… To Reduce Burden on Small Businesses
The Minister of Finance, Mrs. Kemi Adeosun, who inaugurated the committee at the headquarters of the ministry in Abuja, stated that the government was determined to simplify the country’s tax code for effective revenue generation.
She stated that one of the areas of the tax code and laws in need of review was the simplification of the processes as well as the reduction of the tax burden on small businesses.
Adeosun said the country could no longer continue to rely on oil revenue following the volatility in the global market, hence the need to look at effective ways of generating more revenue from taxes.
She lamented that despite the fact that revenue from oil accounted for about 70 per cent of the nation’s earnings, the sector’s contribution to the Gross Domestic Product was just about 13 per cent.
Adeosun noted that time had come for the economy to begin to take advantage of the opportunities of the 87 per cent potential in the non-oil sector through the diversification strategy of the Federal Government.
She said, “This administration is committed to diversifying the sources of government revenues away from oil. Oil is just 13 per cent of our economy but accounts for 70 per cent of the government’s revenue.
“Our challenge is to ensure that the other 87 per cent of economic activity makes its own contribution to government revenue. An effective tax system is key to this and such a system must be underpinned by an effective and appropriate tax policy.
“Nigeria has one of the lowest tax to GDP ratios in the world at just five per cent. There is clearly a pressing need for an overhaul of our tax policy, and this is a key function of the Ministry of Finance.”
The minister added, “Businesses react to tax policies and we are determined to ensure that ours sends the right message that Nigeria is open for business and is encouraging businesses with a tax system that is easy to understand and comply with.
“Areas of our tax code and laws that are in need of review will be addressed as part of this exercise as will modalities for simplifying our processes and reducing the tax burden on small businesses.”
She said the committee, headed by Prof. Abiola Sanni of the University of Lagos, had four weeks to conclude its assignment.
Adeosun stated that the terms of reference of the committee would be to review the national tax policy document; recommend a list of tax laws and regulations that needed to be reviewed or amended; and make any other suggestion on the National Tax Policy to facilitate effective implementation of the document.
The committee is also saddled with the responsibility of recommending policies that will ensure inter-agency cooperation between the Federal Inland Revenue Service and other revenue agencies toward enhancing the internally generated revenue of the Federal Government.
In the same vein, it will also expand the treaty network of Nigeria to include its major trading partners, and review the existing Double Taxation Agreement as well as ensure that tax laws are reviewed from time to time to minimise avoidable hardships to taxpayers.
The minister added, “As keen as we are to grow revenues and improve our tax collection, we are equally determined to ensure that our taxes are simplified. The task of growing tax revenue must be pursued with a human face and sustainability in focus.
“The relevant unit of the Ministry of Finance will be strengthened to enable it to play a more vibrant role in tax policy formulation.”
The minister stated that while the review would be a continuous exercise, in line with global best practices and keeping with the domestic socio-economic realities, the government remained committed to the continuous improvement of the tax system as part of a dynamic framework to enhance compliance.