Nigeria News

Report Commends Nigeria’s Tax Rates Amid Poor Compliance Cost

Nigeria's tax rates are globally and regionally competitive but demands significant improvements in terms of number of tax payments and time it takes to comply, according to the Paying Taxes 2014 report launched yesterday by the PriceWaterhouseCoopers (PWC) in partnership with the World Bank.
 
The study showed that on the average globally, a medium-sized company had a total tax obligation of 43.1 per cent of profits, making 26.7 payments and needing 268 hours to comply with its tax requirements.
 
But it stated that the case study company for Nigeria had a total tax rate of 33.8 percent, made 47 payments and spent 956 hours annually to comply with tax obligation.
 
The Head of Tax and Corporate Advisory Services at PWC Nigeria, Mr. Taiwo Oyedele, said the two indicators ranked the country at 170 out of 189 economies worldwide.
In dealing with the problem of non- compliance with tax obligations by multinationals and individuals, Oyedele said examples must be set by committing offenders to jail to serve as deterrent to others.
 
He also said the abuse of duty waivers and other forms of discriminatory incentives to select individuals and bodies was harmful to the economy as the policy is currently disjointed, leading to waste of money.
 
He said: "You just need to make examples, it can be an individual, it can be a company; once you've gone through a due process, take them to court and once they are found guilty, not only should they pay the tax that they haven't paid, they would go to jail. People go to jail all over the world for not paying taxes, I don't know of anybody who has gone to jail in Nigeria. Once you make those examples and people know there are consequences for not complying, they have no choice but to do the right thing and that applies across the board to national companies, wMeanwhile,  the Director of External Relations, Tax at PwC, Mr. Neville Howlett said:
“Reforming the tax system is essential and this study shows that it is not just corporate income tax that is important. It is also a case of making decisions around who needs to be taxed, how they will be taxed, and by how much."
 
He said: “Trends in the international tax environment such as the globalisation of business, increasing competition among countries for tax revenues, and the increasing proportion of company assets that are made up of intangibles such as brand names, software and know-how, require tax systems around the world to be updated to meet modern needs.”
 
Paying Taxes 2014 measures all mandatory taxes and contributions that a medium-sized company must pay in a given year. Taxes and contributions measured include the profit or corporate income tax, social contributions and labour taxes paid by the employer, property taxes, property transfer taxes, dividend tax, capital gains tax, financial transactions tax, waste collection taxes, vehicle and road taxes, and other small taxes or fees.
 
It said economies around the world are adopting a range of policies as they strive to strike a balance between raising tax revenues and encouraging growth, according to a new report by PwC.
 
"This year, 14 economies significantly increased their total tax obligations or the amount of tax a company has to pay, while 14 others lowered theirs. In most regions around the world, the rate of decline in the total amount companies have to pay in taxes continues to slow. The study also reveals that since the study was initiated nine years ago, corporate income taxes have consistently fallen, while labour taxes borne by companies have been more stable and now represent the largest component of the total tax obligations," it stated.

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