• Saturday, July 13, 2024
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BusinessDay

No country can tax its way to prosperity, KPMG tells Nigeria

Existing fiscal frameworks in Nigeria’s mining sector not attractive for investment – KPMG

KPMG, a global tax and advisory firm, has criticised the actions of the Central Bank of Nigeria (CBN) regarding its move to implement a cybersecurity levy.

It declared that “no country can tax its way to prosperity.” The audit firm noted that there is empirical evidence to prove that higher taxes do not lead to sustainable growth and the timing of the implementation of the section of the Act is wrong considering the prevailing economic conditions in the country.

It stated that because Nigeria faces a significant revenue challenge, the government may go to any length to mobilise the required revenue. However, it was noted that higher taxes do not lead to sustainable growth.

It highlighted that even though the cybercrime levy is not new—it has existed since 2015—the timing of its implementation is suspect, considering prevailing economic challenges.

“The timing of any reforms is essential to the success of such reforms. This underscores the current public resistance to the implementation of the levy. This is certainly not the right time to implement this levy,” it said.

It stated that various reports have indicated that the government may raise about N3 trillion annually from the levy, but the government should have made a formal presentation to the public of the cost and benefit analysis. “It is always critical that the enactment of any tax or levy be accompanied by the tax expenditure statement to provide information as to whether the benefits of such tax or levy outweigh its cost,” it said.

KPMG also questioned how the implementation of the act would drive financial inclusion in the country, given the fear that individuals and businesses would resort to other forms of transaction.

Last week, the CBN asked banks and payment service providers to begin deducting 0.5 percent from electronic transactions as a cybersecurity levy to be managed by the Office of the National Security Adviser (ONSA).

President Bola Tinubu has now urged the CBN to suspend the implementation of this levy and called for a review.