• Monday, June 17, 2024
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Nigeria loses N26trn annually to tax loopholes, incentives

The President Tinubu-led administration has hinted at plans to review the nation’s tax regime and close N26 trillion, which the country loses to tax avoidance, evasion and incentives annually.

According to Taiwo Oyedele, chairman of the presidential fiscal policy and tax reforms Committee, who addressed a press conference in Abuja on Friday, Nigeria loses up to N6 trillion annually to tax incentives adopted by past governments, which did not yield the desired benefits for the country.

 

“When you don’t look at your incentives regime. It can reach a point where it distorts economic growth because some people benefit or don’t and operate in the same sector, so they cannot compete.

“If you look at our tax expenditure reports, over the past three, four years on the average, were given away around N6 trillion per annum, that is significant; what we have not been measuring enough is the benefit we are getting from that.

Read alsoFG to raise tax on sugar-sweetened beverages to 20%

“So I can confirm to you that part of the mandate given to us by Mr President is to look at the incentives regime in Nigeria. So we can, based on data and evidence, design what is appropriate for us as a country in terms of what we want to drive so that those incentives will be targeted,” he said.

He says his administration focuses on driving effective fiscal governance and revenue transformation beyond taxes while optimizing non-tax revenues.

He said the target was to achieve an 18 per cent tax-to-GDP ratio over the next three years while ensuring reduced taxes payable by Nigerians.

Read also Corporate tax slump dims non-oil revenue hopes

“So that appears like a contradiction; how do you remove taxes and collect more? But it’s easy to explain because we know where the gaps are. The estimated tax gap you should collect today, if people should pay the right amount of taxes, is in the region of N20 trillion.

“So to close that gap, we will rely on automation and the efficiency of collection, including harmonising how those taxes are collected.

“The other thing is, if you also consider the incentive rationalization, maybe it’s not N6 trillion we should be giving away. Maybe it’s N2 trillion, which must be targeted at people who most need them.

“And the one that is even more interesting is the plan to increase tax revenue by growing the economy. So if you allow people to be prosperous and businesses to thrive, you naturally make revenue from revenue,” he said.

Read also Experts task FG on tax reforms to rejig Nigeria’s economy

Speaking further, Oyedele said efforts were ongoing to facilitate economic growth and inclusive development by addressing notable impediments to doing business in Nigeria.

“Whether you’re a small business or a large business where you’re multinational or domestic. We want to be the destination for all investors—big, small, and medium sizes, so long as all you’re doing is legitimate. And we don’t want government to come in your way of doing that business and thriving. We want Nigerian companies and businesses to become global,” he added.