Abuja, Nigeria – April 24, 2019: Chairman, Heirs Holdings and Founder, Tony
Elumelu Foundation, Tony O. Elumelu has called for far reaching Tax reforms and
for the National Assembly to urgently pass the Executive Tax bill into
law.
Elumelu Foundation, Tony O. Elumelu has called for far reaching Tax reforms and
for the National Assembly to urgently pass the Executive Tax bill into
law.
Elumelu made this statement as he delivered the
keynote address at the 21st Annual Tax Conference of the Chartered Institute of
Taxation of Nigeria (CITN), titled, “National Development: Unlocking the Potentials of Taxation”.
keynote address at the 21st Annual Tax Conference of the Chartered Institute of
Taxation of Nigeria (CITN), titled, “National Development: Unlocking the Potentials of Taxation”.
Speaking on the challenges that stifle small
businesses, Elumelu quoted a young entrepreneur beneficiary of the Tony Elumelu
Foundation, “The average business owner in Nigeria is a local government
authority on his own because he caters for his own electricity with generators,
he builds his own borehole, handles his own waste disposal, and the government
can make his life easier by creating favorable tax policies that support
SMEs.”
businesses, Elumelu quoted a young entrepreneur beneficiary of the Tony Elumelu
Foundation, “The average business owner in Nigeria is a local government
authority on his own because he caters for his own electricity with generators,
he builds his own borehole, handles his own waste disposal, and the government
can make his life easier by creating favorable tax policies that support
SMEs.”
Elumelu also lamented the plight of SMEs at the
mercy of the tax system revealing, “The average number of taxes businesses pay
in Nigeria is 48, compared to 33 in other Sub-Saharan countries. In Hong Kong,
it’s just 3. Multiple taxation remains a significant burden for SMEs and
corporates operating in the country.” Elumelu
continued: “With a population of close to 200 million people in Nigeria, we
have only 75,000 registered SMEs in the country. No one needs to tell us that
people are avoiding tax or refusing to be a part of the system,” he said.
mercy of the tax system revealing, “The average number of taxes businesses pay
in Nigeria is 48, compared to 33 in other Sub-Saharan countries. In Hong Kong,
it’s just 3. Multiple taxation remains a significant burden for SMEs and
corporates operating in the country.” Elumelu
continued: “With a population of close to 200 million people in Nigeria, we
have only 75,000 registered SMEs in the country. No one needs to tell us that
people are avoiding tax or refusing to be a part of the system,” he said.
With high cost of compliance, complex and costly
business registration processes, many SMEs are choosing to remain informal,
which in turn results in a low tax base and low tax contribution to
GDP. “Nigeria’s tax to GDP ratio is only circa 6%, compared to far smaller
populations like Rwanda at 16%. Imagine the economic transformation we can
achieve as a country if we can move our Tax to GDP ratio by 10%. We will raise
an additional $40 billion in government revenue – identical to the sum of our
foreign reserves,” Elumelu explained. But it won’t be easy.
business registration processes, many SMEs are choosing to remain informal,
which in turn results in a low tax base and low tax contribution to
GDP. “Nigeria’s tax to GDP ratio is only circa 6%, compared to far smaller
populations like Rwanda at 16%. Imagine the economic transformation we can
achieve as a country if we can move our Tax to GDP ratio by 10%. We will raise
an additional $40 billion in government revenue – identical to the sum of our
foreign reserves,” Elumelu explained. But it won’t be easy.
Elumelu advised government
to educate, inform and raise tax awareness, “Government should drive mass mobilization of citizens – let citizens know why they need to pay taxes and
give them the assurance that their tax will be properly utilized.” In addition,
he stated that, “government should employ the use of smart tax incentives to
attract and incentivise local and foreign investors.”
to educate, inform and raise tax awareness, “Government should drive mass mobilization of citizens – let citizens know why they need to pay taxes and
give them the assurance that their tax will be properly utilized.” In addition,
he stated that, “government should employ the use of smart tax incentives to
attract and incentivise local and foreign investors.”
Elumelu also tasked the country’s ambassadors and
embassies with a two year timeline to increase the number of double tax
treaties between host countries and Nigeria. “Nigeria has 14 taxation
treaties while a country like South Africa has 79 double taxation treaties, and
we are the largest economy in Africa. Our embassies should adopt a target in
the next two years to sign Tax treaties with our top 100 trading partners
in the world.”
embassies with a two year timeline to increase the number of double tax
treaties between host countries and Nigeria. “Nigeria has 14 taxation
treaties while a country like South Africa has 79 double taxation treaties, and
we are the largest economy in Africa. Our embassies should adopt a target in
the next two years to sign Tax treaties with our top 100 trading partners
in the world.”
Speaking as the leading proponent of
entrepreneurship in Africa and an advocate for entrepreneurs, Elumelu charged
government to put in place tax systems to encourage SMEs-— the engine for job
creation in the economy.
entrepreneurship in Africa and an advocate for entrepreneurs, Elumelu charged
government to put in place tax systems to encourage SMEs-— the engine for job
creation in the economy.
“Until there is a reduction in what SMEs pay as
tax, elimination of multiple taxation, abolition of minimum income tax and
excess dividend tax, it will be difficult for us to expand the tax base. It
will be difficult for us to attract investors into this country, and it will be
difficult for us to retain the ones already in the country. It will be
difficult for us to mobilize our SMEs to help create employment that we need so
much in this country. It will be difficult for us to have the citizens hold
leaders accountable.”
tax, elimination of multiple taxation, abolition of minimum income tax and
excess dividend tax, it will be difficult for us to expand the tax base. It
will be difficult for us to attract investors into this country, and it will be
difficult for us to retain the ones already in the country. It will be
difficult for us to mobilize our SMEs to help create employment that we need so
much in this country. It will be difficult for us to have the citizens hold
leaders accountable.”
In conclusion, he reminded the National Assembly
members of their mandate in office, “We must encourage government to pass the
Executive Bill immediately. Let’s get the National Assembly to fulfill their
obligation to society and pass the bill immediately, so we can start making
progress”.
members of their mandate in office, “We must encourage government to pass the
Executive Bill immediately. Let’s get the National Assembly to fulfill their
obligation to society and pass the bill immediately, so we can start making
progress”.
Speaking in response to the presentation, Former
President of the Chartered Institute of Taxation in Nigeria, Chief Mark Anthony
Dike emphasized the urgency for the Executive Tax bill to be passed into
law.
President of the Chartered Institute of Taxation in Nigeria, Chief Mark Anthony
Dike emphasized the urgency for the Executive Tax bill to be passed into
law.
He said: “Every year during the military
regime, there was a Finance Miscellaneous Provision Decree aimed at looking at
what has happened and review the areas that need to be amended. As they say,
the taste of the pudding is in the eating. We may conceptualize, but in order
to know the efficacy of a theory, we have to test it. Until the provision of
the Executive order is tested, we cannot know how efficacious it will be.”
regime, there was a Finance Miscellaneous Provision Decree aimed at looking at
what has happened and review the areas that need to be amended. As they say,
the taste of the pudding is in the eating. We may conceptualize, but in order
to know the efficacy of a theory, we have to test it. Until the provision of
the Executive order is tested, we cannot know how efficacious it will be.”
Also present at the event were Dr. Ikemefuna
Nwobodo, President, Chartered Institute of Taxation in Nigeria, Permanent Secretary, Ministry of Finance, Dr. Mahmud Isa-Dutse, Babatunde Fowler, Executive Chairman, Federal Internal Revenue
Service, Ayo Subair, Chairman, Lagos Internal Revenue Services, Members of the
council of CITN and the Auditor General of the Federation, Mr. Anthony Ayine.
Nwobodo, President, Chartered Institute of Taxation in Nigeria, Permanent Secretary, Ministry of Finance, Dr. Mahmud Isa-Dutse, Babatunde Fowler, Executive Chairman, Federal Internal Revenue
Service, Ayo Subair, Chairman, Lagos Internal Revenue Services, Members of the
council of CITN and the Auditor General of the Federation, Mr. Anthony Ayine.
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