PENGASSAN Warns Against Taxing Voluntary Pension Contributions

PENGASSAN Warns Against Taxing Voluntary Pension Contributions

The Petroleum and Natural Gas Senior Staff Association of Nigeria has warned the Joint Tax Board and some state boards of internal revenue against taxing withdrawals from voluntary pension contributions.

While reacting to advertorials by the tax bodies, the association alleged that the bodies were threatening to forcefully impose taxes on withdrawals made by workers from their additional voluntary contributions contrary to the provisions of the Pension Reform Act.

The National Public Relations Officer, PENGASSAN, Fortune Obi, in a statement on Monday, said that such a step by the JTB and state boards of internal revenue could jeopardise the industrial peace being enjoyed in the country.Obi cited Section 4(3) of the PRA 2014, as stating, “Any employee to whom this Act applies may, in addition to the total contributions being made by him and his employer, make voluntary contributions to his Retirement Savings Account.

“Section 10 (4) of the Act further provides that ‘…any income earned on any voluntary contribution made under Section 4(3) of this Act shall be subject to tax at the point of withdrawal where the withdrawal is made before the end of five years from the date the voluntary contribution was made.’”

He noted that with these clear provisions, it was obvious that the tax authorities were over-stepping their bounds by attempting to place restrictions on withdrawals against the express provisions of the law.

Obi stated that it was the responsibility of the National Assembly to amend any section of the Act as deemed fit and that of the judiciary to provide interpretation where necessary.

He added, “Hence, it will be provocative for the JTB or state tax boards to unilaterally usurp the powers of the legislature and the judiciary by their planned and illegal move to tax such withdrawals.

“The tax authorities should be reminded that tax avoidance is the arrangement of one’s financial affairs to minimise tax liability within the scope allowed by law, and is distinct from tax evasion, which implies the illegal non-payment or underpayment of taxes due.”

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