Nigeria, UK sign data agreement on tax mobilisation

Nigerian government has signed an agreement with the United Kingdom on data gathering that would help it recover its evaded taxes, ensure monies are not stashed away abroad and get citizens pay appropriately, going forward.

Finance minister Kemi Adeosun announced this on Sunday while briefing the Nigerian media on the outcomes of the weeklong 2017 spring meetings of the World Bank and International Monetary Fund in Washington DC. She also said the next step would be to name and shame tax evaders.

“So the British Theresa under the beneficial ownership register which President Buhari signed with David Cameron before he left is going to give us a list so that everyone that owns a property in the UK, once it is owned by a Nigerian, is given to us and then we will be able to compare this person on how much tax he is paying back in the country,” Adeosun stated.

“So it is going to be a very systematic process using a lot of data and then deploying a lot of moral suation on the people, this is the right time to do the right thing.

“We believe that is really the only way that the country can move forward.

Nigeria has one of the worst tax to GDP ratios in the World at six percent and according to Adeosun, this is not acceptable.

“we have to find a way of making our tax collection much more effective.

“For most of this year, we will really focus on encouraging people in, but then we need to move into name and shame, where those who are not complying have to be exposed.

She lamented that in Nigeria, only about 13 million tax payers at the moment and that about 12.5 mlillion of them are those who have their taxes deducted at source.

“So are we saying that all the wealthy, all the self employed are they only 500,000? It is not possible.

“It means that people are able to evade and it is largely and unfortunately the high income earners that are able to evade, so we are really going to be a lot more aggressive on tax collection because we are not witch hunting anybody, because that is the job of government, to redistribute income from the high end to the lower. That is how governments works. so people have to pay their fare share.

“And I think for those, who for years have been able to get away with in the past, the game is up and it is time to do the right thing.

Adeosun allayed fears that government would not introduce new taxes at this time, saying Nigeria has adequate taxes. “the problem is is enforcement,” she stated.

Speaking further, the minister said domestic revenue mobilsation is key to Nigeria’s economic survival.

“Nigeria has six percent tax to GDP ratio, Ghana has 15, South Africa is at 30 and most advanced countries are at 30 and 35 plus.

Six percent is actually very low, but even that, a lot of tax that we collect is resource tax, Petroleum Profit Tax, meaning for instance that if the price of oil goes up and down, it determines the level of tax and it makes us more vulnerable..

“The solution is broader taxes that are reflective of the entire economy and we have got to, and I think this was very strongly discussed at the Africa finance ministers, to approach the issue of tax in Africa.

“The problem really is tax evasion and illicit financial flows and we called for support from the World Bank and our colleagues from other countries that when monies are leaving Nigeria, going abroad, not taxed, they should be tracked and repatriated.

“And they pledged to work for us to reverse some of those major flows,” she said, strongly affirming that the government “will make it difficult for people to evade taxes.”

According to her, government is gathering data “because to tax people, you must know how much they have. Over the last year, we have been gathering data by checking with the Corporate Affairs Commission (CAC) on how many companies that operate in Nigeria and checking their tax records.

“There was a recent circular from the Accountant General’s office that anybody who wants to comment payment from federal government must be checked on whether he pays tax.

“Everything we do is driving people, forcing them into the tax net and that’s happens all over the world.

“So we are going to make it much more difficult for people to evade taxes.

“So at every transaction, we will be looking out for data to compare taxes. That’s how we are going to get better payment. The other thing is that there is going to be much better cooperation from the international community. That is one of the things we have even discussion here because a lot of money have left Nigeria and what’s happening now is that there is focus on sharing that data.”

At the spring meetings, issues discussed focused around the state of the global economy, emphasizing that there is growing momentum in the developed and developing economies, but that further progress will be dependent on policies that continue to support the recovery, productivity, growth and enhance resilience.

The meeting, particularly recommended that, working within a multilateral framework, countries should strive for strong and more balanced growth and to focus on providing economic opportunities for all.

In particular, the spring meetings prescribed a mix of policy buffers to implement countercyclical policies especially for commodity producers like Nigeria, with continuos adjustments and a clear focus on innovation and productivity improvements.

Among other things, the meeting also recommended urgent implementation of the right type of structural and macroeconomic reforms as well as better allocation of factors of production as well as use of fiscal incentives in a strategic manner to drive growth and development.

Adeosun also disclosed that the World Bank and two its arms- the International Finance Corporation and Multilateral Investment Guarantee Agency (MIGA), as well as the African Development Bank (AfDB) have all pledged to help Nigeria implement its Power Sector Recovery plan which promises to deliver better electricity outcomes to Nigerians.

The World Bank has also promised to scale up its disbursements of projects in Nigeria to save up development, including projects that focus on enhancing the social safety net and improving quality of lives of the citizens.

“We discussed a broad range of issues ranging from relating to the power sector from financing, gas production and processing, generation, transmission, distribution and other legacy issues,” Adeosun stated.

“These discussions will be continued during an imminent World Bank Group mission to Nigeria in May.”

She also said the Nigeria delegation had fruitful discussions with the private investors, and made a few progress.

“Most of them are interested in making investments in Nigeria but they just want to be sure that the time is right,” she stated.

 

Onyinye Nwachukwu, Washington DC