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InsideTaxSome Imperatives for Tax Administration in the “Change” Era
businesses have become serial applicants for pioneer status abound. Same business replicated many times through set up of new entities to position for pioneer certification is a clear case of regulatory failure and the leakages to revenue due to the Nigerian government can only be imagined. This threat to revenue needs to be addressed wholistically in the “Change” era. There is the need to undertake an assessment of those incentives to determine beyond doubt that their benefit to or impact on the economy have not been assumed.
? Increasing tax awareness, voluntary compliance and technology content: Given that one of the pre-eminent objectives of the National Tax Policy (NTP) is how to create, deepen and institutionalise in a sustainable manner, a culture of voluntary tax compliance amongst individuals and corporate citizens of Nigeria, the real question then would be what tax administrators are prepared to do differently in the
For the first time in the history of Nigeria, a ruling party, defeated at the national polls, successfully completed transfer of power to an opposition party, on 29 May 2015. What a remarkable development in our political evolution as a nation!
The new Federal Government will in the coming days announce the composition of its cabinet and with the 8th National Assembly attempt to once more liberate the Nigerian people from the ills of poverty, insecurity, unemployment, corruption, infrastructural decay, economic uncertainty, unaccountability and perennial fuel shortages.
One thing is clear. Beyond the need for competence, credibility, creativity, hard work and transparency, the new Government must get its financing right. Dwindling revenue from the oil and gas sector has made emphasis on non-oil revenue sources especially tax inevitable.
Taxation as the default alternative, serves many purposes – revenue generation, wealth redistribution, accountability etc. Most advanced countries in the world depend primarily on taxation and as such, this is one tool the new government should be willing to use to stimulate the economy further.
Whilst the tax administration process could definitely be further improved, strategies which seek to curb or eliminate tax leakages under the applicable tax regime (in its current or amended form) must be given fillip. Thus, the imperatives for tax administration in the “Change” era should in no particular order of importance, include:
? Eliminating abuse of tax incentives: The reality is that Nigeria has a plethora of tax incentives available within her economy. And just as there are businesses that are passive in taking advantage of the existing tax incentives in the economy, there are businesses whose activities border on “incentive shopping”. Cases where some promoters of
On technology, this is the current and only option in the 21st century given the daily advances in information and communication technology. All tax processes must be adapted to technology as far and as quickly as possible. There must be consolidation on steps already taken to make electronic filing and access to tax records easy to hand.
? Eliminating “Back-door” settlement of taxes: Leakages on tax revenue due to government arising from inappropriate procurement of settlement of tax liabilities must also be eliminated. Taxpayers who have formed the habit of addressing their tax challenges or resolving their tax liabilities through this avenue on the basis that this model constitutes an alternate variant of “tax planning” need to desist from this practice. Such approaches signify an unwitting (or in some cases, deliberate) intent to perpetrate tax evasion, which is a criminal offence. This would not enhance the reputation of the business with the tax authorities
“Change” era. For instance, what would Relevant Tax Authorities (RTAs) do differently on:? Tax awareness?? Voluntary compliance or tax
disclosure?? Technology?
Obviously, RTAs must continue to engage directly or collaborate in value adding workshops, seminars and conferences on tax to drive the emergence of a “tax conscious citizenry” whether as individuals or corporate citizens.
The current level of response by RTAs to “tax defaulters”, who wish to make voluntary tax disclosure is lukewarm. RTAs must provide clarity on how it seeks to handle tax defaulters who wish to turn new leaves. There is need for RTAs to generate and transmit signals of assurance and further assurances appropriate to the variety of cases that must surely unravel when “taxable persons” in this category feel emboldened/encouraged to come forward.
In this era of “Change”, the performance of the Federal Government and those of the States of the Federation on the indices of transparency, cost of governance, corruption and delivery of a socio-economic system that works would be the most viable and significant statement to ramp up tax compliance or disclosures
and Nigeria at large whilst it may increase the pressure points for officers who wish to profit from such “reputation”.
? Resolving the challenge of 'ambiguous' and 'old' provisions in the tax laws: There is the need to eliminate through appropriate amendments to the tax laws 'grey' provisions, which undermine certainty of tax treatment for the benefit of taxpayers who file their tax returns on self-assessment basis. This is expected to whittle opportunities for unanticipated additional tax liabilities that can create unsavoury cashflow challenges for businesses.
In this era of “Change”, the performance of the Federal Government and those of the States of the Federation on the indices of transparency, cost of governance, corruption and delivery of a socio-economic system that works would be the most viable and significant statement to ramp up tax compliance or disclosures. An irresistible urge to pay the tax due timeously is generated and a compelling case to encourage others is established when taxable persons can see taxpayers’ money “in action”!
This publication contains general information only and Akintola Williams Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services.
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