Tax experts have proposed an expansion of the tax net to encompass the informal sector and unregistered businesses.
The development is coming on the heels amidst Nigeria’s pursuit to enhance revenue generation.
The aim, however, is to bolster the nation’s revenue base and address the challenge of low-income generation, a concern exacerbated by considerable debt servicing and recurrent expenditures consuming a significant portion of the annual budget.
This call resonated at the Detail Tax Business Series event, where leading experts converged to discuss the implications of the Finance Act 2023 on the tax and fiscal landscape. Detail, a distinguished commercial solicitor firm renowned for its focus on non-courtroom practice, hosted the event.
Distinguished participants included; Partner at PwC Africa and Family Business Leader, Esiri Agbeyi, alongside Partner and Head of Deal Advisory, M&A, and Tax at KPMG Nigeria. The panel was moderated by Associate Partner at Detail Commercial Solicitors, Anthony Ezeamama.
Emphasising the need for an expanded tax base, the experts underscored the importance of augmenting the number of individuals and citizens included in the tax net, rather than solely increasing tax rates.
The consensus was that tax authorities should direct their attention toward taxing individuals within the informal sector and unregistered business entities. Additionally, the experts stressed the significance of fostering greater collaboration among various tax authorities.
Addressing the Federal Government’s taxation strategy, the experts advocated for a shift towards consumption-based taxation rather than production-oriented taxation. This recalibration is anticipated to foster economic development and counter inflationary pressures.
Amidst business owners’ grievances regarding the compounding effects of multiple taxes and additional challenges like infrastructural decay, insecurity, erratic power supply, and foreign exchange shortages, the panelists urged the Federal Government and tax authorities to simplify or consolidate existing tax laws. This strategic adjustment aims to alleviate the burdens of multiple taxation.
To streamline the tax payment process and mitigate challenges, the experts proposed the exploration of a single tax collection agency for both the federation and states. This approach has shown success in Kaduna State.
The experts underscored the necessity of a comprehensive re-orientation campaign at both individual and family levels to instill a culture of tax compliance.