President Muhammadu Buhari Wednesday declared that the federal government would develop a framework to mobilise revenue from the non-oil sector.
He also reiterated the federal government’s commitment to achieving a more vibrant and resilient tax system for the country, even as he lamented the low tax-to-gross domestic product (GDP) ratio.
The president stated that no nation could make meaningful progress without stability and predictability of her earnings, expressing government’s commitment to work with the Chartered Institute of Taxation of Nigeria (CITN) to attain an enviable height for the Nigerian tax system.
Speaking at the 21st annual tax conference of the CITN with the theme, “Taxation and National Development: Unlocking the Potential of Taxation,” Buhari who was represented by the Minister of Finance, Mrs. Zainab Ahmed, noted that although Nigeria’s tax-to-GDP ratio has improved from six per cent to about nine per cent in the last three years, it is still one of the lowest in the world.
He said: “Our tax system must reflect the nature of our commercial activity levels. Oil is just about 10 per cent of our GDP but it represents a disproportionate share of our tax revenue. We will therefore, develop a framework that mobilises revenue from the non-oil sector.
“Our tax system must be dynamic in order to respond to an ever evolving commercial landscape and to increasing technology driven business models.
“As part of our drive to increase non-oil revenue, we have set an aggressive target for increasing tax collection. This 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.
“The commendable administrative efforts of the FIRS will be complemented by progressive overhaul of the tax code and tax laws. This administration has been instrumental to critical reforms in the Nigerian tax system, though, for instance, the introduction of the tax amnesty regime under the Voluntary Asset and Income Declaration Scheme (VAIDS) and the Voluntary offshore Assets Regularisation Scheme (VOARS).
“These measures have no doubt led to improvement in voluntary tax payment compliance by the citizenry,” he said
On VAIDS, for instance, the president noted that, “5,122 applications were received, at the end of July 2018, when the scheme had gone through a 12-month cycle and entered sunset.”
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He added that out of these applications, 1,006 made full payment; 1, 613 had outstanding payments to make and 2,503 fell under those who did not furnish adequate information on their tax status.
He disclosed that N92.67 billion tax liability was declared, while N34.67 billion had been paid out of declared liability, adding that the outstanding liability of N56. 81 billion will be paid in installments.
“In all, 16,906 assets were declared under VAIDS.
Of these, 3,317 are immovable assets, 13,771 are moveable assets, while 205 represented intangible assets and investments,” the president said.
Buhari observed that a committee set up to drive the implementation of the national tax policy has resulted in two executive orders and five amendment bills, which will be exposed for relevant stakeholders’ input and legislative action.
He urged the CITN to check any proven unethical and unprofessional practice by its members as a way of upholding the ethics of the profession in the tax system, adding that government will lend support to professionalism in the Nigerian tax system.
Also speaking, the 13th President of the CITN, Cyril Nwobodo, said Nigeria can no longer rely on oil revenue to invest in critical national infrastructure, boost the economy, promote investment and fund governance, hence the need to promote taxation as the most sustainable means of addressing resource mobilisation challenge.
In an interview with journalists at the conference, the Chairman of Heirs Holdings, Mr. Tony Elumelu noted that the only way to address taxation in the country is to make sure that people understand why they need to pay tax.
He said, “The citizens of this country demands a lot and expects a lot in terms of education, health care, infrastructure, security, power and so on. And to provide all of this you need to expand the revenue base of the country through tax collection.
“People are not too excited to pay tax; they believe that when they pay tax, it’s not used properly. My appeal to citizens of Nigeria is to pay tax so that our government is held accountable for good governance. The National Assembly also should pass the executive bill that has been sent to them so that the country can move forward,” he said.
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