About 65 per cent of eligible tax payers have failed to file their returns to the relevant tax authorities in the past two years, according to the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo Iweala.
The minister, who spoke at the Federal Inland Revenue Service (FIRS) stakeholders’ engagement forum in Lagos yesterday, said the failure was partly responsible for the country’s low tax to the Gross Domestic Product (GDP) ratio of 12 per cent, while peers like South Africa are doing well above 20 per cent.
She also said 75 per cent of registered businesses are not captured in the tax system, while 30 per cent of those with pioneer status and enjoying tax holidays have abused the privilege.
The minister announced that Nigeria Liquefied Natural Gas (NLNG) was now a new entrant in the tax system, having paid N200 billion as its tax obligation.
She said the stakeholders’ forum was to appeal to all eligible tax payers to come forward to pay so as to help push government’s drive to diversify the economy.
Tax return is a form on which a taxpayer makes an annual statement of income and personal circumstances, used by the tax authorities to assess liability for tax. The development means that the affected registered tax payers have abdicated their obligations to government for the past two years.
Other contributors said government must play its statutory role of provision of services to engender voluntary payments of taxes. Some others however queried the appointment of McKinsey as consultant to the FIRS while comparable skills are available in-country.
The minister said local tax collectors and or consultants are overbearing in terms of charges, that they almost always demand between 30 and 50 per cent of collections as against four per cent in most cases.
She said fees and charges needed to be competitive, that the choice of engaging consultants was based on cost and efficiency.
“The assistance being given by McKinsey is result based. We are not just paying out money, their fees are result based,” she said, adding that they have really done well in the area of speeding up FIRS audit process.
Full article was first featured in Thisday
This is nothing earth shattering, just that the numbers put a better perspective to the issue. However, the appointment of McKinsey does raise concerns particularly with the local content policy and experience in a difficult terrain like Nigeria.