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Nigeria has one of the highest Company Income Tax (CIT) rates globally which is a disincentive to business growth, says a tax expert, Mr. Taiwo Oyedele, partner,PwC Nigeria.
According to Oyedele, who stated this Saturday in Lagos at the Finance Correspondents Association of Nigeria(FICAN) annual workshop with he theme “Unlocking Opportunities in Nigeria’s Non-Oil Sector”. Nigeria is in the top 10 in the world for highest income tax rate.
Explaining how the country makes the list, he said: “We pay Company Income Tax (CIT) 30 per cent, education tax, 2 per cent, whatever is left, we pay withholding tax of 10 per cent. If you add it together, it is more that 40 per cent already. If you now make a mistake of having a group and you say it’s a holding company, another 30 per cent. Who does that?” he queried.
Speaking further, he said: “When you start a business today, there is something called commencement rule. It is supposed to punish you during commencement, so that you pay tax twice. It does not make sense.”
To address this challenge, the tax expert advised that operators in the private sector should focus on demanding for removal of some of these disincentives that affect business operations.
“What I keep saying to government is that I can insist that I have a pot that is this small and I say I must get 60 per cent of this pot by all means. Or I allow this pot to be big enough and then get 10 per cent of it. Government must remove tax disincentives. One thing I am asking the business community is stop asking the government for incentives because they will think they are doing you a favour. Ask them to remove the disincentives that are not allowing us to do business,” he said.
He also called on the authorities to change their thinking about taxation as current approach has only made compliance difficult.
He said: “Our thinking around taxation is completely upside down as a country. Nigeria does not seem to understand that you need to be prosperous so that you can pay tax. So, tax does not just fall from heaven.”
“As a government, I should help you make money so that you can pay me tax. Its just common sense. Nigeria has a tax system that does not allow businesses to thrive, whether you are small or big,” he added.
He noted that “the reason Nigeria cannot make money from tax, and is not a curse, is that it continues to beat up the people at the bottom of the ladder. But they cannot give you what they don’t have.
