Addressing Nigeria's revenue mobilisation strategy

Nigeria's revenue mobilization strategy has been a topic of discussion for the International Monetary Fund (IMF), which has been pushing for an increase in the country's Value Added Tax (VAT) to 15 percent from the current 7.5 percent. The IMF has also called for tax administration reforms to boost revenue collection in Nigeria. In a recent interview on CNBC Africa, Walea Jai, Partner and Head of Tax Regulatory and People Services at KPMG Nigeria, shared insights and perspectives on the IMF's recommendation and Nigeria's response to it. Jai raised critical points regarding the implications of increasing the VAT rate in Nigeria. He noted that while it is important to align with the VAT rates in West Africa, it is equally crucial to focus on tax and distribution reforms. Highlighting the challenges in Nigeria's tax system, Jai emphasized the need to broaden the tax base and enhance compliance through technology-driven solutions. One key aspect Jai pointed out was the necessity of implementing sunset provisions for tax incentives to prevent revenue losses. He stressed the importance of addressing issues like tax-driven GDP ratio, which currently stands at a low 6% compared to the global average of 15.5%. Jai also underscored the need for diversification of revenue sources, including privatization and foreign asset utilization. In discussing the role of technology in tax administration, Jai highlighted the significance of deploying online platforms for tax returns and payments to facilitate voluntary compliance. He commended the Nigerian tax authorities for leveraging technology to improve taxpayer engagement and efficiency in revenue collection. Furthermore, Jai addressed the challenges in the oil sector, emphasizing the need for strategic reforms to enhance productivity and revenue generation. He emphasized the importance of comprehensive tax reforms that align with best practices in similar economies facing similar challenges. Overall, Jai's insights shed light on the complexities of Nigeria's revenue mobilization efforts and the significance of adopting a holistic approach to tax administration and compliance. By addressing key issues such as tax incentives, technology integration, and revenue diversification, Nigeria can potentially enhance its revenue generation and economic stability in the long run.