Post by Trade facilitator on May 27, 2017 17:09:00 GMT 1
The Federal Government is leaving nothing to chance in its efforts towards entrenching an improved tax policy to effectively harness the much needed resources for sustainable economic growth.
As part of measures to ensure a more effective tax system, the Minister of Finance, Mrs. Kemi Adeosun recently inaugurated a Committee on the Review and Update of the National Tax Policy, headed by Dr. Abiola Sani. The terms of reference of the committee are to review the National Tax Policy (NTP) document, recommend a list of tax laws and regulations that need to be reviewed or amended, make any other suggestions on the NTP to facilitate effective implementation of the document and recommend policy to ensure inter-agency cooperation between the Federal Inland Revenue Service (FIRS) and other revenue agencies toward enhancing the internally generated revenue (IGR) of the Federal Government. Other terms of reference of the committee include expanding the treaty network of Nigeria to include its major trading partners, reviewing the existing Double Taxation Agreement and ensure that tax laws are reviewed from time to time to minimise avoidable hardships to taxpayers.
Adeosun explained that even though the Federal Government was keen on growing revenues and improving the country's tax system, it was equally determined to ensure that taxes are simplified. "The task of growing tax revenue must be pursued with a human face and sustainability in focus. The relevant unit of the Ministry of Finance will be strengthened to enable it play a more vibrant role in tax policy formulation," she said.
The minister promised that the review will be a continuous exercise, as a means of evolving with global best practices and keeping with the domestic socio-economic realities. "Government shall indeed remain committed to the continuous improvement of our tax system as part of a dynamic framework to enhance compliance," Adeosun said.
The minister added that an effective tax system is key to the present administration's commitment towards diversifying the sources of government revenues away from oil. "Oil is just 13 percent of our economy but accounts for 70 percent of government revenue. Our challenge is to ensure that the other 87 percent of economic activity makes its own contribution to government revenue. An effective tax system is key to this and such a system must be underpinned by an effective and appropriate tax policy. Nigeria has one of the lowest tax to GDP ratios in the world at just 5 percent. There is clearly a pressing need for an overhaul of our tax policy and this is a key function of the Ministry of Finance," she said.
Mrs. Adeosun noted that businesses react to tax policy and the present administration would ensure that Nigeria is open for business and is encouraging businesses with a tax system that is easy to understand and comply with. "Areas of our tax code and laws that are in need of review will be addressed as part of this exercise as will modalities for simplifying our processes and reducing the tax burden on small businesses," she said.
She recalled that history was made in 2012 with the introduction of the National Tax Policy which contains a set of fundamental principles, which should serve as guide or barometer in determining what legislative and administrative action the tax system may require. According to her, the policy builds on the set of principles espoused by Adam Smith in his Wealth of Nations viz: Equity, Certainty, Convenience, and Administrative Efficiency.
She, however, noted that for more than four years now since the document was finalised without any additional updates, it is yet to be fully implemented. "In a rapidly changing commercial environment with new business models, tax avoidance and evasion strategies among other activities, a tax policy cannot be static," Adeosun said. This, she explained, necessitated the inauguration of the Committee on the Review and Update of the National Tax Policy.
As part of measures to ensure a more effective tax system, the Minister of Finance, Mrs. Kemi Adeosun recently inaugurated a Committee on the Review and Update of the National Tax Policy, headed by Dr. Abiola Sani. The terms of reference of the committee are to review the National Tax Policy (NTP) document, recommend a list of tax laws and regulations that need to be reviewed or amended, make any other suggestions on the NTP to facilitate effective implementation of the document and recommend policy to ensure inter-agency cooperation between the Federal Inland Revenue Service (FIRS) and other revenue agencies toward enhancing the internally generated revenue (IGR) of the Federal Government. Other terms of reference of the committee include expanding the treaty network of Nigeria to include its major trading partners, reviewing the existing Double Taxation Agreement and ensure that tax laws are reviewed from time to time to minimise avoidable hardships to taxpayers.
Adeosun explained that even though the Federal Government was keen on growing revenues and improving the country's tax system, it was equally determined to ensure that taxes are simplified. "The task of growing tax revenue must be pursued with a human face and sustainability in focus. The relevant unit of the Ministry of Finance will be strengthened to enable it play a more vibrant role in tax policy formulation," she said.
The minister promised that the review will be a continuous exercise, as a means of evolving with global best practices and keeping with the domestic socio-economic realities. "Government shall indeed remain committed to the continuous improvement of our tax system as part of a dynamic framework to enhance compliance," Adeosun said.
The minister added that an effective tax system is key to the present administration's commitment towards diversifying the sources of government revenues away from oil. "Oil is just 13 percent of our economy but accounts for 70 percent of government revenue. Our challenge is to ensure that the other 87 percent of economic activity makes its own contribution to government revenue. An effective tax system is key to this and such a system must be underpinned by an effective and appropriate tax policy. Nigeria has one of the lowest tax to GDP ratios in the world at just 5 percent. There is clearly a pressing need for an overhaul of our tax policy and this is a key function of the Ministry of Finance," she said.
Mrs. Adeosun noted that businesses react to tax policy and the present administration would ensure that Nigeria is open for business and is encouraging businesses with a tax system that is easy to understand and comply with. "Areas of our tax code and laws that are in need of review will be addressed as part of this exercise as will modalities for simplifying our processes and reducing the tax burden on small businesses," she said.
She recalled that history was made in 2012 with the introduction of the National Tax Policy which contains a set of fundamental principles, which should serve as guide or barometer in determining what legislative and administrative action the tax system may require. According to her, the policy builds on the set of principles espoused by Adam Smith in his Wealth of Nations viz: Equity, Certainty, Convenience, and Administrative Efficiency.
She, however, noted that for more than four years now since the document was finalised without any additional updates, it is yet to be fully implemented. "In a rapidly changing commercial environment with new business models, tax avoidance and evasion strategies among other activities, a tax policy cannot be static," Adeosun said. This, she explained, necessitated the inauguration of the Committee on the Review and Update of the National Tax Policy.
