Experts participating in the DETAIL Tax Business Series have recommended that the federal government shift its focus towards taxing consumption instead of production. This strategic adjustment aims to stimulate the growth of the Nigerian economy and combat inflation.
The panel discussion, themed ‘Finance Act 2023: Implications on the Tax & Fiscal Outlook for the New Administration and the Economy,’ highlighted the urgent need for Nigeria’s economy to overcome its current deficit of over N10 trillion, which stems from lower income generation and substantial allocations to debt servicing and recurrent expenses within the annual budget.
Moderated by Anthony Ezeamama, Associate Partner at Detail Commercial Solicitors, the panel featured insights from Esiri Agbeyi, Partner PwC Africa & Family Business Leader, and Ajibola Olomola, Partner and Head Deal Advisory, M&A, Tax, KPMG Nigeria.
Business owners have expressed concerns about the weight of multiple taxes on their enterprises, coupled with challenges such as infrastructure deterioration, insecurity, erratic power supply, and a scarcity of foreign exchange. The panelists emphasized the importance for the Federal Government and tax authorities to simplify or consolidate existing tax laws to address the issue of multiple taxation.
Additionally, the experts suggested that a viable solution lies in the adoption of a single tax collection agency for both the Federation and the States, a model that has proven successful in Kaduna State.
The panelists stressed the significance of expanding the tax net by incorporating more individuals and citizens, rather than merely raising tax rates. To achieve this, tax authorities should direct their efforts towards taxing individuals in the informal sector and unregistered businesses, while fostering greater collaboration amongst regulatory bodies.
Furthermore, the panelists underlined the importance of a citizen re-orientation campaign to instill a culture of tax compliance, even at the family level. Addressing the Finance Act 2023, they noted its introduction of roll-over relief on share disposals under the Capital Gains Tax Act.
Highlighting the Finance Act 2023’s objective related to climate change and green growth, the experts noted Nigeria’s ambition to adopt green practices by 2060. They also called for future Finance Acts to align with the AfCFTA’s vision of enhancing intra-Africa trade.
A revision was pointed out in the Value Added Tax Act, which now subjects transactions related to “towers” or “masts” for network operators to VAT, unlike previous definitions.
Regarding policy directives, the panelists recommended replicating the successful model of the Road Infrastructure Investment Tax Credit Scheme in other crucial sectors of Nigeria’s economy.
Additionally, they urged the federal government to clarify its policy stance on cryptocurrency to harness the benefits from the billions of US dollars in cryptocurrency transactions regularly conducted by Nigerians.
The DETAIL Tax Business Series was held on July 25, 2023, at DCS Place in Lagos. Organized by DETAIL, Nigeria’s pioneering commercial solicitor firm specializing in non-courtroom practice, the event provided a platform for insightful discussions on taxation and its implications.
