Nairametrics| Individuals who default in paying taxes will face a hike in the interest rates on arrears . Minister of finance, Mrs Kemi Adeosun stated this at an event in Abuja. Here are key details of the hike:
- The Federal Government approved a new interest rate hike for liabilities for the 2017 tax year.
- The new interest rate for unpaid taxes will now be 5% over the CBN’s Minimum Rediscount Rate (MRR) for 2017. The CBN’s rate for 2017 is currently 14%. We believe she meant Monetary Policy Rates as MRR is no longer in use.
- The minister has directed the Executive Secretary of the FIRS to begin implementation of the new interest rate will take place from July 1st 2017.
- Prior to this, the FIRS had adopted a range of 20-22% which is the average bank lending rate.
- The finance minister also stated that the change in interest rate was to enhance tax compliance, minimum tax evasion, and reduce late payments.
The move may also spark similar policy changes by state revenue boards. A combination of an economic recession, and low oil prices have made governments across all tiers to ramp up non oil revenue.