Experts Task FG on Tax Reforms to Rejig Nation’s Economy

Experts have tasked the Federal Government to focus on the taxation of consumption rather than production to enable the Nigerian economy to develop and check inflation.

They emphasised this call during the discussion panel at the DETAIL Tax Business Series themed, “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 massive chunk of the annual budget.

The Associate Partner at Detail Commercial Solicitors, Anthony Ezeamama, moderated the DETAIL Tax Business Series panel session.

It featured the Partner PwC Africa & Family Business Leader Esiri Agbeyi and Partner and Head Deal Advisory, M&A, Tax, KPMG Nigeria, Ajibola Olomola.

The panellists urged FG and tax authorities to reduce or consolidate the existing tax laws to tackle the issue of multiple taxation.

This counsel stems from worries that multiple taxation is crippling businesses that are already grappling with issues of infrastructural decay, insecurity, epileptic power supply and foreign exchange shortage.

According to the panellists, one other way of tackling the issue and easing the tax payment process 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 to re-orientate citizens, even at the family level, to encourage tax payment.

On the Finance Act 2023, the experts said it had 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 aims 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 had 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 vital sectors of the Nigerian economy.

They also called on the FG to clarify the policy framework on cryptocurrency to enable it to benefit from the billions of US dollars in cryptocurrency transactions undertaken by Nigerians regularly.

The DETAIL Tax Business Series occurred on 25 July 2023 at DCS Place, Lagos. It was organised by DETAIL, Nigeria’s first commercial solicitor firm to specialise exclusively in non-courtroom practice.