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Appraising the Public Notices issued by the Lagos State Internal Revenue Service and the Joint Tax Board

Second, it would appear that the tax authorities presume that Section 16 of the PRA sets exhaustive rules for withdrawals from RSAs and subjects to tax any withdrawal made otherwise than in accordance with its provisions. However, a closer scrutiny of Section 16 would show that the section generally provides for the circumstances under which withdrawals may be made from the RSA and does not in any manner attempt to specifically set rules for VPC withdrawals. It is admitted that since VPCs are deposited in RSA, any withdrawal therefrom would amount to withdrawal from an RSA which will come within the ambit of Section 16 of PRA. However, it is doubtful that the tax authorities can apply Section 16 to override Section 10(4) such that any withdrawal made in contravention of Section 16 will be subject to tax or that income earned from VPC will be subject to tax where the withdrawal was made after 5 years of the voluntary contribution. This is especially so, in light of the fact that Section 10(1) of the PRA commences with the phrase “Notwithstanding the provision of any other law…”

Third, a deeper look at Section 5(7) of the Labour Act raises some concerns as to its applicability to the issue at hand. Though the section rightly limits the total allowable deductions from the monthly wages of a worker to one-third of the wages of the worker for that month, it is doubtful if such limit can be extended to voluntary contributions. It would appear that such limit is intended to be a statutory shield for workers in respect of permissible mandatory deductions to which their wages may be subjected and such deductions seem to be restricted to those listed in the preceding subsections – reasonable amount of fines for injury or loss caused to the employer by the willful misconduct or neglect of the worker; pension contribution such as is obligated under the CPS; membership dues to any recognized trade unions; and refund of overpayment of wages. Therefore, since VPCs are being made by the worker as a means of savings (employers would only be involved as mechanism for effecting the payment), they do not fall within the category of “deductions” covered by the said Section 5 of the Labour Act and a worker cannot be legally restricted from making voluntary personal savings from his legally earned income nor can the amount of such savings be capped.

Further regarding the applicability of Section 5 of the Labour Act, the definition of a “worker” under Section 91(1) of the Labour Act clearly excludes certain cadre of employees from the ambit of the Act. These are:

  1. Any person employed otherwise than for the purposes of the employer's business;  or

  2. Persons exercising administrative, executive, technical or professional functions as public officers or otherwise; or

  3. Members of the employer's family; or

  4. Representatives, agents and commercial travelers in so far as their work is carried on outside the permanent workplace of the employer's establishment; or

  5. Any person to whom articles or materials are given out to be made up, cleaned, washed, altered, ornamented, finished, repaired or adapted for sale in his own home or on other premises not under the control or management of the person who gave out the articles or the material; or

  6. Any person employed in a vessel or aircraft to which the laws regulating merchant shipping or civil aviation apply;”.