Tax experts want the Nigerian government to review its tax laws to increase revenue generation

TAX practitioners are calling on Nigerian government to review the nation’s tax laws and its entire processes to increase its revenue and tax to Gross Domestic Product, GDP, ratio. Given Nigeria’s declining revenue base, the experts stressed the need for government to create a robust framework for taxing the informal sector and high net worth individuals.

The experts, who gathered at the maiden edition of GTL Trustees Limited ‘Annual Thought Leadership Roundtable Series’ held in Lagos, last week, noted that failure to tackle the myriads of problems besetting tax administration amid global outlook of low oil price would continue to limit the nation’s revenue base, and create some level of inequity in the system.

PricewaterhouseCoopers, PwC, a leading professional services firm, recently put Nigeria’s tax-to-GDP contribution at an abysmal six percent, adding that this is far less impressive compared with what obtains in other countries using the same socio-economic parameters where tax-to-GDP could be as high as 15 to 25 percent.

Taiwo Oyedele, partner, head, Tax and Regulatory Services, PwC Nigeria, said Nigeria’s low tax revenues was at variance with the lifestyle of a large number of its people and with the value of assets known to be owned by Nigerians resident around the world. In addition, he said despite having some of the most profitable and well capitalised companies in Africa, the level of tax remittance is low.

According to the Joint Tax Board, JTB, as at May 2017, the total number of taxpayers in Nigeria is just 14 million out of an estimated 69.9 million who are economically active. Nigeria’s tax to Gross Domestic Product, GDP, ratio is six percent, one of the lowest in the world (compared to India’s 16 percent, Ghana’s 15 percent and South Africa’s 27 percent. Most developed nations have tax to GDP ratios of between 32 and 35 percents.

Therefore, the experts suggested that tax reforms should be carried out urgently to effect relevant and necessary changes in the tax system and address both contentious and contemporary issues. Specifically, Yomi Olugbenro, a partner and West Africa tax leader, Deloitte Nigeria, regretted that some aspects of the nation’s tax system threaten the investment inflow, noting that government must adopt an approach that would help provide a workable tax system to boost its revenue earning capacity.

According to him, rather than compelling a larger percentage to be more tax compliant, government should deal with the issue of trust deficit. Trust deficit arises when citizens believe that government will not act in their best interest, and then it becomes harder for government to secure public support for reforms.

He added that taxes paid by the citizenry were meant to support government to provide social services and development projects hence when that contract was not being fulfilled, the government find it difficult to secure citizen’s support

Adewale Adegbite, managing director, Oasis Group Limited, urged government at all levels to accelerate technology adoption in tax administration to boost compliance and improve efficiency. He noted that leveraging technology for full electronic customer service would not only enhance efficiency, but also reposition the sector for the crucial journey of transforming the entire nation’s tax system.

Abiola Sanni, a Commercial Law expert and professor of Tax and Fiscal Matters, University of Lagos, argued that the recent economic recession had turned taxation to a ‘beautiful bride’ with far reaching implications for taxpayers. He noted that all the existing and future taxes are expected to align with equity, fairness, and simplicity with low cost compliance cost.

He listed non regular review of tax legislation, lack of strict adherence to tax policy direction and procedural guidelines for the operations of various tax authorities as major pitfalls, and urged government to exploit tax opportunities and grow the economy.

– Aug. 10, 2018 @ 16:45 GMT |