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Legal Alert January 2008 Collecting Societies In Nigeria
 
In this Issue:
1. Legal Alert for January, 2008 – Collecting Societies In Nigeria; the Law & Regulations.
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice.
Legal Alert for January 2008 – Collecting Societies In Nigeria; the Law & Regulation
An Artiste or Entertainer expends considerable time, talent and expense in producing the entertainment product that we all so love to listen to or to watch or to use in such appropriate medium as it is produced to suit the consumer of the product. The Artiste or Entertainer receives no other compensation for his or her industry other than for his or her audience to purchase the entertainment product or "lease" it at a fair price.
Most Artistes or copyright owners however do not have the national or global network, managerial and administrative expertise and resources of ensuring that their products/works are maximally distributed without the problems of (a) piracy, (b) none payment of royalty, and (c) where there is payment of royalty, the royalty payment does not get to the Artiste or copyright owner.
The negative aspect of technological advancement and trade globalisation is also not making the function of protecting the intellectual property rights of Artistes and entertainers any easier. An Artiste or copyright owner would find it a colossal and exhorbitant task to individually and independently monitor his or her intellectual property work in the many countries of the world where such intellectual work is available for use.
To solve the above multi-jurisdictional protection problems for copyright owners and many other owners of intellectual proprietary rights, associations usually called Collecting Societies are formed to assist the copyright owners in administering these intellectual property rights in accordance with the laws of each country where such Collecting Society is licenced to administer third party copyrights.
What is a Collecting Society?
A Collecting Society is a representative association consisting of various copyright owners who have authorised the Collecting Society to maximally administer their intellectual proprietary rights in accordance with the statutes and authority of the country where the Collecting Society resides, for an agreed fee.
Licensing & Regulation of Collecting Societies In Nigeria
Collecting Societies hold a very important fiduciary position vis-à-vis the property right owners they represent. Because of this, a Collecting Society is required to show, before been granted a licence under the Nigerian Copyright Law, that (a) it is registered as a company limited by guarantee - as opposed to a company limited by shares - with its primary objectives including:-
(i) The negotiating and granting of copyright licences on behalf of the copyright owners, who are its members, to third party users at an agreed consideration; and
(ii) Collecting royalties on behalf of its members and repatriating these royalties after deducting the Society's approved administrative fee;
(b) it represents a substantial number of the members of the society in the class that it seeks to administer their rights; and (c) it complies with the Copyright (Collecting Societies) Regulations, 1993.
It is however unlawful for any person, corporate or personal, who is neither registered under the Companies and Allied Matters Act as a company limited by guarantee nor licenced by the Nigerian Copyright Commission (NCC), to carry on any business with the objective of negotiating or granting licences for valuable consideration on behalf of its copyright owners/members, and distributing the consideration to its members.
Criminal Liability for Non Licenced Collecting Societies
Any association or society of copyright owners that carry on the functions or duties of a collecting society without licence from NCC contravene the provisions of the above stated Nigerian Law on copyright.
Where found guilty by a Court of Law for not possessing a Collecting Society's licence, such an association or society with its principal executives are liable on conviction, if first offenders, to a fine of N1,000 (One Thousand Naira) for individuals and N10,000 for corporate associations. For second and subsequent offenders, the fine is N2,000.00 (Two Thousand Naira) for individuals and for corporate associations, the punishment is N2,000.00 for each day in which the offence continues.
In addition to the fine for the breach of carrying on business as a collecting society without licence granted in accordance with the provisions of the Nigerian Copyright Act (as amended), this Law gives to the Courts the option to impose with the fine above stated, a term of imprisonment on the offending person or association provided that the term of imprisonment does not exceed 6 months.
A novel provision, at the time of the enactment of the Nigerian Copyright Act, is the removal of the corporate veil that was in the past enjoyed by corporate executives who used to argue that they were only acting for their company which ironically is an artificial entity with no flesh and blood of its own.
Civil Rights & Liability of Collective Administration of Copyrights
Section 15 of the Nigerian Copyright Act confers the right to protect and bring an action for the infringement of a copyright on the owner, assignee or exclusive licensee of the copyright. This right of action is however not absolute as Section 15A provides that a collecting society shall not have such right of action or protection until it applies for and is granted a collecting society's license or, is granted an exemption from applying for and having such a licence by NCC.
Case Law On Collecting Societies
The efforts by the two major associations in Nigeria to have exclusivity to the collective administration of copyright in musical works have resulted in disputes and litigations. There is however no final substantive decision by the highest Court in Nigeria on this subject. Also, the few interlocutory decisions that this writer is aware of, are presently on appeal awaiting final decision by the appellate courts.
Let us however consider some of the interlocutory decisions on collecting societies in Nigeria. In the matter of Musical Copyright Society of Nigeria Limited v. Adeokin Records, Suit No. FHC/L/CS/216/96 (unreported) decision delivered on July 9, 1997 by Ukeje J. (as she then was) and in the matter of Musical Copyright Society of Nigeria v. Details Nigeria Limited FHC/L/CS/434/95 decision delivered on 31st July 1996 by Odunowo J., the Federal High Court of Nigeria held that any association without a collecting society's license is in breach of the provision of Section 32B(2) of the Nigerian Copyright Act and as a result lacks the locus standi to maintain a court action.
The arguments of the Musical Copyright Society of Nigeria in the above matter that it was an owner, assignee and exclusive licensee of copyright was held to be untenable as a party can only sue if it has the legal competence/license to do so. The decisions in Re Adetona (1994) NWLR (part 333) 481; Thomas v. Olufosoye (1981) 3 NWLR (part 13) 523 were relied on by the Court.
The matter of the Musical Copyright Society of Nigeria Limited v. Adeokin Records however went on appeal to the Court of Appeal in suit CA/L/498/97. The Court of Appeal held that, although the Respondent did not file any Respondent's brief in its defence to the appeal, based on the Appellant's brief alone, the 1988 Copyright Act, upon which the originating proceedings in this matter was filed, confers locus standi on the Appellant as owner, assignee and exclusive licensee authorised to prosecute the claims in this matter. The Federal High Court's retrospective application of the amendments to the 1988 Copyright Act was held by the Court of Appeal to be wrong in law as no retrospective effect was clearly intended in the Copyright (Amendment) Act, 1999. The Court of Appeal accordingly remitted this matter to the Federal High Court for re-assignment by the Chief Judge for hearing before another trial Judge.
In another matter, the Nigerian Copyright Council v. Musical Copyright Society of Nigeria Suit No. FHC/L/43c/99 (unreported) the latter collecting society was criminally charged with infringing the provisions of the Nigerian Copyright Act which bars any person or society from carrying on business as a collecting society without obtaining a collecting society's licence from the copyright regulator, NCC. The Court held, on the interlocutory application of the accused association contending that the Complainant Prosecution lacked the legal authority to sustain the charge, that the right to feely associate is not an absolute right but a restrictive one. The Court further held that the Copyright Commission is granted statutory powers similar to those of the Nigerian Police to prosecute offenders of statutory offences provided for under the Nigerian Copyright Act.
For the details of the Federal High Court judgements and other judgements on intellectual property law in Nigeria, see the book "Nigerian Copyright Law & Practice" By John O. Asein, Esq.
Regulator's Notice
In October 2007, following claims and counter claims by the two principal collecting rights associations in the Nigerian music industry, the Nigerian Copyright Commission issued a widely circulated public notice warning members of the public that there is presently no approved or authorised or licenced collecting society in Nigeria. Members of the public were reminded that it is a criminal offence under Section 32B(4) of the Nigerian Copyright Act (as amended) for any body or corporate association or group to perform or purport to perform the duties of a collecting society without a valid licence issued to it/them by NCC.
Conclusion
The essence of the Copyright Act (as amended) and collecting societies in their entirety is the protection of the rights of the owners of the copyright to an intellectual property work or works. The Nigerian copyright regulator and the various associations laying claim to copyright protection would do well to close ranks and work together in the interest of the rights owners. Without such harmonised cooperation, unauthorised users and pirates would continue to enjoy where they have not sown.
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This Alert and others produced by us are provided without any charge to you. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
You are equally permitted to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm.
Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert Tax Benefits Pioneer Status
 
In this Issue:
1. Legal Alert for November, 2009 – Tax Benefits of Pioneer Status in Nigeria
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice.
Legal Alert for November, 2009 – Tax Benefits of Pioneer Status in Nigeria
TAX BENEFITS OF PIONEER STATUS APPROVAL IN NIGERIA
The number of Nigerian companies applying for and obtaining pioneer status approval has dwindled considerably in the last decade with the attendant decrease in the benefits inherent in the possession of a pioneer's status certificate.
This is despite the subsisting applicable legislation in the Nigerian Statute book, namely the Industrial Development Income Tax Relief Act ("the industrial Development Act").
The Industrial Development Act provides that where the Nigerian government is of the opinion that any sector or industry in her economy is not being undertaken on a scale suitable to the economic advancement of Nigeria, or that it is in the public interest to encourage the further development or establishment or advancement of trade in such a sector or industry, the President of Nigeria is authorised to publish in a Gazette, a list of such industry or industries to whom pioneer status Certificate may be issued upon their successful application.
Any industry that is not listed in the schedule of industries, to which pioneer status could be granted, is at liberty to apply for the inclusion of such an industry in the pioneer status list. The Nigerian government is also at liberty to, from time to time, amend its list of pioneer industries, enterprises and products.
APPLICATION FOR PIONEER STATUS
To qualify to apply for pioneer status, a joint venture company or a foreign wholly-owned company must show that it will incur capital expenditure in excess of N5,000,000 (Five Million Naira). In addition, an application for pioneer status must be submitted within one year of the applicant company commencing commercial production otherwise the application will time-barred.
Every application for pioneer status must be addressed to the Federal Minister for Industries stating the ground or grounds on which the applicant relies for making the application for the issuance of a pioneer certificate to such an Applicant company. The application should indicate:
(a) Whether the Applicant Company is an indigenously controlled or foreign controlled company?
(b) Particulars of the assets on which qualifying capital expenditure will be incurred by the company, including their source and estimated costs.
(c) The probable date of commencement of the production by the company.
(d) The location of the assets in respect of which qualifying expenditure will be incurred by the applicant company.
(e) The product and any by-product proposed to be or that is being produced by the company.
(f) Provide particulars of the loan and share capital, or the proposed loan and share capital of the applicant company or the proposed applicant company.
(g) Provide the names, addresses and nationalities of each Director, and the number of shares held by each such Director in the applicant company.
(h) Give the name(s), addresses and nationalities of each promoter in the case of a company that is yet to be incorporated.
A pioneer certificate could be amended by including an additional product or products. The particulars of all pioneer Certificates must be published in the Federal Government Gazette.
INCOME TAX RELIEF FOR PIONEER COMPANIES
The tax relief period for all pioneer companies is three years commencing on the first production day of the company. The tax relief period may be extended subject to some conditions, for a further period of two years or one extra year after which a further extra one year may be allowed.
However, a company which acquires or proposes to acquire the assets of a company that has pioneer status or has been taken over or is been taken over by such other company remains only entitled to continue to enjoy a pioneer approval that must not exceed five years cumulatively from the date of its original grant or the date of the first production under the original grant.
A Pioneer Company is not allowed, for tax relief purposes, during the period of the tenure of its grant, to engage in other form of enterprise different from those for which pioneer approval has been granted. Where however a pioneer company engages in such other trade or business, the profit accruing to it from such other trade or business shall be liable to Nigerian Income tax statutes and regulations.
Subject to the above condition, all the profits of a pioneer company from an approved pioneer enterprise or product are not subject to the payment of Income tax on their assessable or total profits.
Also, the Dividend Income of a pioneer company is exempted from tax in the hands of the shareholders of such a company provided such dividends are paid from an account of the company approved by the Federal Board of Internal Revenue (FBIR). FBIR is also authorised to retract these benefits within a period of six years should the pioneer certificate of the pioneer company be cancelled or such other contrary directive is issued by the Nigerian government for good reason.
FALSE INFORMATION
Any applicant who makes or presents a false declaration or statement, or who produces a false invoice or undertaking is guilty of an offence and is liable on conviction to a fine not exceeding N1,000 or to a term of imprisonment of five years or to both the fine and the term of imprisonment. Where the offence is committed by a body corporate, every director, manager, secretary or other principal officer of the company, if found severally guilty with the body corporate, will also be liable in the same manner as if he or she had committed the offence in his or her individual capacity.
CONCLUSION
In the last decade, pioneer certificates have been issued to industries in the manufacturing, solid minerals, telecommunications, food production, processing and agriculture, scientific instruments, construction services, gas and industrial power, utility services, real estate development, tourism, information and communication technology, and other related pioneer sectors of the Nigerian economy. More recently however, there appears to be a paucity of fresh applications or consciousness of the business benefits and effectiveness of pioneer approvals in Nigeria.
Multiple taxation and infrastructural challenges continue to overwhelm existing and new businesses. Investment promotion agencies of government with independent chambers of commerce and other business stakeholders should enlighten their members through institutionalised pressure groups to bring certainty to establishing enduring businesses in Nigeria while taking advantage of the existing statutes like the one on pioneer companies and the tax relief that they enjoy.
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This Alert and others produced by us are provided without any charge to you. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
You are equally permitted to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm.
Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert Tourism & Hospitality Regulations in Nigeria
 
In this Issue:
1. Legal Alert for October, 2009 – Tourism and Hospitality Regulations in Nigeria
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice.
Legal Alert for October, 2009 – Tourism & Hospitality Regulations in Nigeria.
The objective of tourism and hospitality development and promotion in Nigeria continues to meet with minimal success due to lack of basic infrastructure and enlightenment on the economic, social, political and health benefits of tourism and the hospitality industries. Nigerians prefer to travel overseas for their vacation and health care needs to the disadvantage of the very large tourism potential in Nigeria. To address this problem, the Nigerian government enacted another Tourism Law to promote, develop and regulate tourism and hospitality businesses in Nigeria.
Nigerian Tourism Development Act, 1992
The Nigerian Tourism Development Corporation Act established the Nigerian Tourism Development Corporation (NTDC) as the statutory authority empowered to promote, develop and regulate tourism and hospitality businesses in Nigeria. NTDC is also required by statute to among other things encourage people living within and outside Nigeria to take their holidays in Nigeria, in addition to encouraging the provision and improvement of tourism amenities and facilities in Nigeria. The latter responsibility includes the encouragement of the development of Hotels and their ancillary facilities necessary to promote tourism.
It is also the statutory responsibility of NTDC to register, classify and grade tourism, hospitality, travel agencies and tour operators' establishments in Nigeria. The Hotel Inspectorate Division of NTDC is charged with this responsibility of registering, classifying, grading and monitoring Hotels and other Hospitality businesses in Nigeria. Annexed to the NTDC Act is the Hospitality and Tourism Establishments (Registration, Grading and Classification) Regulations. NTDC has the power to suspend or revoke a certificate of registration. The exercise of this power can however be appealed against, administratively and judicially.
States & Local Governments Tourism
All the thirty-six (36) States in the Federal Republic of Nigeria are required to have a State Tourism Board. Each State Tourism Board has the responsibility of assisting NTDC in the implementation of the promotion and development of tourism, in its entirety in that State, to the benefit of the entire Federation of Nigeria.
Each Local Government Area in each of the thirty-six (36) States of the Federal Republic of Nigeria also has established for them, statutorily, a Local Government Tourism Committee (LGT Committee) which has the responsibility of recommending to the NTDC Tourism Board, tourism projects in that local government area for the enhancement of tourist attractions, the preservation and maintenance of monuments and museums, among other functions.
NTDC Inspectors & Cooperation of Hospitality Establishments
All proprietors and managers of hospitality and tourism establishments are required by the NTDC Act to provide full cooperation to NTDC Inspectors in the discharge of their statutory duties. Where any person, whether a proprietor, proprietress, owner, manager, agent, employee or howsoever described delays or obstructs an inspector or fails to provide the required information or cooperation in the execution of the Inspectors statutory duties under the NTDC Act, such a person commits an offence which on conviction carries a fine of N1,000 or a term of imprisonment of one month, or to both the term of imprisonment and the fine.
Hospitality & Tourism Establishments (Registration, Grading & Classification) Regulations, 1995
No person is authorised, under any circumstances, to operate a hospitality or tourism establishment unless he or she has applied for and obtained and remains in possession of a current NTDC certificate of registration specifying the owner of the establishment where the hospitality or tourism business is carried on, the premises, etc. The only exception to this NTDC registration rule are premises used exclusively for boarding persons in religious, educational or charitable institutions, charitable places for the handicapped persons and children, private houses, furnished apartments used for residential periods not exceeding one month, government guest houses and lodges, etc.
The owner of a hospitality and tourism establishment must within sixty (60) days from the date of its commencing business operations apply to NTDC for an annual renewable registration, classification or re-classification of its hospitality or tourism establishment. The application for registration, classification or re-classification must be accompanied by the prescribed NTDC fees and such other documents as may be reasonably required by NTDC.
Every NTDC certificate of registration expires on the 31st day of December of the year in which the NTDC certificate was issued.
The Owner of every hospitality or tourism establishment is mandatorily required to display its NTDC certificate of registration in a prominent place at its reception desk. The owner of such an establishment is also required to display outside its premises, the sign provided by NTDC indicating the name of the establishment, its classification and grading status. Any owner or manager who uses a star or crown sign other than as classified or graded by NTDC commits an offence which on conviction attracts a fine of N5,000.
Also, any owner or manager who fails to apply for NTDC registration within sixty (60) days of its commencement of operation is liable on conviction to a fine of N5,000 in the first instance and a further penalty ranging from N1,000 to N2,000 for every week, after the period of registration has expired and registration is not effected.
All owners of every tourism and hospitality establishment involved in charter or tour services are also required to register their establishment with NTDC in addition to obtaining from a reputable insurance company a business guarantee bond in the minimum amount of N500,000 against all fiduciary liabilities of such an establishment.
Checklist for NTDC Hospitality & Tourism Establishments Registration
Subject to such additional requirements as NTDC may prescribe, the following must be presented for registration to be considered: -
(a) NTDC Application form and fees;
(b) Completed registration documents;
(c) Evidence of good character and capability of operating or managing a hospitality or tourism establishment;
(d) The Hospitality or tourism premises is structurally adapted to the Hospitality or Tourism business;
(e) Proper sanitation is provided in the designated premises;
(f) Uninterrupted electricity, portable water, proper fire fighting equipment and adequate security must be provided;
(g) Proper provision is made for the storage, preparation and serving of food;
(h) The premises complies with health requirements in force in Nigeria;
(i) The establishment will be conducted in an efficient manner;
(j) The premises will not harbour criminals.
Conclusion
NTDC continues to publish the advantages of tourism to the people living within and outside Nigeria. The infrastructure deficiencies in Nigeria however remain a great challenge in reversing an otherwise detoriorating culture and apathy to tourism generally in Nigeria. The State and Local Government areas tourism bodies are not visibly functional to assist NTDC in covering a country with a vast land mass as Nigeria. The efforts of NTDC and private investors will be greatly enhanced if these problems are resolved.
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This Alert and others produced by us are provided without any charge to you. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
You are equally permitted to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm.
Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert Lagos State Consumption Tax Law
 
In this Issue:
1. Legal Alert for September, 2009 – Lagos State Consumption Tax Law
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice.
Legal Alert for September, 2009 – Lagos State Consumption Tax Law
Declining oil revenues with declining infrastructural facilities that are unable to match an over-populated State, etc has led to the Lagos State Government passing into Law the Lagos State Hotel Occupancy, Restaurants and Events Centres Consumption Tax Law, 2009 (the Lagos State Consumption Tax). This Law imposes a five per cent (5%) tax on all goods and services consumed in Hotels, Restaurants and Events Centres' situated within the territory of Lagos State.
Despite the five per cent (5%) charge being excluded from being charged on the existing five per cent (5%) Value Added Tax charge (and service charge), establishments in the Hospitality, Tourism and entertainment industries are opposed to this tax on legal and cost-of-doing business grounds.
This Alert considers what the Consumption Tax provides for, with the grounds of the opposition to it. This will keep you informed on how it affects you, the final consumer.
The Consumption Tax
The five per cent (5%) consumption tax, which excludes the existing charge on VAT and service charge, is charged on the consumer of goods and services in hotels, restaurants and events centres which operate within the territory of Lagos State. The Owner, Manager or Controller of these kinds of business establishments are mandated to collect this tax on behalf of the Lagos State Government and remit the tax collected to the Lagos State Inland Revenue Service (LIRS).
All Hotels, Restaurants and Events Centres affected by this Law must within a period of thirty (30) days of the commencement of this Law or the commencement of the business of the operators of such an establishment, register with LIRS for the application of the provisions of this Law.
All consumption tax collected must be reported and remitted to LIRS on or before the 20th day of each calendar month. Failure to make a return or effect a remittance, or where a return or a remittance are not substantiated by the record of the business establishment concerned, LIRS may use its best of judgement to estimate the amount of the consumption tax payable for the relevant period, and the estimate must be paid by the collecting owner/agent within twenty-one (21) days of the service of the order on the collecting owner/agent.
Any Consumption Tax that is not remitted within the prescribed period shall in addition to other penalties prescribed by the Consumption Tax Law bear interest at the rate of five per cent (5%) per annum above the Central Bank of Nigeria (CBN) minimum rediscount rate as is determined by the CBN at the time of the actual remittance. A collecting owner/manager/agent who in addition fails to file a report and remit the consumption tax collected within the time required is in addition liable to pay a further penalty of ten per cent (10%) of the amount due. A Director, Manager, Officer, Agent or employee who fails to comply with this Law is equally guilty of an offence and liable on conviction to a penalty of six (6) months imprisonment or a fine of N2,000,000 (Two Million Naira) or to both the term of imprisonment and the fine.
Any owner, manager, controller or collecting agent has a right to appeal in the first instance to the Chairman of LIRS within seven (7) days of his receipt of a consumption tax assessment requesting the revenue service to review, amend or reverse the assessment. Where the appeal fails, the Owner or the collecting agent has the right of further appeal against such a decision to the Lagos State High Court.
The Lagos State Sales Tax Law is exempted from applying to the premises to which the Lagos State Consumption Tax Law already applies; i.e. Hotels, Restaurants and Events Centres'.
VAT vs. Lagos State Consumption Tax Law
To prevent multiple taxation and the anarchy associated with it, the old Sales Tax Act was abrogated and in its place, Value Added Tax (VAT) was introduced for application to the entire federation (and states) of Nigeria. VAT, which is also a consumption tax, is charged and paid on the supply of all goods and services other than such goods and services which are expressly exempted under the VAT Act.
VAT, like the Lagos State Consumption Tax, is charged at the flat rate of five per cent (5%) of the goods or services enjoyed by the ultimate consumer. Unlike the Lagos State Consumption Tax which is solely for the benefit of the Lagos State Government, VAT is administered by the Federal Government of Nigeria Agency, the Federal Board of Inland Revenue (FBIR), with the proceeds of VAT being distributed under an agreed formular by the 36 States of the Federation of Nigeria. It has been contended that firstly, VAT as presently administered, is against the principle of federalism and secondly that its distribution formula is extremely inequitable in the light of the fact that a large percentage of VAT collected in Nigeria is from businesses situated in Lagos State.
The Taxes and Levies (Approved List for Collection) Act, 1998 also does not accommodate State Governments enacting for their own States, a separate Consumption Tax. The Supreme Court decision in Attorney General of Ogun State v. Alhaja Ayinke Aberuagba (1997) 1 NRLR (part 1) 51 @ 60 held that a State Law on consumption tax might be void on the ground of covering the field where identical legislations, without any inconsistency on the same subject matter, were made by a State and by the Federal Government. In such a situation, the State Law must give way to the Federal legislation. However, the Ogun State Sales Tax Law was declared null and void by the Supreme Court in this case because the Law imposed a tax on goods and services brought into the State which was a matter of inter-state trade and commerce which is within the exclusive legislative power of the Federal Government.
The Taxes and Levies (Approved List for Collection) Act, 1998 was not applicable at the time the Aberuagba matter was decided by the Supreme Court. Equally instructive on this matter are the provisions of the 1999 Construction of the Federal Republic of Nigeria, 2nd Schedule (part II) paragraphs 9, 18 and 19, which authorises a State House of Assembly to make laws for the collection of any tax, fee or rate, or to make laws for the industrial, commercial or agricultural development of a State. Section 4 (7) of the 1999 Constitution also empowers a State House of Assembly to make laws for the peace, order and good government of the State in respect of any matter that is not included in the exclusive legislative list, or any matter included in the concurrent list or any other matter with respect to which it is empowered to make laws by the provisions of the 1999 Constitution.
Conclusion
It is arguably the case that Nigeria is one of the countries in the world that is perceived to have some of the highest cost of doing business as a result of the lack of basic infrastructural facilities and multiple taxation. The co-existence of VAT with the Lagos State Consumption Tax will only exacerbate these perceptions to the further peril of all the economies, State or Federal, in the Federation of Nigeria. The inability to equitably restructure the distribution of VAT proceeds, or to increase its charging rate while reducing the tax rates for personal and corporate taxes makes a strong case for the transfer of its administration to each individual State in the Federation of Nigeria for VAT to be charged on goods and services distributed within that State while the Federal Government administers VAT on goods and services within its direct jurisdiction, i.e. matters on the exclusive legislative list.
Subscribe & Unsubscribe to Legal Alerts
This Alert and others produced by us are provided without any charge to you. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
You are equally permitted to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm.
Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert Stamp Duties Law & Enforcement
 
In this Issue:
1. Legal Alert for August, 2009 – Stamp Duties Law & Enforcement in Nigeria.
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice.
Legal Alert for August, 2009 – Stamp Duties Law & Enforcement in Nigeria
The recent economic down-turn and governments' need to expand their revenue base brought about the resuscitation of the legal requirement that all written instruments in Nigeria, of a contractual nature, must be stamped. This development has led to some disquiet in the business community where many practitioners are curious to know the legal basis for this "new tax" requirement.
Stamp duties payment is one of the oldest imposed tax. It is true that stamp duties is the least recognised and enforced of all the taxes and duties in Nigeria. However, in modern times, the legal requirement that all written documents must be stamped obviously affects everyone's day-to-day business life.
Stamp duties payment matters are governed by the Stamp Duties Act, cap 411, Laws of the Federation of Nigeria, 1990. This legal alert gives you a synopsis of what the Stamp Duties Act regulates.
Stamp Duties Act
Stamp duties, unlike other forms of taxes or duties, are taxes on written documents as opposed to taxes directly imposed on individuals or their transactions.
The care for and the management of stamp duties in Nigeria is imposed on the Commissioner for Stamp Duties. The Federal Government of Nigeria is the only competent authority allowed to impose, charge and collect stamp duties on written instruments between one incorporated company and another incorporated company or individual. The converse is the case that State Governments impose, charge and collect stamp duties on written instruments that are executed between individuals only.
Unlike other taxes, the decision not to stamp a written document does not attract a criminal penalty as it only bars such a written document from being admitted in evidence in a civil judicial proceeding. Thus, until a written document is stamped at the Stamp Duties office by the payment of the applicable stamp duties on the document, such a document will remain inadmissible. See Section 22 (4) of the Stamp Duties Act.
Generally, stamp duties is charged at the rate of 75k on every N50 of the consideration of a conveyance. For other kinds of written documents, various rates of charge are imposed as stamp duties.
In the term of implementation, a written document is stamped by the affixing of adhesive stamps on it or the affixing of what is known as a die to the material or written instrument.
Every written instrument which is required to be stamped with an adhesive stamp must be stamped on or before its execution. In practice however, a grace period of forty days from when the written instrument is executed is allowed before a penalty accrues on the document for late presentation for stamping.
Any person presenting a written document for stamping after the date of its first execution must pay a penalty which includes (i) the unpaid stamp duty; (ii) a penalty of N20 or such sum as is charged by the stamp duty office; (iii) interest on such duty at the rate of ten per cent (10%) per annum from the day when the instrument was first executed up to the time when the unpaid duty is paid.
Conclusion
Barring any special reason, it is always recommended that sensitive business documents should be stamped before or immediately they are executed. There are stamp duties offices all over the federation of Nigeria who are always willing to provide applicants with information and assessment of what it will costs them to stamp their documents. This is a preferred option to none stamping of your written documents.
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