Government focuses on 34.2m Nigerian tax evaders to raise funds for infrastructure

In a bid to provide needed infrastructure to fast track economic development, Nigeria is intensifying efforts at focusing on the estimated 34.2 million employed Nigerians and 23 million firms out of a record of 37 million SMEs who evade tax.
Part of this effort was the launching of Voluntary Assets and Income Declaration Scheme (VAIDS), last week by the acting President, Yemi Osinbajo, to promote compliance and generate more revenue to fund development and provide infrastructure for Nigerians.
Babatunde Fowler, executive chairman, Federal Inland Revenue Services (FIRS), confirmed this to BusinessDay last weekend that out of calculated 81.2 million Nigeria’s workforce about 34.2 million, about 65 percent, were outside tax bracket, saying in 2016, the country celebrated the addition of N27 billion to the national treasury from a novel idea of tax collection.
Speaking at Association of Advertising Agencies of Nigeria’s (AAAN) 44 congress in Lagos with the theme ‘Fresh thinking,’ Fowler said there was waiver of penalty and interest programme, saying, “FIRS offered tax amnesty to taxpayers in default of payment of taxes between 2013 and 2015.”
According to Fowler, the defaulters were allowed to pay the actual taxes owed while the penalty and interests were waived, and “this was with a proviso: that they declared their indebtedness, paid 25 percent of the principal amount and present a payment plan on the outstanding tax liabilities acceptable to the service.
“What we are trying to do is to encourage individuals and corporates to come forward and register,” he told the advertisers, who have been going through excruciating time due to the recession.
He further said there was improved collaboration with the Joint Tax Board (JTB), on registration of new taxpayers, audit and taxpayers education.
“States are peer reviewing each other on the new taxpayers’ target. While FIRS registered 814,000 new corporate taxpayers in 2016, the 36 states under JTB registered 3.4 million additional corporate taxpayers, bringing Nigeria’s taxpayers base to 14 million as at December 2016,” he said.
In a separate discussion with BusinessDay, the lead partner of Andersen Tax in Nigeria, Olaleye Adebiyi, agreed that over 65 percent of taxable Nigerians do not pay tax.
Instead of laying the whole blame on the tax defaulters, Adebiyi who started his career in 1991 with Arthur Andersen, said various state governments are not doing enough to bring more Nigerians in to the tax bracket.
He also attributed tax default to weak enforcement of tax laws due to tax authorities’ lack of capacity.
Adebiyi, who was speaking to BusinessDay recently in an interview, linked the lacklustre attitude of state governments to collect tax, which he expected would boost their revenue to heavy reliance on federal allocation. “Many of the states have been depending on federal allocation for too long and they are not aggressive in collecting taxes to generate revenue from individuals and firms”.
“Government is not doing enough to bring more people into tax net. There are so many people outside the tax bracket. In a particular state the gap between registered voters and taxpayers is wide. For the small businesses, many of them don’t pay tax. Again many people are not paying the actual amount”.
According to him, developed countries depend on tax to run government stating that when people pay tax, they can also hold government accountable.
While advising state governments to encourage their citizens to pay tax, Adebiyi equally urged the state governments to show evidence of tax money collected to inspire more Nigerians to pay tax.
More states are however picking up in tax collection, perhaps due to the bite of recession, Adebiyi whose firm which is making entry into Africa with specialisation on Tax Advisory & Regulatory Services, Transfer Pricing, Energy & Infrastructure, Consumer & Industrial Markets, Tax Adjudication/Litigation and Family Wealth and Private Clients, said.

 

Daniel Obi