What Nigeria's new tax template means for taxpayers

Nigeria's tax system has long been plagued by complexity, with a plethora of taxes at the federal, state, and local levels causing confusion and inefficiency for taxpayers and businesses alike. In a move to address this challenge, Nigeria's Presidential Fiscal Policy and Tax Reforms Committee has proposed a significant overhaul that would reduce the number of taxes in the country from 60 to around 8, streamlining the collection processes and aiming to enhance the business environment in the country. To delve into the implications of this proposed tax reform, Michael Ango, Partner, Tax and Regulatory Services at Andersen Nigeria, joined CNBC Africa for an in-depth discussion. Mr. Ango highlighted the key issues that the committee aimed to tackle, particularly the uncertainty surrounding the tax system in Nigeria, the multitude of taxes, levies, and fees levied by different taxing authorities, and the need to streamline revenue administration. The proposed reduction in the number of taxes is seen as a step towards creating a more business-friendly environment that can attract and retain investment in Nigeria. By simplifying the tax system, businesses and individuals will be able to focus on providing value to the economy rather than navigating a complex web of tax requirements. The recommendation also includes renaming the Federal Inland Revenue Service (FIRS) as the sole collector of revenue for the federation. While this role has been mandated to the FIRS for years, the implementation has not been fully realized. Strengthening the FIRS as the primary revenue authority at the federal level aims to centralize tax collection and administration, similar to practices in other jurisdictions like Ghana and Canada. This consolidation is expected to enhance efficiency for taxpayers, providing a single point of contact for tax matters and simplifying the payment process. Looking ahead, there are still areas within Nigeria's tax system that need attention, including the dominance of cash transactions and the untapped potential of the informal sector. These aspects are critical for comprehensive tax reform to drive economic growth and development in Nigeria. By incorporating these elements into the reforms, Nigeria can build a stronger foundation for sustainable economic progress. In conclusion, Nigeria's proposed tax overhaul holds the promise of a more efficient and business-friendly tax system that can catalyze economic growth and attract investment. As the country moves towards simplifying tax collection and administration, stakeholders are optimistic about the potential impact of these reforms on the Nigerian economy.