…Audits 800,000 coys
Stories from Uche Usim, Abuja
The Federal Government, has vowed to tackle the challenge of tax invasion, as its recent findings on remittances and illicit financial flows indicate a pattern of systematic evasion by multinational and local operators.
Minister of Finance, Mrs Kemi Adeosun, who stated this yesterday in Abuja in an statement made available to Daily Sun, said the Buhari administration was not prepared to pamper tax evaders as revenue mobilisation remains the master key to unlocking Nigeria’s huge growth potential through funding of its ailing infrastructure like roads, power and rail.
She revealed that over 800,000 companies, including some government contractors, that have never paid taxes have already been identified and are being audited.
“This is an unprecedented initiative that entails cooperation between Federal and State Governments. The Federal Ministry of Finance has also commenced a database project that combines data from the various arms of government including bank records, property and company ownership, and Customs records to create accurate profiles of those liable to pay taxes. The Ministry has also placed one of the world’s premier private investigation agencies on retainership to trace overseas assets”, she stated.
The Minister noted that changing the Nigerian economic psyche remains a tough task since tax mobilisation, by its nature, tends to erode the popularity of any government that pursues it.
“But the current administration understands that the short term lure of political expediency must give way to the long term best interests of Africa’s largest economy. Its energetic, young and growing population are deserving of the chance to experience a truly transformed, sustainable and growing economy”, she said.
Adeosun added that recent statistics released by her Ministry showed that Nigeria has just 14 million active tax payers from an economically active base of 70 million.
“Over 95 per cent of these are salary earners in the formal sector, just 241 persons paid personal income taxes of N20 million (US$65,573.77) in 2016. “Taxing the high networth and Nigeria’s huge community of entrepreneurs constitutes a critical but yet attainable target. The statistics for corporate tax payment shows the debilitating effects of base erosion and profit shifting as well as abuse of an overly generous tax incentive and duty waiver system. “The historical government apathy towards revenue mobilisation is one of the effects of the mistaken identity that saw Nigeria perceive itself as an oil economy,” she said.
This administration is determined to correct this identity crisis and all its concomitant effects”, the Minister stated.
Adeosun said branding Nigeria an oil nation was a huge error as such tags are pinned on economies that are typically characterised by low population densities and abundant oil resources.
“Saudi Arabia with 10 million barrels of oil per day and 30 million people, Kuwait with 2.7 million barrels of oil per day and 4 million people and Qatar with 1.5 million barrels of oil per day and 2.5 million people are typical of such. These economies pursued an economic model that was built around a large government dependent almost entirely on oil revenue for funding,” she said.
Such economies could afford to have low or in some cases no domestic revenue mobilisation, in the form of taxes. Tax to Gross Domestic Product (GDP) ratios of less than 10 per cent against the OECD average of 34.6 per cent could be justified especially in the era of high oil prices.
“But Nigeria is not actually an ‘oil economy’. With just 2 million barrels of oil per day and over 180 million people, simple mathematics tells us that 90 Nigerians share a barrel of oil compared to 3 Saudis, 1.44 Kuwaitis and 1.69 Qataris. With oil at just 10 per cent of GDP, Nigeria simply does not fit into the mould of the traditional oil economies”, she explained.
The Minister said part of the strategies to change the nation’s economic landscape and address the issue of tax evasion was the recent launching of the Voluntary Asset and Income Declaration Scheme (VAIDS), which offers Nigerian tax payers (corporate and individual), a nine-month window to regularise their tax status in exchange for a guarantee of no interest, penalties, tax investigation or further audit.
“This amnesty follows successful initiatives in a number of countries, where tax evasion is a problem, such as Indonesia, Argentina, South Africa and India. It has been programmed to end just as the Automatic Exchange of Information, which will provide Nigerian tax authorities with unprecedented levels of information on offshore assets, becomes effective.
“The initial signs suggest that Nigerians are responding positively to the new revenue narrative. Despite the emergence from a recession, tax revenues are showing early signs of growth. Value Added Tax (VAT) shows 18.97 per cent year on year improvement.
