The Federal Government announced plans to scrape approximately 50 taxes in Nigeria, aiming to simplify tax compliance and reduce the burden on citizens.
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, unveiled this decision during discussions organized by the IMF’s Tax Administration Diagnostic Assessment Tool (TADAT) secretariat on Tuesday.
Oyedele highlighted the intention to focus on essential taxes like Income Tax, VAT, Property Tax, and Excise Tax, streamlining and eliminating numerous other taxes across all government levels.
He said, “There are over 60 taxes officially and unofficially, nobody knows. I think it is more than 200. We did a study 10 years ago for manufacturers and there was a state where if you combine all the taxes across all levels of government, it was more than 197 and that is just for one state.
“What we are trying to do now is to focus on the most important taxes. You don’t need to be a tax expert to know Income Tax, consumption tax by way of VAT, Property Tax and Excise Tax. Those important taxes are the ones we want to focus on and do away with other taxes. Then, harmonise the number of taxes not only for manufacturers but for everyone.
“We are currently at the stage of consultation where we are going to be speaking to our stakeholders to try and understand the problems from their perspective and bring the solution that we want. We are focusing on the outcome approach; we say we have reduced the taxes from over 60 to less than 10. It means that there will be clarity for compliance and the burden of compliance is less in the situation of the tax because it is now unified.”
President Tinubu in July set up the committee to formulate a functional tax policy that would remove all barriers impeding business growth in Nigeria.
Oyedele explained during the discussion that the priority of the committee “if I put it in the form of the thematic areas is: one to ensure that there is fairness in the tax system, two, to ensure efficiency in the tax system and three is to build trust between government, tax administrators and taxpayers and broadly the Nigerian people.
“If you then talk about the fairness of it, we are going to ensure that the burden of compliance, small business pay too many taxes and the burden of compliance relatively is much higher. We are going to leverage a lot of technology.”
According to the tax expert, the efficiency would come from the administration and use of technology.
Oyedele reiterated that the committee is committed to building trust and ensuring there is proper accountability and transparency which he referred to as one of the calls of the TADAT assessment.
He revealed further that there are ongoing plans to create an ombudsman in Nigeria with the responsibility of protecting small businesses.
He said, “It takes so long for people to get justice within the tax system. For the large companies, they can afford it. But small business owners, can’t even afford professional representation. They cannot pay an accountant; they cannot pay a lawyer.
“So, we are looking at setting up the office of a tax ombudsman in Nigeria that can intervene and protect. One, it will have a kind of oversight over the work of the revenue authorities and protect taxpayers especially those who cannot defend themselves. These are going to be the areas of priority for us.”