Chairman, Heirs Holdings and Founder, Tony Elumelu Foundation, Tony O. Elumelu, yesterday lamented the multiplicity of taxes in the country,saying the average businesses pay 48 multiple taxes in Nigeria.
Elumelu,who disclosed this in his keynote address at the 21st Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN), titled, “National Development: Unlocking the Potentials of Taxation’’,said the development was a far cry from their contemporaries in other sub- Saharan countries and Hong Kong,who pay 33 and three taxes resprectively..
He said taxation remains a significant burden for SMEs and corporates operating in the country.
“With a population of close to 200 million people in Nigeria, we have only 75,000 registered SMEs in the country. No one needs to tell us that people are avoiding tax or refusing to be a part of the system,” he said.
With high cost of compliance, complex and costly business registration processes, many SMEs are choosing to remain informal, which in turn results in a low tax base and low tax contribution to GDP. “Nigeria’s tax to GDP ratio is only circa 6%, compared to far smaller populations like Rwanda at 16%. Imagine the economic transformation we can achieve as a country if we can move our Tax to GDP ratio by 10%. We will raise an additional $40billion in government revenue – identical to the sum of our foreign reserves,” Elumelu explained.
He advised government to educate, inform and raise tax awareness, “Government should drive mass mobilisation of citizens – let citizens know why they need to pay taxes and give them the assurance that their tax will be properly utilised.” In addition he stated that, “government should employ the use of smart tax incentives to attract and incentivise local and foreign investors.”
Elumelu also tasked the country’s ambassadors and embassies with a two year timeline to increase the number of double tax treaties between host countries and Nigeria.
“Nigeria has 14 taxation treaties while a country like South Africa has 79 double taxation treaties, and we are the largest economy in Africa. Our embassies should adopt a target in the next two years to sign Tax treaties with our top 100 trading partners in the world.”
Elumelu charged government to put in place tax systems to encourage SMEs to effectively perform their function as the engine for job creation in the country .
“Until there is a reduction in what SMEs pay as tax, elimination of multiple taxation, abolition of minimum income tax and excess dividend tax, it will be difficult for us to expand the tax base. It will be difficult for us to attract investors into this country, and it will be difficult for us to retain the ones already in the country. It will be difficult for us to mobilise our SMEs to help create employment that we need so much in this country. It will be difficult for us to have the citizens hold leaders accountable.”