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Businesses in Nigeria have raised concerns about the complexities and inconsistencies in the tax and levy structures imposed by the Federal Inland Revenue Service (FIRS), urging the agency to provide clearer, more streamlined tax guidelines. They argue that the current tax process is excessively burdensome, particularly for Micro, Small, and Medium Enterprises (MSMEs), which are already struggling to cope with numerous operational challenges.
At a recent stakeholder engagement organized by the Lagos Chamber of Commerce and Industry (LCCI) in collaboration with FIRS, Dr. Seyi Olanrewaju, Treasurer of the Institute of Chartered Accountants of Nigeria (ICAN), called for simplified and consistent tax regulations. Speaking on behalf of ICAN’s Diamond President, Davidson Alaribe, Olanrewaju emphasized that reducing the number of taxes imposed on businesses would ease their burden and help foster compliance.
Olanrewaju expressed frustration that businesses often cannot keep pace with frequent changes in tax policies, which are not always clearly defined. This lack of clarity leads to varied interpretations, complicating compliance. He urged FIRS to provide more support to MSMEs, which are already contending with numerous operational pressures, by offering guidance and reducing the tax-related burdens they face.
Additionally, Olanrewaju called for the establishment of a feedback mechanism between FIRS and taxpayers to ensure that concerns are addressed effectively and promptly.
In response to these challenges, FIRS announced plans to introduce an electronic invoicing (e-Invoice) system as part of its broader tax reform agenda. The e-Invoice platform, designed in accordance with the Tax Administration and Enforcement Act of 2007, aims to streamline invoice management and improve the efficiency of the nation’s tax administration.
Speaking at the event, Dr. Zacheus Adedeji, Executive Chairman of FIRS, represented by Otivbo Olaniyi, Acting Director of the Medium Taxpayers Department, South, stated that the agency is committed to harmonizing its tax services to better support Nigeria’s economic growth. He noted that reforms have been implemented to consolidate various tax functions within a single integrated department, ensuring that all tax matters are handled more efficiently.
As part of these reforms, FIRS has phased out functions such as VAT Coordination and Stamp Duty Offices, reducing instances of taxpayer harassment due to multiple tax demands. The introduction of the TaxPro Max platform, which allows taxpayers to file returns and access tax services online, demonstrates FIRS’s dedication to enhancing the ease of tax management.
LCCI President, Gabriel Idahosa, highlighted the importance of the forum, especially in light of Nigeria’s evolving fiscal landscape. He stressed that taxes play a critical role in promoting economic growth, equity, and sustainable development. However, he lamented Nigeria’s low tax-to-GDP ratio, which stands at 10.86%, significantly below the African average of 15-20%.
Idahosa praised some of the recommendations made by the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by Taiwo Oyedele, emphasizing that the Organised Private Sector (OPS) is crucial to Nigeria’s economic development and, by extension, its tax base. He called for better collaboration between OPS and the government to ensure that tax policies support business innovation and competitiveness.
As part of the ongoing reforms, Adedeji noted that small businesses are now exempt from withholding tax compliance. Additionally, businesses with low profit margins benefit from reduced tax rates, while exemptions have been granted to manufacturers and farmers. Other incentives include zero VAT on Feed Gas for processed gas, Compressed Natural Gas (CNG), and equipment related to LPG and CNG expansion. These reforms are intended to attract foreign investment and support local industries, providing much-needed relief to businesses facing tax-related challenges.
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