Nigeria looks to tax compliance to drive revenue mobilisation

Nigeria's Minister of Finance, Budget, and National Planning, Zainab Ahmed, recently highlighted the government's shift in focus from revenue collection to tax compliance as a key strategy to drive revenue mobilization. This move underscores the country's commitment to strengthening its tax base and ensuring that taxpayers fulfill their obligations to enhance revenue generation. The government's initiatives, such as the Finance Act 2020 and the Strategic Revenue Growth Initiative, play pivotal roles in this overarching goal. The Finance Act 2020 introduced critical reforms to improve tax administration and compliance, while the Strategic Revenue Growth Initiative aims to increase fiscal revenue from 6% to 15% of GDP by 2023. These ambitious targets necessitate concerted efforts to expand the tax base, enhance compliance, and effectively utilize tax revenues to bolster economic development and social welfare. To delve deeper into this crucial topic, Michael Ango, Partner for Tax Regulatory Services at Andersen Tax, provided valuable insights on the strategies and challenges associated with driving tax compliance and revenue mobilization in Nigeria. The government's emphasis on tax compliance signifies a holistic approach that goes beyond mere revenue collection. Tax compliance entails taxpayers fulfilling their obligations, such as preparing tax returns, filing accounts, and adhering to regulatory requirements, to ensure transparent and accountable revenue generation. Compliance efforts are essential for building trust between taxpayers and the government, fostering a culture of accountability, and improving revenue collection efficiency. The Finance Act 2020 and the Strategic Revenue Growth Initiative serve as key pillars in the government's drive to enhance tax compliance and revenue mobilization. These initiatives prioritize sustainable revenue generation, the identification of new revenue streams, and the enhancement of the overall revenue ecosystem. By aligning strategic objectives with targeted reforms, Nigeria aims to achieve tangible improvements in revenue mobilization, governance, and economic resilience. The targets set under the Strategic Revenue Growth Initiative reflect the government's commitment to expanding the tax base and maximizing revenue potential. The goal of increasing fiscal revenue to 15% of GDP by 2023 presents a challenging yet achievable objective that requires proactive measures to boost tax compliance, eliminate tax evasion, and streamline revenue collection processes. Enhancing compliance with taxes such as value-added tax (VAT) and income tax remains critical to achieving revenue targets and sustaining economic growth. Government efforts to drive more taxpayers into compliance, enforce regular reporting requirements, and leverage digital platforms for tax filing are crucial steps towards realizing the revenue mobilization goals. While the timeline for achieving the revenue targets is ambitious, with just two years left until 2023, sustained efforts, improved governance, and effective communication on tax utilization can foster public trust in the tax system and incentivize voluntary compliance. As Nigeria navigates the complexities of revenue mobilization and tax compliance, stakeholders must collaborate, innovate, and align their priorities to ensure sustainable economic progress and social development. By promoting a culture of tax compliance, accountability, and transparency, Nigeria can harness its fiscal resources to enhance public services, infrastructure, and economic opportunities for its citizens.