Minister of Finance, Ngozi Okonjo Iweala
Nigeria currently stand at 138 out of 183 countries in the country’s in the 2012 Paying Taxes report jointly published by the Price Waterhouse Coppers (PwC) and World Bank.
This, according to the report, reflected a decline, compared with the 134 recorded the previous year.
Speaking at a media briefing in Lagos at the weekend, Partner/Tax and Corporate Advisory Services Leader, PwC, Mr. Taiwo Oyedele, said the report showed that in Nigeria, a medium-sized company on average paid nearly one-third of its commercial profit in taxes and spends about 23 weeks in a year dealing with its tax affairs and make tax payment every 10 days.
“With this, Nigeria is far behind many of the leading investment destinations in Africa including Mauritius, which ranks 9, South Africa, 36 and Ghana 87, “he said.
He explained that the study also showed that a medium size company in the country paid 32.7 per cent of its commercial profit in taxes and also spent 938 hours to comply.
“Clearly the worst sub-indicator for Nigeria, which has been dragging the overall ranking down, is the amount of time required to comply with tax obligations. This covers the time required to comply with major taxes (hours per year) including collection of information, computation of tax payable, completing tax return forms, filing with relevant tax authorities, arranging payment or withholding and preparing tax accounting records and supporting documentation,” he said.
Continuing, he said: “The Paying Taxes results enable governments to benchmark their tax system with others on a like-for-like basis and to identify best practises. The study measures three separate aspects of paying taxes. Two of these relate to tax compliance burden and one to tax cost.
“Levying tax is not an easy task for government, especially in the wake of the global economic down turn.”
Oyedele, however, observed that going by the indicator, Nigeria ranked lowest in Africa and only ahead of three countries in the world namely; Vietnam (181), Bolivia (182) and Brazil (183) respectively.
“The enormous time required for tax compliance in Nigeria is a reflection of the bureaucratic, complex and cumbersome tax administration system in the country, “Oyedele said.
He further stated that the country had been slipping consistently on the Ease of Paying Taxes index because of slow and uncoordinated approach to tax reform while many countries have improved theirs significantly.
“During 2010/2011 covered by the 2012 study, 33 economies made it easier to pay taxes or reduced tax rates. Introducing electronic systems to make compliance easier was the most common feature of tax reform during the period, “he declared.