Stransact (Chartered Accountants), the correspondent firm of RSM, the sixth largest accounting and auditing firm in the world, has advocated for the development of indigenous and customized solutions to Nigeria’s tax issues as Nigerians get ready for the inauguration of a new president in May 2023.
Teniola Atanda, Digital Marketing Executive of Stransact, noted in a release that the company’s partners suggested tax-related measures for the government at a recent media conference to help safeguard Africa’s biggest economy.
The Nigerian tax system faces numerous problems and difficulties, including poor administration, a lack of a centralized database of taxpayers, tax evasion, the complexity of Nigerian tax legislation, and the failure to pay tax refunds. In the meantime, the IMF has recommended to the Nigerian government that it increase its revenue base in order to lower its debt.
All economic initiatives should be customized to the policies and realities of the country. The issue is not with the debt but with the terms of borrowing and how we use the borrowed funds. It is dangerous to borrow more while the economy is shrinking. With increased credit ratings, we will borrow at a lower cost.Eben Joels, General Partner at Stransact
The General Partner applauded the Federal Inland Revenue Services (FIRS) for the launch of TaxPro-Max, a homegrown piece of software that facilitates easy tax filing, payment, and withholding crediting. He did point out that the multiple currency rate regime, while allowing powerful individuals to profit excessively, is also stunting the expansion of legitimate firms.
Despite the Federal Inland Revenue Service’s (FIRS) commendable performance in tax collection for the year 2022, which saw a historic peak of ten trillion naira in revenue generated, the agency continues to face difficulties in its efforts to formalize the informal sector, which would help increase revenue collection, reduce the need for the government to borrow excessive amounts of money, and ultimately mitigate the country’s rising debt profile.
The Stransact Partners remarked that Nigeria has one of the highest multiplicities of taxes in the world in their remarks to the media. The many taxes levied on individuals and businesses have grown to be a significant burden for Nigerians and a barrier to doing business, as the inflation rate is projected to reach 22.04% in March 2023.
In order to avoid tax increases or the introduction of new levies, they encouraged the government to expand the tax net by including more individuals from the unorganized sector.
In the informal sector of the Nigerian economy, where the majority of transactions take place outside of the banking system, Victor Athe, Partner, Tax Services, advocated for their “formalization”. According to Athe, expanding the tax base and raising the amount of tax income accessible to the government through the formalization of the economy’s unregulated sectors through facilities and regulations.
Lastly, the Stransact Partners challenged Nigerians to demand accountability from government representatives at all levels on the use of tax funds.