have the Capital Gains Tax, the Personal Income Tax, among others, can you take us through (quickly) these Taxes?

OLAJIDE: Companies Income Tax is a Tax on the profits of incorporated entities in Nigeria. It also includes the tax on the profits of non-resident companies carrying on business in Nigeria. The Tax is paid by LLC inclusive of Plc.

Personal Income Tax is a statutory obligation imposed by the government on the incomes of individuals, communities, families, trustees or executors of any settlement. It is to be remitted to the Inland Revenue Service of the state in which the tax payer resides.

Withholding Tax is an income tax to be paid to the government by the payer of the income rather than by the recipient of the income. It is not really a distinct tax and therefore has no legislation of its own.

DNL L & S: As a Tax Risk Manager with a passion to position Startups, how do you think the Startups are faring in the light of these Taxes? What economic impact does the imposition of these taxes have on Startups?

OLAJIDE: Every cooperate individual must be tax conscious and responsible but your tax responsibility towards the government becomes an issue when you are running on borrowed funds, investors fund or even yet to break even.

DNL L & S: Covid-19 happened on us, we didn’t prepare for it apparently. Is there any regulation or law that has been passed to cushion the effect of the Covid-19  on Entrepreneurs, Startups Founders and the entire Business Community?

OLAJIDE: There is a stimulus bill in the pipeline which has been presented by the House of Representatives, but waiting for the passage of the National Assembly and the assent by the President. The bill upon becoming an ACT is meant to cushion the effect of COVID_19 on businesses but a deeper look into the provision of the bill shows that it does not touch pertinent issues affecting businesses at the moment: liquidity issue, payment of salaries and retention of full staff capacity. One of the incentives is the PAYE difference and refund 50 percent PAYE to companies. This is not sufficient as it may not only be small but does not solve the challenge of cash flow for companies.

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DNL L & S: Of course, there is a nexus between the economy of a Country and its Tax System, what effect will the Covid-19 outbreak have on StartUps in Nigeria, in terms of tax remittance and the amount remitted?

OLAJIDE: It is expected that the effect of the covid-19 would be felt across sectors and industries of the world. Startups, like every other business would also be affected too.

DNL L & S: How will this affect the economy and the Tax system?

OLAJIDE: The effect on the economy is increase in unemployment and decrease in purchasing power of the public. Moreover, Government may not be able to meet its revenue target due to low taxes. There may also be increase in tax avoidance

Tax is the life-blood of any government and without it, the operations of the government would be stifled. Many of the projects might suffer some setbacks like funding. On the part of businesses, businesses will struggle to stay afloat which ultimately will affect tax remittance.

There will always be a downturn in business activities and flexibility is required. Only a business that is a going concern can pay tax.

DNL L & S: What are the front burner issues in our Taxing System at the moment?

OLAJIDE: Simply put, Compliance, widening the tax-bracket and Avoidance.

DNL L & S: What do you think the industry should have done ahead of this Pandemic?

OLAJIDE: I think the tax authorities were pro-active enough to have gone tech with tax. With the E-Tax platform, many of the relevant Tax Authorities’ services can be accessed online.

DNL L & S: Going forward, what should we do differently as Individual Tax Payers, StartUps?

OLAJIDE: Compliance! Compliance! Compliance! There are many avoidable risks that businesses and individuals expose themselves to due to non-compliance. I will encourage tax-payers to engage the services of a tax advisor to plan their affairs.

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