- Asks c’ttee to expand Nigeria’s treaty network to include major trading partners
Ndubuisi Francis in Abuja
The federal government has inaugurated a committee for the review of the National Tax Policy (NTP) in order to make it conform with global best practices as well as align with the nation’s socio-economic realities.
The committee, will among others, expand Nigeria’s treaty network with other countries to include major trading partners as well as review the existing Double Taxation Agreement.
The Minister of Finance, Mrs. Kemi Adeosun, who inaugurated the committee in her office in Abuja yesterday, said the move was aimed at entrenching an improved tax policy to effectively harness the much-needed resources necessary for the nation’s sustainable economic growth and development.
The committee, which has four weeks to complete its assignment has six terms of reference, including a review of the National Tax Policy document, and recommend a list of tax laws and regulations that need to be reviewed or amended.
It is also to make any other suggestions on the NTP with a view to facilitating the effective implementation of the document, recommend policy to ensure inter-agency cooperation between the Federal Inland Revenue Service (FIRS) and other revenue agencies towards enhancing the internally generated revenue (IGR) of the federal government.
The committee chaired by Dr. Abiola Sani is to equally expand the treaty network of Nigeria to include the nation’s major trading partners and review the existing Double Taxation Agreement.
Another term of reference is for to ensure that tax laws are reviewed from time to time to minimise avoidable hardships to taxpayers
“As keen as we are to grow revenues and improve our tax collection, we are equally determined to ensure that our taxes are simplified. The task of growing tax revenue must be pursued with a human face and sustainability in focus.
“The relevant unit of the Ministry of Finance will be strengthened to enable it play a more vibrant role in tax policy formulation,” Adeosun said.
History, she noted was made in 2012 with the introduction of the National Tax Policy, which contains a set of fundamental principles, which should serve as guide or barometer in determining what legislative and administrative action the tax system may require.
She added that the Policy builds on the set of principles espoused by Adam Smith in his wealth of nations which include equity, certainty, convenience, and administrative efficiency.
“However, it is over four years now since the document was finalised without any additional updates and it is yet to be fully implemented. In a rapidly changing commercial environment with new business models, tax avoidance and evasion strategies among other activities, a tax policy can not be static.
“The review will be a continuous exercise, as a means of evolving with global best practices and keeping with the domestic socio-economic realities. Government shall indeed remain committed to the continuous improvement of our tax system as part of a dynamic framework to enhance compliance,” she stated.
Adeosun said the current administration was committed to diversifying the sources of government revenues away from oil, which is just 13 per cent of the economy but accounts for 70 per cent of government revenue.
“Our challenge is to ensure that the other 87 per cent of economic activity makes its own contribution to government revenue. An effective tax system is key to this and such as system must be underpinned by an effective and appropriate tax policy.
“Nigeria has one of the lowest tax to GDP ratios in the world at just five per cent There is clearly a pressing need for an overhaul of our tax policy and this is a key function of the Ministry of Finance.
“Businesses react to tax policy and we are determined to ensure that ours sends the right message being that Nigeria is open for business and is encouraging businesses with a tax system that is easy to understand and comply with.
“Areas of our tax code and laws that are in need of review will be addressed as part of this exercise as will modalities for simplifying our processes and reducing the tax burden on small businesses,” she assured.