‘Tax Default Caused By Poor Administration’

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Ineffective tax administration has been identified as the reason behind rising incidence of tax default and lack of compliance.

The Executive Chairman, Lagos State Internal Revenue Service, Olufolarin Ogunsanwo, disclosed this while presenting a paper at the Lagos Chamber of Commerce and Industry Taxation Roundtable which was held in Lagos during the week.

Citing the World Bank Ease of Doing Business Index, Ogunsanwo pointed out that Nigeria was  ranked 169th out of 189 countries in the index adding that of particular concern to the LIRS was the report that Nigeria ranked 181st  out of 189 countries on the Ease of Paying Taxes Index.

He took particular note of the indicators for the ranking which include; time required to comply with tax payments – 908 hours, total tax rates – 33.3 per cent, total tax payments – 59 payments. “Analysts have found that the major drawback responsible for this poor rating is ineffective tax administration,” he said.

“This makes it more expensive to voluntarily comply than not to comply at all.

“However, the analysts’ report stated that implementing reforms in property registration and tax administration could translate into improved ranking for Nigeria by at least 47 places.”

The LIRS chairman disclosed further that the agency had introduced measures and incentives to encourage compliance, such as the provision of one per cent incentive for self assessment and establishment of a customer care desk in all the 38 tax stations to deal promptly with all issues that may be brought up by taxpayers.

He listed other measures as Electronic Tax Clearance Certificate with a maximum response time of 72 hours, opening of additional tax stations in Sangotedo, Amuwo Odofin and Tejuosho to complement the existing 36 stations and ease access to information and other services by taxpayers. “Plans are underway to open two additional stations,” he added.

According to the LIRS chairman, there are 12 taxes and levies collectible by the Lagos State Government namely personal income tax, withholding tax (Individuals only) capital gains tax (Individuals only), stamp duties on instruments executed by individuals, pools betting and lotteries, among others.