Erikume: Nigeria’s complex tax system generated unintended consequences
Partner and Director, Tax Reporting and Strategy at PwC Nigeria, Kenneth Erikume says Nigeria's complex tax system that has generated unintended consequences for both taxpayers and government. These include increase in the cost of doing business, early exit of companies, increased cost of compliance and revenue leakages. Meanwhile, Nigeria’s President says despite the ongoing deliberation on the four proposed tax bills, when enacted, promise to streamline tax administration, enhance revenue generation, and promote equitable resource allocation. Kenneth Erikume, Partner and Director, Tax reporting and strategy at PwC Nigeria joins CNBC Africa for more on these.
Tue, 17 Dec 2024 16:34:36 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The complex tax system in Nigeria has led to unintended consequences such as increased compliance costs, revenue leakages, and the early exit of companies.
- The government is considering four tax bills to streamline tax administration, enhance revenue generation, and ensure equitable distribution of resources.
- The proposed establishment of a tax ombudsman office aims to protect vulnerable taxpayers and promote inclusivity in the tax system.
Nigeria's tax system has come under intense scrutiny for its complexity and the unintended consequences it has generated for both taxpayers and the government. Kenneth Erikume, Partner and Director of Tax Reporting and Strategy at PwC Nigeria, highlighted the challenges faced due to the intricate tax laws in the country. In a recent interview with CNBC Africa, Erikume discussed how the current tax regime has led to an increase in the cost of doing business, early exit of companies, heightened compliance costs, and revenue leakages. The existing system, with over 60 official and 200 unofficial tax laws, has created a convoluted environment that makes it difficult for both taxpayers and the government to navigate efficiently. Erikume pointed out that Nigeria's federal structure, with the federal, state, and local governments having the authority to collect taxes, has contributed to the existing complexities. The lack of centralization and data has resulted in revenue leakage and insufficient funds for distribution. This has compelled the states to focus on 'low-hanging fruit' by imposing new taxes on existing compliant taxpayers, further burdening businesses. In response to these challenges, the government is deliberating on four proposed tax bills aimed at streamlining tax administration, enhancing revenue generation, and promoting equitable resource allocation. President Buhari has expressed optimism that these reforms will address the shortcomings of the current system and create a more effective tax environment. One key proposal includes the establishment of an office for a tax ombudsman, inspired by similar models in countries like South Africa. The ombudsman would serve as a mediator to advocate for vulnerable individuals who lack access to tax consultants or a full understanding of their rights and obligations. This initiative aims to protect the rights of all taxpayers, including informal sector workers who may face challenges in complying with tax laws. Despite the potential benefits of the proposed reforms, concerns have been raised, particularly from stakeholders in the northern region of the country. Some fear that the reforms may not address their specific needs or lead to equitable outcomes. However, Erikume believes that the government can alleviate these concerns through open dialogue and inclusivity. By engaging all stakeholders in the decision-making process and addressing their viewpoints, a consensus can be reached that serves the interests of all parties involved. Erikume emphasized the need for change in Nigeria's tax system and urged for a collaborative approach to ensure a sustainable and equitable tax environment. As the country continues to navigate the complexities of its tax laws, the successful implementation of the proposed reforms could herald a new era of tax efficiency and compliance in Nigeria.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.
