The Federal Government is collaborating with the Organisation for Economic Co-operation and Development (OECD) to ensure effective and efficient tax system in the country.
Minister of Finance Budget and National Planning, Mrs Zainab Ahmed who disclosed this at the National Tax Dialogue in Abuja explained that the aim was to create a Global Forum on transparency for exchange of information for tax purposes.
A statement by the Minister’s Special Adviser on Media and Comunications, Yunusa Tanko Abdullahi, on Friday quoted the minister to have said that with this development, “there is no hiding place for tax dodgers.”
Ahmed said further: “we are committed to deploying technology to make tax payment and tax administration easier and more efficient.
“We are also reforming tax refund processes, collection of value added tax (VAT) on cross-border transactions and putting measures in place to block revenue leakages.”
The statement said: “As the government continues to do its best to cater for Nigerians in the face of daunting economic circumstances, the minister has called on the citizens to perform their basic civic obligation by paying their taxes correctly and promptly.”
According to her, the recent launch of the system for automatic exchange of financial information was a key step.
“Accordingly, everyone (taxpayers, tax practitioners, lawyers and indeed, every well-meaning Nigerian) is called upon to join hands with government to reposition the economy and provide better living conditions for our populace. To this end, tax compliance must be taken as a duty for building our nation,” she also said.
Speaking on the efforts of the government to enhance taxation, Mrs Ahmed said: “We are continuing our efforts to monitor and enhance taxation of MNEs which are doing business in Nigeria. We introduced the concept of Significant Economic Presence (SEP) into our domestic legislation last year as a starting point for the taxation of income generated from Nigeria via digital or online platforms. This year, we will continue our work with the OECD inclusive framework to stop base erosion and profit shifting.”
The minister noted that the COVID-19 pandemic has complicated a lot of issues leading to, among other things, cyclical economic crises.
“There is significant fall in crude oil prices resulting into very huge funding gap for the government. This trend is projected to continue into 2021 (hopefully, not beyond) as the pandemic continues to disrupt economic activities globally.
“The lockdowns of 2020 and the associated reduction in economic activities during those periods are expected to bear negatively on companies’ 2021 taxable profits. The extent of revenue decline from corporate income tax may not be known until 30th June 2021 when most companies would have filed their tax returns for the year,” she also stated.
According to her, despite government’s best effort in providing palliatives to cushion the effect of the pandemic on businesses, families and individuals, the impact has been no less severe. Many people are struggling to provide food and other basic needs while a lot of businesses are struggling to keep their employees.
Noting further, Ahmed said: “The situation has presented the government with a very difficult task of balancing the need to support struggling businesses and families through fiscal incentives and other palliative measures on the one hand while, on the other hand, raising necessary revenue to fund government budget.
“One way or the other, we must achieve, as a nation, the key objective of assisting businesses and individuals to pull-through this difficult episode and put the economy back on track for stable and sustainable growth,” she assured.
Drawing attention to the need for understanding the rationale behind government policy measures, Ahmed urged that the rationale behind some of the policy measures adopted by government in response to the impact of COVID-19 are better understood within the context of the peculiar economic situation facing the country.
“For instance, in 2019, the government exempted small companies from tax while reducing tax rate for medium companies.
“This year, the government, as a way of helping workers remunerated at the lower-rung of the wage ladder, exempted minimum wage from income tax and further reduced the rate of minimum tax for businesses.
“The government deliberately took the decision not to impose new taxes, notwithstanding the pressing need for increased revenue,” she added.