Though considered a civic duty, tax remittance is a significant source of revenue generation that helps the government to meet its statutory obligations.
The retired customs officer lamented that a greater percentage of the loans he obtained from banks goes into tax payments to the Federal Inland Revenue Service, Lagos State Internal Revenue Service and local government agencies. Major among his worries is the payment of staff salaries, which he lamented, had become practically impossible., Christopher lamented the precarious financial situation of his pure water factory, noting that the heavy taxation has made things more difficult. He expressed the fear that he may have to close down the factory and release the 68 staff working with him to the labour market.
Tax duplication has been highlighted as a significant contributor to the poor ranking of Nigeria on the world ease of doing business index. Corporate and business taxpayers are often faced with multiplicity and duplication of taxes levied by different levels of government. In a research carried out by the Chartered Institute of Taxation of Nigeria on why these taxes exist, the root of multiple taxations was linked to greed, perceived unfair revenue formula and the quest to boost internally generated revenue of states and local councils.
They include company income tax, stamp duties, capital gains tax, personal income tax, withholding tax, industrial training fund tax, Value Added Tax and education tax, among others. The tax regulatory Act, stipulates that no person, other than the appropriate tax authority, shall assess or collect, on behalf of the government, any tax or levy listed in the Schedule.
He said, “These taxes come in different forms and guises, and are often in conflict with one another. A team of inspectors from the Federal Ministry of Environment could, for instance, come on a visit to a factory in one day; another team from the state could come the next day, and yet another, from the local government, could come the day after.”
The data from the Company Income Tax reports published by the National Bureau of Statistics showed a significant spike in the tax remitted by manufacturing firms between October 2021 and 2022.showed that telecommunication companies with their headquarters situated in Lagos are mostly affected by multiple taxations, which are classified into customs and general taxes.
According to Mondaq, a technology and intelligent syndication platform, telecommunication companies also pay annual tax to the Nigerian Communications Commission for what is known as ‘Individual Licence’. Additional taxes are also collected by both federal and state government agencies that include the Nigerian Communications Commission, National Information Technology Development Agency, State’s Government Inland Revenue Services, National Civil Aviation Authority, Nigerian Customs Service, Federal Ministry of Environment and Federal Ministry of Works.
The Chartered Institute of Taxation of Nigeria, in a paper, stated that many of the SMEs businesses in Nigeria do not survive beyond their fourth anniversary due to multiple taxation challenges.The CITN paper listed the use of crude orthodox means such as mounting of roadblocks and forceful closure of shops as some of the ways taxes are collected from SMEs.
The lady, who is in her 40s, told our correspondent that she went into processing agricultural products into finished goods two years ago and was almost forced out of business. She is not alone, as Lukman Adegboyega, an entrepreneur said he had to abandon his packaging business for an office job after he was practically milked dry by various task force and tax officials
The Survey also showed that SMEs in Nigeria contribute to about 50 per cent of the country’s GDP and also account for over 80 per cent employment ratio. Meanwhile, PricewaterhouseCoopers Company, in its 2020 publication titled, “Building to Last: Navigating MSME growth and sustainability in a New Decade,” outlined challenges it faced in paying taxes.
“The taxes are many. We would probably be talking of about 30 to 50 and more. They are quite large and it depends on the industry you are in. It is a primary issue that the government needs to fix,” Idahosa said.
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