The Chairman of the Federal Inland Revenue Service, Mr Babatunde Fowler, has advised developing countries to grow Value Added Tax (VAT) and revenue from the digital economy in order to lessen dependence on income from natural resources.
Fowler, who is also the First Vice Chairman of the United Nations International Committee of Tax Experts and Chairman, African Tax Administration Forum (ATAF), was quoted in a statement to have given the advice in New York in an address delivered at the opening of the Meeting of the United Nations’ Economic Council (ECOSOC) on Taxation on and Digitalisation of the Economy and Taxation of ODA-Funded Projects recently.
He stressed that developing nations should focus on taxation, as they have no control over prices of goods produced by developed economies from the natural resources they export.
Using technology to capture all the VAT available, Fowler said Nigeria, in the last one year, has increased its tax revenue base by 800,000 corporate accounts and grown non-oil tax revenue to a stage that it accounts for 64.3 per cent of total revenue from 42.8 per cent between 2012 and 2014.
“We have moved away from an oil-dependent revenue source to a non-oil revenue source. At the same time, we have focused on VAT. VAT continues to be the fastest growing tax type in the world and I was quite amazed when the UAE spoke about introducing VAT,” he said.
Fowler, disclosed that Nigeria realised N767 billion from VAT in 2015, N828 billion in 2016 and N972 billion in 2017, a growth of about 25 per cent, a development he ascribed to political will, international collaboration and cooperation of the judiciary, which recently yielded a favourable judgement over Vodacom in the case of VAT liability for a non-resident company.
He urged other developing countries to follow the Nigerian example, which according to him includes tax treaties that assist collection and remittance.
He maintained that the only way to ensure sustainable socio-economic development would be through taxation and called on developing countries to reform their tax processes.
Fowler, noted that 90 per cent of items produced in developed economies are sold in developing economies, depriving that latter of profits and taxes.