•Ahmed seeks review of incentive regimes
•Tax revenue still below the OECD average of 35.5%, says CITN boss
James Emejo in Abuja
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, yesterday said taxing new business models and their profits in an increasingly digitalised economy has remained a challenge for the government.
Speaking at the opening of the 25th Annual Tax Conference (ATC) with the theme: “Nigeria of the Future: Achieving Sustainable Development through Taxation”, which was organised by the Chartered Institute of Taxation of Nigeria (CITN) in Abuja, the minister stressed the need to critically analyse the solutions to address the tax challenges of the digitalised economy as well as the global minimum tax regime.
Ahmed, also called for a rethink of the government’s incentive regimes and approaches in granting tax incentives in order to strike a balance between stimulating economic growth and generating revenue to fund government business.
While commending CITN for its enviable and valuable contributions to national development over the years, the minister also urged tax practitioners and administrators to come up with robust recommendations to better harness domestic revenues for sustainable financing.
Represented at the occasion by the ministry’s Director, Tax Policy, Mr. Ahmed Abubakar, the minister reiterated the commitment of the federal government to work with the institute in order to take the nation’s tax system to greater heights.
She, therefore, tasked the conference to reflect critically on the issues and use the opportunity to discuss the country’s tax rules in the ever-changing business models.
Ahmed, said the theme of the conference represented a clarion call to reposition the Nigerian economy for greater accomplishment, stating that Nigeria’s low revenue to GDP as well as tax ratio to GDP has been a recurring challenge over the years.
She said no nation would make meaningful progress without its ability and predictability of her earnings, hence, the need to shift focus to how to generate more revenues that will sustain the economy for greater development.
She said the federal government had carried out extensive fiscal policy reforms through the annual Finance Act.
According to her, “Between 2019 and 2020, three Acts have been enacted by the Finance Bill pending before the National Assembly. The primary objectives of these Acts are to progressively reform the fiscal environment and enhance non-oil revenue while supporting the implementation of the annual budgets.
“It is also to ensure that we are responsive to tax reforms which are necessitated by the dynamic and ever-changing economic business environment.
“The main aim of the various finance acts is to reinforce the administration’s public financial management reforms and accelerate domestic revenue mobilisation.”
She pointed out that, “Currently, non-oil revenue has become more stable than oil revenue; for the first in history, the FIRS crossed the N10 trillion mark in revenue collection with total collection of N10.1 trillion. Non-oil taxes contributed 59 per cent or N5.96 trillion while the oil tax stood at 41 per cent or N4.09 trillion.
“Towards improving the non-oil revenue receipt, the tax administration will be improved and efforts would be sustained to expand the non-oil revenue base. In addition, the tax system will be further strengthened in the medium term to strengthen collection, efficiency, enhancing compliance and reorganising the business practices of revenue agencies as well as employing appropriate technology.”
The minister added that going forward, efforts would be made to bring more businesses in the informal sector into the tax net.
Also, speaking at the conference, Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami, stressed that the digitisation of the economy and its tax challenges constituted a critical area that would shape taxation in the country in particular and the world in general.
Nami, highlighted the 2021 OECD Inclusive Framework on Base Erosion and Profit Shifting, which proposed a two-pillar solution for the tax challenges from the digitalised economy which Nigeria didn’t endorse as a result of the projected negative impact on the country’s revenue.
He said while discussions on the subject matter was ongoing, Nigeria would ensure it explores all avenues and options to optimally maximise the benefits of the two-pillar solution.
Represented by the FIRS Coordinating Director, Mr. Abubakar Lawal, Nami further noted that the service was faced with huge expectations to fund the federation adding that as such, it becomes necessary that all hands are on deck to ensure that no stone is left unturned in its tax to revenue mobilisation drive.
He called on all relevant professional bodies to join efforts with the FIRS and enhance collaboration towards ensuring that taxpayers are professionally guided and advised in order to achieve optimum tax revenue collection.
The President/Chairman of the Council, CITN, Chief Adesina Adedayo, said there was a fundamental gap between the country’s developmental potential and current realities.
He said while the FIRS may be commended for the giant strides recorded in tax collection, the judicious utilisation of the resources had been the subject of intense debate among Nigerians.
Adebayo pointed out that amid insufficient revenue from crude oil earnings, the fluctuating value of the naira, rising debt burdens, and increasing government expenditure, taxation have become the only “hope of the nation.”
He said, “However, it is apparent that the country has not effectively harnessed its tax revenue potential. It is also general knowledge that Nigeria’s Tax to GDP ratio is considered a serious cause for concern when compared to others within Africa.
“Although there are several arguments on the subject, the fact still remains that it is below the OECD average of 35.5 per cent.”
