The federal government has commenced the redrafting of the nation’s tax laws.
Minister of finance Mrs Kemi Adeosun made this disclosure Thursday in Abuja when she met with tax experts.
According to Adeosun, “An overhaul of our tax code is long overdue as so is the redrafting of our tax laws to reflect current business practices and new trends. We must respond to the growing phenomenon of base shifting and other practices that allow companies to evade their fiscal and legal responsibilities.”
She disclosed that the Federal Government plans to engage with relevant members of the National Assembly to ensure that required revisions, amendments and new laws can be passed expediently to keep pace with the rapid change in business practices.
The Minister explained that the nation’s tax system must be dynamic in order to respond to an ever-evolving commercial landscape and to increasingly technology-driven business models.
She stated that the Federal Government, as part of the drive to increase non-oil revenue, has set an aggressive target for increasing tax collection. This, according to her, is a reflection of the fact that the current level of compliance is low and in some cases, the effective tax rate paid by those that are compliant is lower than expected. She added that the commendable administrative efforts of FIRS would be complemented by an overhaul of the tax code and tax laws.
She further stated that “We will critically examine our GDP to align taxes with economic activity in our bid to block all leakages. For example, the multi-billion naira losses being identified in our solid minerals sector by illegal and undocumented miners will be addressed with increased formalisation and review of the governing laws. Indeed, we are committed to the continuous improvement of our tax system as part of a dynamic framework. We will use tax administration and technology to widen compliance and encourage more individuals and companies into the tax net”, adding that the Federal Government is already investing in technology to boost the efficiency of our collections.
According to her, some of the recent initiatives being implemented in the Ministry of Finance mean that it is now virtually impossible to obtain a payment from the Federal Government without being fully taxed compliant.
Promising that tax revenues will be judiciously utilised going further, Mrs. Adeosun stated that tax payment is part of the social contract between Government and people and that the most effective measure to enhance compliance is the knowledge that tax revenues are being utilised effectively for the development of the people. The Minister explained that the Federal Government is already implementing public financial management reforms to strengthen financial controls and ensure greater accountability, while the government is also making progress to ensure value for money in every naira spent in its efforts to reduce overhead and increase the efficiency of government expenditure.
She explained that growing the economy at a rate that will address the employment needs of our huge population requires a fundamental change in how government collects its revenues and spends.The Minister said Government is committed to making sure that every naira counts. “We have strengthened our controls and made significant progress in enhancing the effectiveness of our financial expenditure in bringing development to Nigeria.”
The Minister further commented that “the commercial opportunities in Nigeria, despite our current challenges, are compelling and I am happy to report that we are now witnessing an increasing level of interest from long term investors who are keen to participate in the Nigerian upside as this government begins to position Nigeria to attain its true potential. It is particularly gratifying that the majority of these enquires relate to the non-oil sector. However, as encouraged as I am about these developments, I am concerned about the ability of our tax system to adequately develop and deploy effective measures to ensure that government revenue is mobilized in line with these developments.”
