The Federal Government has been advised to focus on the taxation of consumption rather than production in order to enable the Nigerian economy to develop as well as check inflation.
The admonition was given by panellists at the DETAIL Tax Business Series on the theme “Finance Act 2023: Implications on the Tax & Fiscal Outlook for the New Administration and the Economy”.
This is coming as Nigeria’s economy currently operates at a deficit of over N10 trillion due to lower income generation with debt servicing and recurrent expenditures taking a huge chunk of the annual budget.
The DETAIL Tax Business Series panel session was moderated by Anthony Ezeamama, Associate Partner at Detail Commercial Solicitors, and featured Esiri Agbeyi, Partner PwC Africa & Family Business Leader, and Ajibola Olomola, Partner and Head Deal Advisory, M&A, Tax, KPMG Nigeria.
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With business owners lamenting how multiple taxations are crippling their businesses that are already grappling with issues of infrastructural decay, insecurity, epileptic power supply and foreign exchange shortage, the panellists urged the Federal Government and tax authorities to reduce or consolidate the existing tax laws as a way of tackling the issue of multiple taxations.
One other way of tackling the issue as well as easing the process of tax payment, they said, is for the tax authorities to explore the advantages of a single tax collection agency for the Federation and the States, respectively. This, according to them, has been successfully implemented in Kaduna State.
They stressed the need to increase the number of individuals and citizens in the tax net rather than increasing the tax rate. To do this, tax authorities should focus on taxation of persons in the informal sector and unregistered businesses, and there should also be greater collaboration among the authorities, they said.
At the same time, the panellists said there was a need for re-orientation of citizens, even at the family level, to encourage tax payment.
On the Finance Act 2023, the experts said it has introduced roll-over relief on the disposal of shares under the Capital Gains Tax Act.
They mentioned that one of the objectives of the Finance Act 2023 is climate change/green growth, and Nigeria has the goal to go green by 2060.
They further said future Finance Acts should be tailored towards enabling fiscal measures that align with the AfCFTA’s goal of encouraging trade in Africa.
Before now, the definition of “buildings” under the Value Added Tax Act (“VAT Act”) included “towers” or “masts” for network operators, but the experts said this has been amended such that VAT will now apply on transactions relating to towers or masts.
In terms of policy directives, the panellists said the success of the Road Infrastructure Investment Tax Credit Scheme’s model could be replicated in other important sectors of the Nigerian economy.
They also called on the Federal Government to clarify the policy framework on cryptocurrency to enable it to benefit from the billions of US dollars in cryptocurrency transactions undertaken by Nigerians on a regular basis.
The DETAIL Tax Business Series took place on 25 July 2023 at DCS Place, Lagos. It was organised by DETAIL, Nigeria’s first commercial solicitor firm to specialize exclusively in non-courtroom practice.