The President of Chartered Institute of Taxation of Nigeria (CITN), Olajumoke SImplice, has asked the Federal Government to amend the tax law, especially the new Value Added Tax.
The CITN boss explained that the challenge with the increment was that it would affect cost of goods and items as manufacturers would have to pay higher VAT.
[READ MORE: FG earns N28.6 trillion from VAT, others]
She said, “There should be threshold for registration for VAT. Companies with less than N10m revenue should be exempted from registration. For manufacturers, they should exempt raw materials from VAT, so it will not affect the cost of production. We need to look at the areas of the companies income tax to amend.
“We can reduce the companies income tax and personal income tax. That will release more money to employees and they will have more money to spend, and they will pay tax. I think what we need to do is to request for accountability because we are doing our obligation to the country. The government should reduce the cost of governance.”
She added that the development was timely and appropriate as the VAT Act was promulgated in 1993 and came into effect in 1994.
“Our VAT is the lowest when compared with other countries. The idea then was that, let us start from there and continuously, we will move it up. But 25 years on, nothing has been done. In 2007, when the idea was moved, it was killed. Earlier this year, when it was moved, it was killed. So when is the right time?”
On the query that tax collection between 2012 and 2014 was better than 2015 and 2018, she explained between 2012 and 2014, oil was over $100 per barrel and if one looked at the figure for collection for those years, oil majorly was over 50%.
“While in the period of Babatunde Fowler, we saw oil price falling below $50; look at the disparity. Of course, collection will be low. When things like that happen, you are forced to look inward, and that was what Fowler did.
“He looked inward by looking at the Value Added Tax. He looked at what was happening, looked at the people who were outside the tax net, and brought them in. By that, he succeeded in moving the number of taxpayers from 10 million to 20 million. If you look at the collection now, we are moving from oil revenue to non-oil revenue. And that is the way it should be,” she said.
[READ ALSO: Famfa oil boss, Folorunso Alakija reacts to VAT increment]
About CITN: CITN is to be in charge of capacity building for tax professionals. It trains, retrains, conducts exams for those who want to become members.
“When you become our member, we don’t stop there. We have what we call mandatory professional training programme, and we do that across the nation. So we take training to the doorstep of our members wherever they are in this country. In fact, we are also planning to do the training online, it has started from first of September,” she added.