The Federal Government has inaugurated a committee on the review an update of the national tax policy document as part of efforts to increase the non-oil revenue in the country.
Speaking at the inauguration ceremony in Abuja, Minister of Finance, Kemi Adeosun said the review has become necessary as the current document is out of tune with the present realities and vowed to simplify tax code for more effective tax system.
She said there was need for entrenching an improved tax policy to effectively harness the much needed resources necessary for sustainable economic growth and development of our great nation.
Adeosun noted that the current administration is committed to diversifying the sources of government revenues away from oil, stressing that “Oil is just 13% of our economy but accounts for 70% of government revenue”.
According to her, “our challenge is to ensure that the other 87% of economic activity makes its own contribution to government revenue. An effective tax system is key to this and must be underpinned by an effective and appropriate tax policy”.
She revealed that Nigeria has one of the lowest tax to GDP ratios in the world at just 5%, adding that there is clearly a pressing need for an overhaul of our tax policy which is a key function of the Ministry of Finance.
She further said that businesses react to tax policy and Government is determined to ensure that the right message is sent that Nigeria is open for business and is encouraging businesses with a tax system that is easy to understand and comply with.
“Areas of our tax code and laws that are in need of review will be addressed as part of this exercise as will modalities for simplifying our processes and reducing the tax burden on small businesses”, she said.
She said the terms of reference of the committee are to review the National Tax Policy(NTP) document, recommend a list of tax laws and regulations that need to be reviewed or amended, make any other suggestions on the NTP to facilitate effective implementation of the document.
Others are to recommend policy to ensure inter-agency cooperation between the Federal Inland Revenue Service (FIRS) and other revenue agencies toward enhancing the Internally Generated Revenue (IGR) of the Federal Government, expand the treaty network of Nigeria to include her major trading partners and review the existing Double Taxation Agreement, and finally ensure that tax laws are reviewed from time to time to minimise avoidable hardships to taxpayers.
“As keen as we are to grow revenues and improve our tax collection, we are equally determined to ensure that our taxes are simplified. The task of growing tax revenue must be pursued with a human face and sustainability in focus. The relevant unit of the Ministry of Finance will be strengthened to enable it play a more vibrant role in tax policy formulation”, she said.
She said the review will be a continuous exercise, as a means of evolving with global best practices and keeping with the domestic socio-economic realities, adding that government shall indeed remain committed to the continuous improvement of the tax system as part of a dynamic framework to enhance compliance.