A law firm, Banwo and Ihodalo Chamber, has described the police levy fund, which mandates companies in Nigeria to remit 0.005 per cent of their net profit to the Nigeria Police Trust Fund, as unconstitutional.
According to an analysis by the firm, the new tax is tantamount to ‘double taxation and flies in the face of constitutional and international best practices’.
The firm reasoned that any company paying the levy would have already paid a 30 per cent company income tax and another two per cent education tax.
It said, “The net profit levy imposed on companies by the Act is effectively double taxation and flies in the face of constitutional and international best practices, as the levy is essentially paid from profits that have already been taxed.”
Speaking further, the law firm said the Police Trust Fund Act was silent on what the scope of a Nigerian company is.
The firm also notes that the law, which was signed by President Muhammadu Buhari on June 24, does not state if a company can meet the obligations of the levy from its taxable profit.
It added, “It also flies in the face of the Revised National Tax Policy issued by the Federal Ministry of Finance on February 1, 2017, which cites reduction in the number of taxes and avoidance of multiple taxation as part of the policy guidelines of the Nigerian tax system.”