Nigeria: Experts Urge Nigerian Government to Expand Tax Base to Informal Sector

A group of experts has called upon the Nigerian Federal Government to broaden its tax coverage to include the informal sector and unregistered businesses, as a means to bolster the country’s revenue sources.

These recommendations were made during the Detail Tax Business Series event, themed ‘Finance Act 2023: Implications on the tax & fiscal outlook for the new administration and the economy.’ The event, organized by Detail, a commercial solicitor firm specializing in non-courtroom practice, aimed to address the challenges facing Nigeria’s revenue generation, particularly in light of substantial debt servicing and recurring expenditures.

According to a statement from the organizers, the panel of experts featured Esiri Agbeyi, Partner, PwC Africa & Family Business Leader, and Ajibola Olomola, Partner and Head, Deal Advisory, M&A, Tax, KPMG Nigeria. The discussion was moderated by Anthony Ezeamama, Associate Partner at Detail Commercial Solicitors.

The experts underscored the importance of expanding the taxpayer base rather than increasing tax rates. They recommended a focus on taxing individuals in the informal sector and unregistered businesses, emphasizing the significance of collaboration among tax authorities.

To stimulate economic growth and counter inflation, the Federal Government was advised to shift its focus towards taxing consumption rather than production.

In light of numerous complaints from business owners regarding the burden of multiple taxes alongside challenges like infrastructural decay, insecurity, unreliable power supply, and foreign exchange shortages, the panelists suggested that the government and tax authorities simplify or consolidate existing tax laws to address the issue of multiple taxation.

Additionally, the experts proposed the exploration of a single tax collection agency for both the federal government and the states, a model that has proven successful in Kaduna State.

The experts stressed the necessity of a broader societal mindset shift to encourage tax payment, even at the family level.