Nigeria’s Finance Bill 2019: PwC’s Oyedele on what the bill means to the country’s economy

Nigeria's economy has long been faced with challenges surrounding revenue generation for the government. Taiwo Oyedele, Partner and West Africa Tax Leader at PwC Nigeria, highlighted the importance of addressing revenue matters, stating that even if corruption were eliminated, the country would still struggle financially. Oyedele emphasized the significance of taxation in improving the economic landscape. While acknowledging that no country enjoys paying taxes, he noted that it is a necessary contribution for the government to provide essential services efficiently. Currently, Nigerians are among the highest tax-paying citizens globally, including informal taxes paid to non-state actors, further burdening the population. At an Executive Session on Finance Bill and Tax Strategy, Nigeria's Finance Minister, Zainab Ahmed, engaged with stakeholders to discuss the country's 2019 Finance Bill. Oyedele shed light on the bill's importance, outlining its main objectives to promote small and medium enterprises, enhance infrastructure, support the capital market, ensure fiscal equity for insurance companies, and modernize Nigeria's tax system. The bill, encompassing amendments to seven tax laws with 56 sections and over 80 changes, is a substantial step towards revamping the tax framework, crucial for economic growth. Discussing tax harmonization, Oyedele expressed that the bill falls short in consolidating various taxes, of which Nigeria has over 60 officially and more than 300 unofficially. He proposed a streamlined approach with around 10 to 12 taxes to simplify the system and boost revenue. Despite not introducing new taxes, the bill raised the Value Added Tax (VAT) rate while expanding exemptions to cover essential items consumed by lower-income groups and small businesses, thereby redistributing the tax burden. While highlighting potential downsides in the lack of comprehensive impact analysis, Oyedele lauded the government's openness to input from private sector stakeholders for fine-tuning the bill's provisions. He emphasized that the bill has the potential to positively impact the economy, stressing the need for collective responsibility amongst citizens to contribute to the nation's development. The correlation between the finance bill and Nigeria's annual budget was underscored by Oyedele as crucial for funding government expenditures. With the finance bill serving as the primary source of revenue generation, it links directly to the budget's provisions, particularly in light of the recent minimum wage increase. The shift towards tax-based funding aligns with global best practices, signaling a step towards a more sustainable economic model for Nigeria. In conclusion, Nigeria's Finance Bill 2019 marks a pivotal moment in the country's economic landscape, signaling a move towards modernizing the tax system and fostering sustainable growth. With continued dialogue and collaboration between the government and private sector, the bill holds the promise of creating a more conducive environment for businesses to thrive and citizens to prosper.