350,000 companies in Nigeria do not pay taxes, says FG
The Minister of State for Finance Mr. Yerima Ngama yesterday disclosed that tax payment by businesses in Nigeria has remained the lowest in West Africa with tax making up only 7 percent of the countries Gross Domestic Product (GDP) with over 350,000 companies defaulting in tax remittance to the government..
To capture more companies and individuals in the wider tax net, the government is considering the idea of E-payment in the country.
Delivering a keynote address at the Africa Tax Forum held in Abuja on Thursday, Ngama noted that despite being the fifth fastest growing economy, government's tax revenue can best be described as pittance.
The minister said it was regrettable that most companies in Nigeria were not remitting taxes to government, the minister stressed that something has to be done urgently on this, if the economy must move forward.
He disclosed that the fall out of tax evasion is the high cost of doing business in Nigeria.
According to him, if all the companies are paying taxes, the government can use the tax proceeds to take care of infrastructural facilities such as electricity, good roads, water and many more, and in the process bring down the high cost of doing business for the benefit of all.
Apart from the high incidence of tax evasion, the minister stated that compared to the size of Nigeria, the quantum of taxes collected is nothing to write home about.
The situation, he said was caused by the large size of the informal sector within the Nigerian economy.
Ngama lamented that despite the fact the Nigeria is the number one fastest growing economy in Africa and the fifth in the world, 54 per cent of business activities in Nigeria are taking place in the informal sector while the figure has reduced to 40 per cent at the present.
Unlike in Ghana which collects 21 per cent of its Gross Domestic Product (GDP) as taxes, the minister said it is only 7 per cent GDP in Nigeria.
Describing the situation as unacceptable, Dr Ngama said the government would do all things possible to bring a larger part of the informal sector into the tax net with a view to raking more taxes.
He said, 'A lot of economic activities are taking place but most of them are informal, when you have this kind of business structure, it is difficult to impose tax.
'Five years ago, 55 percent of businesses that take place in the country are informal but as at 2013 it has gone down to 45 percent.'
He further said that for government to reap the benefits of its growing economy, it is important to formalisation of businesses as it would ensure a better way of tax rendition.
'Today, more people are learning to organize their business better, register their business and more important imbibe accounting practices. You have to keep all your activities to know what profit you have made and this will it make it easy for the tax authorities to update and collect tax,' he said.
While saying that it would be in the interest of Nigerians to pay their tax to enable government provide the much needed infrastructure, Ngama said that people should not only self assess themselves, they should pay their taxes willing.
'When you pay tax, you are not paying the money to anybody but to yourself because it is easier and better for allof us to contribute so that we can commonly provide the entire infrastructure that we need. Rather than not contribute tax and up providing our own infrastructure at a higher cost.'