Nigeria waives penalties on outstanding tax liabilities

Nigeria's Federal Inland Revenue Service has set a December 31 deadline for the waiver of penalties and interests on overdue taxes with full principal payment. Muda Yusuf, the Director of the Centre for the Promotion of Private Enterprises, shed light on the implications of this move on revenue generation and expanding the tax net during a recent interview on CNBC Africa. Yusuf commended the government's proactive stance on revenue generation and highlighted the significant progress in non-oil revenue collection, notably surpassing targets. He emphasized the importance of taxation in achieving the country's revenue goals, especially as non-oil revenue is projected to contribute significantly in the coming years. The approach taken by the Federal Inland Revenue Service was likened to a 'carrot and stick' strategy, aiming to incentivize compliance while ensuring subsequent follow-up for tax collection. This measure seeks to encourage more individuals and businesses to enter the tax net, thereby optimizing non-oil revenue. Yusuf acknowledged the challenges in the economy but remained optimistic about achieving the 2024 revenue target of 18 trillion Naira. He highlighted the surpassing performance of non-oil revenue, particularly corporate income tax and value-added tax (VAT), indicating positive revenue trends. The interview also touched upon the government's ambition to attain a one trillion dollar economy in the near future. Yusuf expressed confidence in this goal, citing the consistent growth in non-oil revenue and the impact of recent economic reforms. He emphasized the need to sustain momentum and create a favorable investment climate to enhance tax compliance and revenue collection. Discussions around waivers for corporate entities sparked a debate on their value in stimulating investment versus potential revenue loss. Yusuf defended the strategic use of waivers to incentivize critical sectors and attract investors, noting that abuses should be addressed without disregarding the benefits of waivers. Overall, the interview delved into the complexities of tax policy, revenue targets, and the balancing act between fostering compliance and maximizing revenue streams in Nigeria's economic landscape.