…As 30% of Companies in Nigeria Evade Tax, Says Oxfam
Oxfam, an international non-governmental organization, in Nigeria has said about 30 percent of companies operating in Nigeria evade tax, while 25 percent of registered companies in the country are not paying tax.
The organisation also noted that Nigeria loses about $2.9billion (N580billion) every year to tax waivers granted to multinational companies operating in the country.
The disclosure was made by Nigeria Country Director, Constant Tchona, during the official unveiling of two reports: Fair Tax Monitor Index and the Commitment to Reducing Inequality Index, to the public on Wednesday in Abuja.
According to Tchona the fiscal incentives granted with the hope of stimulating investments into the country’s economy are eroded with poor governance and lack of transparency, especially when the Central Bank of Nigeria has confirmed that there is no cost-benefit analysis to justify the exemptions and when there is no check on the discretionary powers residing with the Executive in granting exemptions.
“The procedures for granting tax incentives should undergo a thorough review, focused on transparency and governance. This should include mandatory parliamentary oversight, publication of annual tax expenditure reports, clear requirements for incentives and periodic review of expected results”, Tchona said.
He also said that taxpayers in the country often opt to negotiate with corrupt tax administration staff in return for gratifications and reduced sums to the coffers of the government, while calling on the Federal Government to fast-forward action on the new National Tax Policy approved and clamp down on corporate crimes.
Tchona said: “Official FIRS numbers suggest that the entire tax system is fraught with crippling challenges of weak enforcement, corruption and outright evasion. The records show that about 30% of companies in Nigeria are involved in tax evasion and also 25% of registered companies in the country are not paying tax.
“Taxpayers often opt to negotiate with corrupt tax administration staff in return for gratifications and reduced sums to the coffers of the government. This is despite the sanctions imposed by the same Company Income Tax Act for such conduct.”
He asked the National assembly to enact a law that will criminalize totally the actions of middlemen – banks, auditors, accountants, and lawyers that facilitate Illicit Financial Flows. When such professionals act contrary to existing regulations, they should be held accountable in Nigeria. This can be enforced through strengthened professional association bodies.
“There is need for the Nigerian government to fast-forward action on the new National Tax Policy approved and clamp down on corporate crimes. New legislation and rules to cope with current realities should be enacted along with introduction of cutting-edge technology.
“The National Assembly should enact a law to punish the “enablers” of tax evasion such as lawyers, accountants and bankers, and should be made to face fines of up to 100 per cent of tax evaded.
“The tax system should be reviewed and amended to be more equitable to women as drivers of SMEs; most especially Personal Income Tax Act on unorganized sector needs to be amended to ensure they achieve gender equity, legitimate, and consistent with the government’s commitment to gender equity,” he said.
