How COVID-19 impacts Nigeria's tax compliance & collection
Nigeria's revenue challenges are being exacerbated by the Covid-19 pandemic, from crude oil receipts to non-oil revenues. Adeyemi Adediran, Associate Director at Andersen Tax joins CNBC Africa to discuss how the pandemic has impacting tax compliance and collection.
Thu, 23 Apr 2020 11:47:48 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Challenges in tax collection exacerbated by the pandemic and pre-existing low tax-to-GDP ratio
- Extensions in compliance deadlines and online filing options implemented to support taxpayers
- Balancing the need for tax cuts/waivers with revenue generation to stimulate the economy amidst the pandemic
The Covid-19 pandemic has brought unprecedented challenges to Nigeria's tax compliance and collection efforts, exacerbating the country's revenue struggles from both crude oil receipts and non-oil revenues. Adeyemi Adediran, Associate Director at Andersen Tax, shed light on the impact of the pandemic on tax compliance and collection in a recent interview with CNBC Africa. Before the pandemic, Nigeria already faced difficulties in tax collection, with a tax-to-GDP ratio of just 6%. The pandemic has only worsened the situation, with companies experiencing sharp declines in revenue and profits, leading to reduced taxes payable and challenging tax authorities to meet their targets. Lockdown policies have slowed down business activities, further impeding revenue generation from taxes, particularly given the significant role of the oil industry in tax collections. The fluctuating oil prices, dropping below $30 per barrel, have also dealt a blow to government revenue. Tax professionals are now working closely with clients to navigate these challenging times. The pandemic has forced tax authorities to extend compliance deadlines for certain taxes, such as value-added tax and company taxes, to accommodate the disruptions caused by the lockdown measures. While online filing options have been made available, some taxpayers are still struggling to meet their compliance obligations due to the ongoing lockdowns. Adediran highlighted the importance of monitoring developments and potentially extending deadlines further to support taxpayers in meeting their obligations. As governments worldwide face economic strains due to the pandemic, calls for tax cuts and waivers have emerged. In Nigeria, the Lagos Chamber of Commerce and Industry has advocated for more tax reductions to support businesses. However, the government faces a challenging balancing act between stimulating the economy and generating revenue. Adediran suggested that the government could work with taxpayers to develop installment payment plans for outstanding tax liabilities and consider waiving penalties to ease the financial burden on businesses. While accommodating tax waivers can support businesses during these tough times, Adediran emphasized the need for strict monitoring to ensure that the intended goals of the incentives are met. He stressed the importance of fostering a conducive environment for businesses to survive the pandemic so that they can continue to contribute to the tax revenue pool. Ultimately, collaboration between the government and taxpayers is essential to navigate the current challenges and sustain revenue generation amidst the ongoing crisis.