Kenfield Griffith, the chief executive officer of tappi, and end-to-end digital commerce SaaS solution provider, has applauded the proposed tax and fiscal reforms in Nigeria, which attempts to exempt 95% of the informal sector from taxes.
Griffith was commenting on a recent publication by Techeconomy in which the Presidential Fiscal Policy and Tax Reforms Committee, said proposals are on the table aimed at streamlining the country’s tax system.
The Committee led by a tax expert, Taiwo Oyedele, aims to reduce the number of taxes and levies payable by businesses in the country by over 87%.
While they plan to make it easier for residents to pay taxes, the Committee said it is not unaware of the need to increase government’s revenue streams.
Oyedele said the Committee is proposing for an approval to retain eight key taxes: income tax, value-added tax, property tax, customs duties, excise tax, stamp duties, special levy, and harmonized levy.
Additionally, the social security contribution will be kept. The committee aims to complete the approval process by the end of the third quarter, with implementation expected to begin in January 2025.
Currently, Nigeria has over 60 taxes and one of the lowest tax-to-GDP ratios in the world at 10%.
President Bola Tinubu’s government aims to increase this to 18% by 2027 to address rising fiscal deficits, which reached 5.6% of GDP in 2023.
To achieve this, the committee recommends increasing value-added tax on non-essential items like mobile phones while reducing tax on essential items like food, housing, transportation, education, and health to protect vulnerable Nigerians.
The standard VAT rate is currently 7.5%. Oyedele believes the proposed reforms will significantly benefit the country, and the committee expects the new tax regime to be in place by January.
“The implementation is expected to kick in by January next year, if everything goes according to our plan,” Oyedele said during a presentation in Lagos, recently.
Commenting on the tax reform’s potential effect on Nigeria’s 40 million Micros, Small and Medium Enterprises (MSMEs), Kenfield Griffith of tappi, said:
“Recent news to reduce the burden of multiple taxation offers critical relief in arguably the most challenging economic period Nigeria’s small business owners have experienced in recent years”.
Forming over 90% of all businesses across the country, SMEs are undoubtedly the backbone of Nigeria’s economy.
In order to realise their full potential, we simply cannot undervalue the role of establishing an enabling ecosystem for them to truly thrive.
As a platform focused on redefining the digital landscape for SMEs, we know first-hand the transformative impact prioritising this approach can have in an online sphere, witnessing thousands of businesses across Nigeria expand and drive significant customer growth.
With this in mind, our hope is that the new tax reforms will act as the first of many transformational government policies geared towards empowering SMEs so we can collectively build a robust and sustainable environment where they can emerge as a driving force for growth for years to come.”
With a strong presence in Nigeria, tappi’s end-to-end digital commerce SaaS solution simplifies the creation of online business profiles through an AI-powered chat experience.
Leveraging payments and messaging, the platform is rapidly emerging as the SEO backbone to boost revenue for MSMEs across the continent.
