SBL ABUJA CONFERENCE: Plenary Session Takes a Look at Strides in Tax Administration in Nigeria, and its Impact on Business

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In a session moderated by Lolade Ososanmi, a Partner in the Taxation, Corporate Advisory, Compliance practice at the law firm of Udo Udoma & Belo-Osagie, a panel comprising of Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PwC; Dr. Jude Odinkonigbo, a Counsel at the Templars law firm and a Senior Lecturer at the University of Nigeria, Nsukka; and Titilola Akinlawon SAN, a co-founding Partner at the law firm of Akinlawon & Ajomo, took a look at how recent amendments and innovations in the country’s tax laws have either enhanced or impeded the sustainable growth of businesses in Nigeria.

In his lead presentation, PwC’s Oyedele described government’s interface with business as comprising of three key factors: regulations, policies and taxation. Of these, he said, taxation was the most direct, and it comes in four or five ways: Personal Income Tax (PIC); Company Income Tax (CIC); Value Added Tax (VAT); and what he disapprovingly referred to as ‘Implicit Tax’ (when you do for yourself what government ought to be doing for you).

NEWSWIRE Law and Events Magazine’s correspondent in Abuja reports that the summary of Oyedele’s presentation was simply this: the plethora of amendments in the nation’s tax laws as seen in the past few years were aimed at just one objective: to collect more and more money from an already economically beleaguered populace. While there was nothing wrong in principle with wanting to generate more revenues for government to fulfil its statutory obligations, the idea that every single problem government is confronted with can be solved by throwing more money at it is fundamentally flawed.

“You cannot solve the problem of a bucket that cannot hold water,” Oyedele said, “by increasing the intensity with which you pour water into it.”

He had strong words for the proposed Tax Crimes Commission in particular, which he described as a duplication of the functions of the Federal Inland Revenue Service (FIRS), and advised the authorities to focus on making the best use of the funds being collected at present.

He ended his rather caustic presentation with another quote by Lowell Nussbaum: “A fine is a tax for doing wrong, and a tax is a fine for doing well.” He warned that this approach to taxation (as a fine for doing well) will do more harm than good to the livelihoods of individuals, the bottomlines of corporate organisations, and the economy of the country.

Other panelists, beginning from Mrs. Akinlawon, SAN, spoke in the same vein, lamenting a surfeit of taxes, even for purposes of filing appeals against tax penalties. She warned that such requirements, rather than increasing the revenue base of government in the long run, could put the cashflow of individuals and companies alike in jeopardy and eventually lead them to close shop – in which case there’d no longer be any taxes to collect from them.

The panelists were also quick to disabuse anyone who might think that what is being advocated at this session is tax avoidance, stressing, rather, that it is tax CERTAINTY that is being advocated.

In his contribution, Dr. Odinkonigbo of Templars tried to strike a balance between the requirement by tax authorities to pry into a company’s finances and other information in order to assess its tax position on the one hand, and the need to protect the given company’s right to privacy (especially as regards the protection of trade secrets) on the other. He wondered whether such pieces of legislation as the Finance Act of 2021, Section 18, and the Nigerian Data Protection Regulation, for example, offered adequate protection to companies as far as privacy was concerned.

In the course of the discourse, however, the panelists addressed Dr. Odinkonigbo’s concerns by calling attention to the fact that though tax authorities had the powers to enforce relevant laws to check tax avoidance – even by obtaining sensitive company information – any wrong use of such information could be prosecuted in court and visited with punitive sanctions. And in any case, panelists added, many other legal tools and mechanisms were available to help strike that balance.

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