Ugo Aliogo and Oluchi Chibuzor
As Nigeria joined the growing number of countries that have introduced digital currency technology, taxation experts in the country have expressed the need for the Central Bank of Nigeria (CBN) and the Federal Inland Revenue Service (FIRS) to integrate and synchronize its operation on e-Naira for effective tax harmonization.
This according to the stakeholders at a business luncheon organized by the chartered Institute of Taxation of Nigeria (CITN) in Lagos would close necessary taxation gaps that may arise in the course of the auditing process in the country.
They maintained that transaction necessitates tax consequences and as such there is a need for a clear policy statement on the matter so that tax administrators can know what is ahead in the country to avoid retrospective policy.
With the theme, ‘Digital Currency Technology and e-Naira: Nature and Implications for taxation,’ the event was declared open by the Senate President, Ahmad Lawan, who highlighted the need for a well structured policy framework that captures the nations evolving economy that is migrating to a digitized world globally.
Lawan, represented by his Senior Adviser on Economic matters, Professor Nasifi Abdullahi, emphasized the imperative alternative financing source of funding for the Nigerian economy.
He however, pointed out that the ICT sector is now the second largest sector of the economy driving growth in the non-oil sector.
According to him, this trend poses as an opportunity for the nation to effectively harness.
He maintained that it indicates that the nation’s population, which is 65 percent for 35 years below is digitally savvy and economic activities are progressively migrating from the normal trading economic activities into cyberspace.
“Now, this is an opportunity to expand the economy and then improve incomes, but is also a challenge; how do you improve tax collection on economic activities that are progressive becoming digital, what is the level of tax that you need to impose that is not be too punitive to the growth of that sector, what is the affordability component, what are the challenges associated with avoidance.
“Our low tax-GDP-ratio is a challenge and also an opportunity, challenge in the sense that it indicates low tax collection. The aggregate collection since September this year is only four percent, so maybe many companies are not paying tax. Now the challenge is, if that is a problem at the federal level, to effectively collect the company income tax and with the advance capacity of the FIRS you can imagine the extreme losses that are happening at the national levels, “he said.
Chairman of Council, CITN, Adesina Adebayo said the session was instituted by the Institute to create an avenue to enable stakeholders deliberate, interact and discuss issues centered on taxation and other national issues in line with our statutory responsibilities as a professional Tax Institute chartered by law to promote the practice of taxation in the economic development of our dear nation, Nigeria.
He intimated that the outcome of the deliberations would be articulated as a position paper to the government and relevant stakeholders as input to policy formulation.
The representative of the Executive Chairman, FIRS and State coordinator Lagos Mainland West, FIRS, Mrs. Akpomedaye Tolu, said going digital has actually boosted its revenue collection.
She noted that with FIRS’s tax promax they are interested in how ICT will improve its operations and overall tax collection in the country.
In his presentation, the Director, System Management Department, CBN, Musa Jimoh said the Apex bank has been researching about digital currency since 2017.
He noted that the difference between eNaira and crypto currency was that it is issued and backed by law, adding that CDC will not disrupt any financial entities in the country as the CBN is looking at integrating eNaira into various payments gateways
He noted that the introduction would lead to reduction in cost of cash management, financial inclusion, improved monetary and financial stability policies, and poverty reduction.
