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10th Detail Business Series Examines Impact Of Finance Act On Nigeria's Economy

Taxes & Tariffs	1024 VIEWS
Taxes & Tariffs
1024 VIEWS

Thursday, February 13, 2020 / 11.00PM / Ottoabasi Abasiekong for WebTV / Header Image Credit: WebTV

Keynote speaker at the recently held business lecture series of legal advisory firm, Detail Solicitors, Mr. Taiwo Oyedele, a Partner and West African Tax Leader at global audit firm, Price Water House Coopers (PwC) has argued that the recently signed Finance Act 2019 which has changed the tax and fiscal policy landscape of the country, will cover the following areas; promoting fiscal equity, reforming the domestic tax laws and also affecting infrastructure and financial markets.

The Tax Law and Budget Deficits

The legislation which has been gazetted by the Federal Government is the first major tax reform carried out since 1999.

Mr. Oyedele underscored the fact that Nigeria's current budget deficits and large debt burden constitute part of the fiscal challenge of the Federal government.

According to him, this dovetailed into sub-nationals facing huge fiscal gaps, worsened by the implementation of the new N30,000 minimum wage.

With the various issues facing the Federal and State governments, the tax expert said the Finance Act would provide an avenue for ramping up revenue.

Giving further insight into the country's fiscal problems, he acknowledged the fact that Nigerians have a low level of tax compliance, influenced by the following factors;

Low level of knowledge of tax matters and the complexities
Challenge of fiscal exchange and the absence of a social contract
Legacy issues of social and individual norms
Issues of Legitimacy, Trust and Fairness
The low participation of citizens in state affairs

He was of the view that Nigeria has the task of addressing its low tax morale, to incentivize more individuals and businesses to come into the tax net.

PwC Survey

He noted that the trust deficit between citizens and government accounts for the high rate of tax evasion in the country, a recent PwC survey revealed the following;

22% of individuals felt it was wrong to evade tax, while 14% of small businesses felt the same way
54% of individuals felt it was wrong but understandable to evade tax, while 50% of small businesses felt the same way.
17% of individuals knew it was wrong and punishable to evade tax, while 31% of small businesses felt the same way.

Oyedele called on governments at all tiers to improve service delivery to citizens, which will boost their morale and woo them to pay their taxes.

He said the top priority of citizens was education and healthcare, while for businesses, their top two areas of interest to be addressed were electricity and security.

On the issue of governance, he tasked the government to be systemic about tackling the issue of corruption and invest in Human Capital Development.

Mr. Anthony Ezeamama, Senior Associate Detail Solicitors, in an overview of the Finance Act 2019, highlighted one of the major changes captured in the provisions for the Digital and Electronic Services companies who are key drivers of the economy, he observed the following;

The expanded basis for taxation of non-resident companies.
Digital services companies without a physical presence in Nigeria, but have a significant economic presence as defined by the Minister of Finance will now be taxed.
Withholding tax on such transactions provided by such a non-resident company is the final tax on the income of the non-resident receipt provided that such person is not caught up by other provisions of section 13(2) of Company Income Tax, that deals with non-resident taxation.

Also speaking at the event, Mr. Chukwudi Ofili, Associate Partner, Detail Associates, said the 10^th edition of the business series was part of the role played by the legal firm to provide clarity to investors and businesses on the provisions of the Finance Act 2019.

He believed that since the Act will involve an annual review, Detail Solicitors will continue to engage stakeholders on policy implications and sectoral impact.

The business series featured a panel session with the theme, "Thriving as a Business in 2020 and Beyond" with discussants such as Bimbo Ogundare, Associate Director, Transaction Advisory Services, Ernst & Young, Victor Ndukauba, Deputy Managing Director, Afrinvest, Guy Bertrand Njoya, CFO Max.NG, and Tola Akinhanmi, Head Real Estate Finance, Stanbic IBTC Capital.

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