Mrs Latifat Balogun is the CEO of Hatlab place, Abuja. In the past months, she has paid different taxes in different guises. She narrates her experience.
“The Federal Capital Territory is collecting one; Abuja Municipal Area Council (AMAC) is charging another one. Sometimes, the FCT will call it business premises charges, while AMAC will call it petty licensing for businesses and shops. We have things like tenement rates. This has increased our operational expenses,” Balogun says.
“For instance, if I have to supply goods/furniture in Kwali Area council, I have to get their license which is valid for a year even if it’s one day delivery. If the truck goes to another area council, it has to get their documentation as well. If we don’t do this and they arrest our drivers, we have to pay a fine. A lot of them are unnecessary and unexpected taxes. This is costing us as business owners,” she explains.
Under the current Nigerian laws taxation is enforced by the three tiers of government, federal, state and local governments. These are enforced and guided through various laws and agencies which include the Income Tax Management Act, Companies Income Tax decree, Joint Tax Board as well as few others. All these were created with the purpose of ensuring strict adherence to tax payment and to discourage the issue of tax evasion. However, Nigerians still decry the amount and number of taxes levied on them and their businesses.
In a study titled Tax Compliance Costs of Small and Medium Scale Enterprises in Nigeria by Emmanuel Eragbhe and Kennedy Modugo (2014), published in the international Journal of Accounting and Taxation, they noted that Nigerian SMEs bear considerably high tax compliance cost, which reduces and stifles their innovation and growth. The study also reveals that on the average, “the SMEs overall Tax Compliance Cost (TCC) in Nigeria is about N108, 594 per annum and the values range from N14, 500 to N725, 000 per annum. Smaller SMEs were found to have an average TCC of N219, 601 per annum as against N123, 047 TCC per annum for larger SMEs, which implies the existence of tax compliance costs regression in Nigeria”.
An official of the FCTA who does not want his name in print says what the FCTA charges is fees for registration of business premise but a board is yet to be constituted for the FCT Inland Revenue Service Board. “When the board is constituted, then they will handle all issues of taxation,’’ he said.
The Chief Revenue Officer of Abuja Municipal Area Council (AMAC), Chief Danlami Awaje, said there is nothing like multi taxation in the area council.
He said the area council taxes are carried in relation to the provision of the council’s bye laws.
“ Generally whatever business you are doing as far as it is AMAC, aside the taxes paid to regulatory agencies for operating a business in the domain of AMAC , you have a duty to pay operational permit regardless of the business,” Awaje said.
“Every charge we bring to any organization it is backed up by our bye-law and any business owner that has issues with us, when he comes here we clarify the issue. If you operate your business within AMAC you have a duty to pay us taxes for that.
I agree that there are conflicting roles that is taking place between agencies of FCTA and the Area council because there are some places that you find public health going to ask for money, by constitution it is our duty backed by law,” Awaje explains.
He said harmonization of the taxes is not easily possible because the demands are not coming from the same agencies.
But business owners like Balogun said government should harmonise these taxes. “We are saying the government should look at it and harmonise all their taxes. Let them emulate what Kaduna state is doing. Kaduna state has a single document stating all the taxes a business owner will pay in a year. So, let them harmonise it and lets know what and what we are paying for,” Balogun explains.
She also has another plea. “The staff they send to enforce these laws should have a human face and not harass business owners around and shutting their businesses down. We don’t what to deal with agents we want to deal directly with government,” she said.