Nigeria has one of the highest company income tax rates globally which is a disincentive for business growth, Taiwo Oyedele, tax leader, and partner PwC Nigeria, has said.
He spoke on Saturday at the Finance Correspondents Association of Nigeria, FICAN annual workshop themed “Unlocking Opportunities in Nigeria’s Non-Oil Sector”.
According to Oyedele, tax on income in Nigeria is among the highest 10 in the world.
He explained that in Nigeria, “we pay Company Income Tax (CIT) 30 percent, education tax 2 percent, whatever is left, we pay withholding tax of 10 percent. If you add it together, it is more that 40 percent already.
- Strong push for Nigeria insurers’ M&A as analysts look for growth
- World Bank, IMF set up group to drive recovery, growth in the face of COVID-19
- Disinflation continues in Nigeria with 17.93% May CPI
- Nigeria goes missing in $38bn cotton market
- Nigeria flags off construction of its $7bn NLNG Train 7 project
If you now make a mistake of having a group and you say it’s a holding company, that is another 30 percent tax. Who does that?” he said.
Speaking further, Oyedele explained that when one starts a business today, there is something called commencement rule. It is supposed to punish you during commencement, so that you pay tax twice. It does not make sense.”
To address this challenge, the tax expert advised that operators in the private sector should focus on demanding for removal of some of these disincentives that affect business operations.
“What I keep saying to government is that I can insist that I have a pot that is this small and I say I must get 60 percent of this pot by all means. Or I allow this pot to be big enough and then get 10 percent of it.
Government must remove tax disincentives. One thing I am asking the business community is stop asking the government for incentives because they will think they are doing you a favour. Ask them to remove the disincentives that are not allowing us to do business,” he said.
He also called on the authorities to change their thinking about taxation as current approach has only made compliance difficult.
He said: “Our thinking around taxation is completely upside down as a country. Nigeria does not seem to understand that you need to be prosperous so that you can pay tax. Tax does not just fall from heaven.
As a government, I should help you make money so that you can pay me tax. Its just common sense. Nigeria has a tax system that does not allow businesses to thrive, whether you are small or big,” he added.
He noted that “the reason Nigeria cannot make money from tax, and is not a curse, is that it continues to beat up the people at the bottom of the ladder. But they cannot give you what they don’t have. In societies where they think things logically, they focus on the top 1 percent who are the rich and big companies and they will get the desired tax result,” he said.
Frontpage January 8, 2018