Nigerian Business Owners Groan Under Poor Infrastructure; Ask For Tax Breaks

Friday, 26 April 2019 / 11.21AM / News Commentary on Tony Elumelu’s Speech At CITN 2019

Chairman, Heirs Holdings and Founder, Tony ElumeluFoundation, Tony O. Elumelu has called for far reaching Tax reforms and for theNational Assembly to urgently pass the Executive Tax bill into law.

Elumelu made this statement as he delivered thekeynote address at the 21st Annual Tax Conference of the Chartered Institute ofTaxation of Nigeria (CITN), titled, “National Development: Unlocking the Potentials of Taxation”.

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Mr. Tony O. Elumelu CON, delivers keynote address at the 21st Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN), titled, “National Development: Unlocking the Potentials of Taxation

Speaking on the challenges that stifle smallbusinesses, Elumelu quoted a young entrepreneur beneficiary of the Tony ElumeluFoundation, “The average business owner in Nigeria is a local governmentauthority on his own because he caters for his own electricity with generators,he builds his own borehole, handles his own waste disposal, and the governmentcan make his life easier by creating favourable tax policies that supportSMEs.”

Elumelu also lamented the plight of SMEs at the mercyof the tax system revealing, “The average number of taxes businesses pay inNigeria is 48, compared to 33 in other Sub-Saharan countries. In Hong Kong,it's just 3. Multiple taxation remains a significant burden for SMEs andcorporates operating in the country.” Elumelucontinued: “With a population of close to 200 million people in Nigeria, wehave only 75,000 registered SMEs in the country. No one needs to tell us thatpeople are avoiding tax or refusing to be a part of the system,” he said.

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Permanent Secretary, Ministry ofFinance, Dr. Mahmud Isa-Dutse; President, Chartered Institute of Taxation inNigeria, Dr. Ikemefuna Nwobodo; Executive Chairman, Federal Internal RevenueService, Babatunde Fowler; Keynote Speaker and Founder, Tony ElumeluFoundation, Mr. Tony O. Elumelu CON; and Chairman, Lagos Internal RevenueServices, Ayo Subair.

With high cost of compliance, complex and costly business registrationprocesses, many SMEs are choosing to remain informal, which in turn results ina low tax base and low tax contribution to GDP. “Nigeria’s tax to GDPratio is only circa 6%, compared to far smaller populations like Rwanda at 16%.Imagine the economic transformation we can achieve as a country if we can moveour Tax to GDP ratio by 10%. We will raise an additional $40billion ingovernment revenue - identical to the sum of our foreign reserves,” Elumeluexplained.

But it won’t be easy. Elumelu advised government toeducate, inform and raise tax awareness, “Government should drive massmobilisation of citizens - let citizens know why they need to pay taxes andgive them the assurance that their tax will be properly utilised.” In additionhe stated that, “government should employ the use of smart tax incentives toattract and incentivise local and foreign investors.”

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Elumelu addresses media after the event

Elumelu also tasked the country’s ambassadors and embassies with a twoyear timeline to increase the number of double tax treaties between hostcountries and Nigeria. “Nigeria has 14 taxation treaties while a countrylike South Africa has 79 double taxation treaties, and we are the largesteconomy in Africa. Our embassies should adopt a target in the next two years tosign Tax treaties with our top 100 trading partners in the world.”

Speaking as the leading proponent of entrepreneurshipin Africa and an advocate for entrepreneurs, Elumelu charged government to putin place tax systems to encourage SMEs-— the engine for job creation in theeconomy.

“Until there is a reduction in what SMEs pay as tax,elimination of multiple taxation, abolition of minimum income tax and excessdividend tax, it will be difficult for us to expand the tax base. It will bedifficult for us to attract investors into this country, and it will bedifficult for us to retain the ones already in the country. It will bedifficult for us to mobilise our SMEs to help create employment that we need somuch in this country. It will be difficult for us to have the citizens holdleaders accountable.”

In conclusion, he reminded the National Assemblymembers of their mandate in office, “We must encourage government to pass theExecutive Bill immediately. Let’s get the National Assembly to fulfil theirobligation to society and pass the bill immediately, so we can start makingprogress”.

Speaking in response to the presentation, FormerPresident of the Chartered Institute of Taxation in Nigeria, Chief Mark AnthonyDike emphasized the urgency for the Executive Tax bill to be passed intolaw.

He said: “Every year during the military regime,there was a Finance Miscellaneous Provision Decree aimed at looking at what hashappened and review the areas that need to be amended. As they say, the tasteof the pudding is in the eating. We may conceptualise, but in order to know theefficacy of a theory, we have to test it. Until the provision of the Executiveorder is tested, we cannot know how efficacious it will be.”

Also present at the event were Dr. Ikemefuna Nwobodo,President, Chartered Institute of Taxation in Nigeria, Permanent Secretary, Ministry of Finance, Dr. Mahmud Isa-Dutse, Babatunde Fowler, Executive Chairman, Federal Internal RevenueService, Ayo Subair, Chairman, Lagos Internal Revenue Services, Members of thecouncil of CITN and the Auditor General of the Federation, Mr. Anthony Ayine.