Lagos, June 16, 2023: Stakeholders have advised government to pursue initiatives that will widen tax net instead of increasing taxes to reduce the burden of taxation in the country.
They spoke in Lagos during the fifth symposium of Issuers and Investors Alternative Dispute Resolution Initiative (IIADRI) Clinic with the theme: “Nigeria Tax Law: Matters Arising.”
The Chairman, IIADRI, Mr Sebastian Udoh, noted that increasing taxes may become imminent due to the huge national debts inherited by the new government amidst global and national economic challenges.
Udoh, however, urged government to expand its tax net rather than increasing tax rates to protect Nigerians companies.
He noted that while the country’s external and internal debt stock was put at N80 trillion, its revenues from oil and non-oil sector dropped by 60 per cent and 3.7 per cent respectively as at Feb 2023.
Udoh added Nigeria recently witnessed some fiscal and monetary policy changes such as currency redesign and fuel subsidy removal in the midst ofthe debt overhang.
He, however, emphasised the need for companies in Nigeria to adopt coping mechanisms amid increasing taxation to mitigate its impact on their operations and profitability.
“Expectedly, Nigeria has just witnessed a change in government.
“Is the government likely to look in the direction of tax increase or tax expansion?
“What would be the best tax policies that this government should adopt that are capable of engendering corporate growth?
“This is why this symposium comes up with recommendations to companies on how to manage the tax regimes, take advantage of tax incentives, embrace pioneer status and avoid taxes legitimately,” he said.
President, Lagos Chamber of Commerce and Industry (LCCI), Dr Michael Olawale-Cole, said the timing of the event was right seeing that the business community was currently in search of solutions to remain sustainable.
Cole noted that some key challenges faced by the Organised Private Sector include multiple tax authorities, multiple regulations, current tax laws that favour the digital economy and high corporate tax rate.
Others, he said, were inconsistent enforcement, lack of transparency and accountability and a narrow tax base, among others.
The LCCI boss also emphasised the need for government to expand the tax-base rather than increasing the tax rate.
According to him, increasing tax rates will have detrimental impact on companies’ operations.
“This event is geared toward encouraging stakeholder collaboration, bringing about resolutions, and re-energising collaborative measures needed to promote sound corporate culture and strong ethics in the economy
“The event is appropriate because this is the time when the business community is in search of solutions to various challenges faced by corporations vis-à-vis tax law and tax administration in the country,” he said.
President, Manufacturers Association of Nigeria (MAN), Mr Francis Meshioye, described taxes as a powerful tool systematically managed by government to control the state of the economy.
Meshioye noted that the amount of revenue government could raise through taxes and the success of enterprises was dependent on the health status of the economy.
He, therefore, urged government to manage and properly coordinate its taxation activities in the interest of the economy, particularly the manufacturing sector which currently was beguiled by the harsh operating environment.
Meshioye noted that MAN had over the years lamented the burden of multiple taxes, fees, and levies imposed by all tiers of government on its members.
According to the MAN president, the upward the excise duty as contained in the 2023 fiscal policy measure came as a rude shock without consideration to the current hardship the real sector faced.
Meshioye pointed out that in 2022, the burden of indirect taxes on Nigeria rose by approximately 19 per cent, noting that the burden of taxes was fast decapitating industrial activities in the country.
“MAN appreciates the current call by the past administration for a committee to look into the issue of excess taxes in the country.
“Until this issue is completely resolved, the perennial huge tax burden the government is levying on the manufacturing sector will continue to adversely affect the sector’s operations and competitiveness,” he said.