TAXATION IN NIGERIA

The Nigerian dream of declining income and increasing taxation in the country is what we all would have to get accustomed too, with new policies and enforcement being put in place especially by the Lagos state government with little or no concern for the citizens and businesses owners in the state.

Nigerians have been asked to pay taxes for online bank transactions, taxes have been imposed for using the Point Of Sale (POS) machine, you are charged for interbank transactions, a new tax has been imposed on house rent, Value Added Tax (VAT) has been increased from 5% to 7.5% and there is a plan to tax logistics and courier firms.

In the aftermath of the COVID 19 pandemic that rattled the world at large, not leaving out the third world countries that still struggles to provide its citizens with the basic needs such as healthcare, security and the likes, a new law has been passed into the system that is set to shake the economic downturn of the pandemic to a whole new phase. And this begs the question, is that what the citizens and business ventures need in this time of crisis?

The Lagos State Government led by Governor Babajide Sanwo-Olu announced a 5% levy on all “audio and visual content” created and sold within the state and a 10% service tax for ride-hailing company in the state. What the levy is for hasn’t been made clear, sources have come out to say the levy will “assist the Lagos state government in policy formulation, with regards to planning and funding for the sector”.

Content creators have also been mandated to register their content within 30 days.

Eyebrows have been raised in negating this seeming “craze” and injustice because content creators pay income and VAT tax already why burden them with multiple taxations at one of the most difficult times in Nigerian history, with the rates of Dollar to Naira at a staggering difference and the crash in the price of crude oil in the global market, this is the oddest of time to drain your hardworking citizens.

Taxes appear to be a major constraint to the development of emerging SMEs in Nigeria, businesses that make a profit are usually subjected to multiple taxations in their first three years of commencement due to the rules for taxation of new businesses, thereby increasing the risk of failure of SMEs within the first few years of business, In the same vein, a good number of the SMEs are not able to adequately benefit from tax incentives due to the small size of their operations.”

In this age of great technology and data advancement Nigeria has not been able to harmonize all of the data it has generated over the past years to ensure a widening of the tax net, better planning and seamless taxation of its people who don’t trust the government parastatals to do right by them and manage the generated revenue for the betterment of the economy.

Is tax important? Yes.

By obligation, every individual, whether resident or non-resident in Nigeria, persons in paid employment or businesses or persons who derive their income from Nigeria, as well as companies that operate in Nigeria, are all liable to pay tax. Failure to deduct and remit tax or failure to pay taxes of any kind as the case may attract punitive fines and penalties.

Like other countries, the main function of the Nigerian tax system is to generate revenue for the running of the government at all levels and provide infrastructure to the public. Effective tax drive is achieved through an efficient tax administration and tax system reforms. These elements also create a tax culture, reduced incidences of corruption and tax evasion.

We, however, look towards every Nigerian understanding the principles of taxation in Nigeria. It would enable us to better understand the tax moves the government is making.

 

 



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