FCTI, President, Chartered Institute of Taxation of Nigeria (CITN) speaks in this interview with Assistant Editor. Excerpts
CITN contributes immensely to various fiscal policies and reforms of government aimed at achieving sustainable economic development in the country. As an umbrella body of tax professionals, what is your take on the proposed N13.08trillion budget for 2021 and the projected non-oil revenue?
In terms of size, the budget is quite audacious. The 2021 FG budget of N13.08trillion was made to target revenue of N7.886trillion, of which, 31percent will come from oil-related sources and 69percent from non-oil revenue sources. Our submission is to ensure policy alignments to achieve sustainable revenue growth targets.
We would want to assume that the fundamentals behind the revenue projections were borne out of measures that the government had taken over the last few years, particularly in growing non-oil revenue sources. Of importance is the recent amendment to the tax laws through the Finance Act 2019 which also provided a strong buffer for the government on the revenue side. We expect that efforts would be fixated on the implementation of the provisions of the law.
Covid-19 pandemic no doubt poses a great challenge to both the global and domestic economy. Looking at what has happened to oil prices and heightened economic uncertainty; how can Nigeria leverage taxation to hedge against negative impacts on Covid-19 on the economy?
We commend government’s initiatives in providing grants and loans to be extended by CBN and Commercial Banks to manufacturing companies, SMES and mandatory Productive Lending Programme by the Commercial Banks to Manufacturing Companies, in order to stimulate economic activities, post COVID-19.
CITN recommends an urgent review of the management of the Crude Oil fiscal regime in Nigeria, and a review of government’s commitment to the development of Solid Minerals to boost the earning capacity of the Country.
We expect that the Tax Policy mix and design would be structured to eliminate incidences of multiple taxation, create effective tax incentives and equitable Personal Income Tax regime.
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To put the economy back to strong performance, the need to carry out broad-spectrum policies review to align monetary policies and fiscal policies is recommended. The Financial Services Reform should aim to drive down commercial interest rates, create currency redenomination and asset pricing to reverse the over-reliance on the US dollar and overpricing of assets.
What are we not doing as a country to bring more people and corporates into the tax net?
We are not effectively harnessing and utilizing data available to us. Furthermore, tax authorities at all levels until recently were not collaborating effectively resulting in multiple audits and information hoarding that did not benefit the tax system.
CITN recommends increased collaboration and cooperation among tax administrations. The Federal and State Governments must commit to improving the fiscal sustainability index. Measures should be initiated in the area of fiscal discipline, providing support to the States Internal Revenue Service, investing in technology to drive tax collections and reduction of revenue losses, accountability and transparency. There is also need for sustained tax enlightenment and education to galvanise more taxpayers to being tax compliant.
How can Nigeria further leverage technology to grow tax revenue?
It must be pointed out that as a country, we have at our disposal various technological platforms which can be easily deployed to grow tax revenues. However, we are not fully utilizing the potentials that exist.
For example, we have implemented several novel initiatives in the area of data acquisition platforms such as the Bank Verification Number Registration Platform of the Central Bank of Nigeria that aggregates banking data using a single platform; the National Identity Card Scheme of the National Identity Management Commission, just to mention but a few. Unfortunately, these silos of information exist independently and are not integrated to derive the benefit that we should get from such. All over the world, without reliable data, it is difficult to increase the tax net.
Therefore, as a matter of national priority, government at all levels should form a consensus and work towards ensuring that we have a unified database of all Nigerians and residents not just for planning but for tax purposes.
This is the critical step to take to grow tax revenues. Technology can be harnessed to drive the process and going forward we would be better for it.
As an advocate of taxation and ease of doing business, what is CITN’S position on the recently implemented 7.5percent VAT rate? Could it have come earlier?
I would prefer to answer the latter part of your question first. Certainly, the implementation of the increase in VAT to 7.5percent was long overdue. CITN’S position is not hinged on the fact that we have not increased the rate of VAT since the tax was introduced in 1991. Rather, we believe that the dynamics of the tax system and current economic fundamentals support its increment. If we are serious about mobilizing revenue and positioning the tax system towards effectively actualizing this objective, then it should be reflected in government fiscal policies.
As expected, the review of the VAT Act also provided buffers for small businesses operating below a certain threshold from charging VAT on goods and services. In essence, the existence or survival of such businesses is not threatened. The benefits of its implementation far outweigh the misgivings of some stakeholders on the timing or reasons adduced for the increase.
This 22nd annual tax conference is themed “Taxation and Economic Competitiveness: Imperatives for National Development”. Why this theme?
The role of taxation in the development and sustenance discourse cannot be over-emphasized. The theme was borne out of the Institute’s desire to advance taxation as an essential tool for promoting macroeconomic goals of achieving full employment, income redistribution, competitive environment for businesses, amongst others.
Recently, the Federal Government asked Diaspora bank account holders to fill self-certification form in their banks. The directive was towards an international agreement Nigeria signed that allows the exchange of tax information between countries that would help to curb tax evasion by citizens of member countries. What is your position on this?
I believe the intent of the directive is not lost. However, the approach may not have been well-thought-out. All the same, I am delighted that that episode has been put behind us. Other ways are being employed to get the needed information for which the government intended in the first place.
Now that Covid-19 pandemic becomes a new normal in the way people do businesses. How are you coping with this situation amid efforts to grow your membership?
It has been challenging no doubt, given the fact that our society has not fully embraced the use of technology in certain aspects of doing business and across sectors. Fortunately, in the recent past, we started deploying technology in our processes which made it easier for us to adapt to the disruptions caused by the COVID-19 Pandemic.
We have held several training programmes and some traditional events of the Institute virtually that before now, we were accustomed to holding physically.
Images of professional institutions like CITN thrive on the discipline of its members. What is CITN doing to ensure you have disciplined tax professionals?
CITN is doing quite a lot in this regard. We have some cases already dispensed of by our Disciplinary Tribunal while others are pending before the Investigation Panel of the Institute. At every opportunity, we emphasize the need for professionalism and ethical conduct by members in line with the Institute’s code of conduct.
So far so good, we have had minimal cases of reported misconduct by our members. However, we advise employers of labour, taxpayers and members of the public not to hesitate in bringing to the attention of the Institute any member that has been found wanting in their professional conduct and discipline as Tax Professionals.
Recently, CITN urged tax authorities to constantly engage taxpayers towards addressing the challenges that they (taxpayers) face in these uncertain and challenging times. How better can this be done?
Unfortunately, many states are not taking adequate steps in this direction. We believe that taxpayers can best be engaged in open conversations in the mode of town hall meetings. This can be done quarterly or biannually with representatives of the Organized Private Sector, Trade Associations, Market Women, Chambers of Commerce and so on in attendance. This can help provide first-hand information to the government in enunciating tax and other policies that will enable them surmount the challenges that they face while also increasing government revenue in the long run.
The negative effects of Covid-19 pandemic are so glaring on standards of living including the inability of taxpayers to fulfil their tax obligations as and when due. What should Government do and what’s your view on expected revenue to government?
I must commend the Tax Authorities at the Federal Level for taking steps in this direction. The measures already being implemented includes the exemption of certain categories of taxpayers from paying taxes, extending the period for filing tax returns, waivers of penalties and rebates are all worthy initiatives.
Government revenues would be affected negatively in some way. However, there are lots of potentials for increased revenue from taxes that we have not explored.
The number of persons and entities in the tax net is still a far cry compared to the number of businesses operating in the country and individuals doing business and earning income. Our efforts should concentrate on bringing them into the tax net.
Do you agree that the 2020 CAMA, along with the recent revisions of the Taxation Acts, will reduce the tax burden for small businesses and encourage Nigeria’s informal sector?
I believe so. More incentives have been provided for taxpayers and by extension, we are encouraging the sustenance and establishment of more businesses. I would enjoin that taxpayers employ the services of Tax Professionals to advise them on ways to take advantage of these incentives to grow their businesses. Moreso, we have this information in the public domain that they can have access to.
The Africa Continental Free Trade Agreement (AFCFTA) which Nigeria signed aims to increase trade between African countries. What’s the implication of this on taxes?
There are implications to our tax regime as there will be need to review our trade tariffs and bring them in alignment to the Agreement. Also, our tax rates would be reviewed to bring them in tandem with the terms of the Agreement. Furthermore, it will create a liberalized market for goods and services amongst other things. It is notable however, that there are challenges as to whether Nigeria will have a level playing ground without negatively impacting our tax system.
How can taxpayers adapt while living with the Pandemic?
The Pandemic to me was a wake-up call. At some point in time as humans, we are supposed to adapt to changes in the environment. I think we are coping just fine though the disruptions across world economies are far-reaching and would remain with us for a long time. I would however advise taxpayers to plan their tax affairs bearing in mind that tax evasion is criminal and would bring disservice to our nation.
