Chinwendu Obienyi

Unless Nigeria implements flexible tax regime to its processes, it might continue to face challenges around  revenue generation as well as stunted economic growth. This was the view of experts at the Tax Breakfast Seminar: 2020 National Budget and Finance Act during a panel session organised by KPMG Nigeria in Lagos at the weekend.

At the discussions, Chief Executive Officer, Seplat Petroleum Development Company Plc, Austin Avuru, said that investments are lacking in the traditional basin segment, leading to the oil sector not meeting up with expectations of projections set every year.

“The thing about taxation is the judgement will enventually come at the flow of funds into the system. if a tax regime is good enough, then we will be able to see inflow of capital, If it is not good enough, we will see capital flight. Consistently over the last ten years, we have been drawing our budgets on assumptions of oil production.  But the truth is that if we do not invest in the oil industry, then there is no way to achieve projections that are drawn up every year in the budget. In the last 15 years, we were planning to do 15 million barrels/day and a reserve of 30 million barrels but now we do not see people talking about it anymore. Currently, we are doing 1.96 million barrels/ a day because deepwater where the tax collection is minimal and there is no investment is in this segment.

According to him, if the government puts in place a flexible tax regime that makes provisions for increases and reduction in oil price and cost, then there would be a much improved jump in economic growth.

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“So tax rate is not necessarily the big incentive for government to get more money because if there is no taxable revenue to tax then at $30 per barrel cost  we are now approaching, if oil price is $50 in traditional basin and you back out 20 per cent royalties, you are left with $40 before backing out cost, then very little will get to the FIRS”, Avuru said.

For his part, the Executive Chairman, Federal Inland Revenue Service (FIRS), Mohammed Nami, explained that the issue with taxation revolves around the data and its reliability. Nami thereafter charged business owners to keep adequate records and ensure their taxes are paid on time to avoid punishments.

He said, “The successful implementation of the Finance Act requires all stakeholders to ensure that accounting and tax records are adequately kept by their clients as well as payment of taxes in due time.

Running a business without keeping records is like driving a car without a speedometer and so it is on this note that I urge all businesses in Nigeria to keep their records as we have got capacity to deplore technology going forward to link everything to Bank Verification Number (BVN)”.