FG Decries Tax Evasion by Companies
The federal government Thursday expressed concerned over the large number of companies that had refused to pay their taxes.
Speaking at the opening of the African Tax Forum in Abuja, the Minister of State for Finance, Alhaji Yerima Ngama, regretted that about 350, 000 companies had evaded engaged in tax circumvention within the last few years.
This, he said, had resulted in the low tax-to-GDP ratio in the country, stressing that the current rate of about seven per cent showed that majority of Nigerians were evading taxes.
He said: “Five years ago, 54 per cent of the business that take place in this country is informal but today, that has been reduced to 46 per cent.
“More people are organising their business better and registering their business and more importantly to adopt well known accounting principle.
“If you look at Ghana, the level of formality and organisation of business is better than Nigeria. Today, the tax collected in Ghana is about 21 per cent of their Gross Domestic Product.
Continuing, he said: “In fact, in most African countries, tax collection is about 10 per cent of GDP but in Nigeria, the total tax collected is just seven per cent of GDP. That shows that so many people and companies are not rendering tax returns.”
According to the minister: “At the last count, about 350, 000 companies have not rendered tax returns in the country. So we need to strategise, we need to research and find out what could be done to improve tax rendition and tax collection, what could be done to encourage accounting for activities.
“There is nothing the tax man would do unless the accounts are rendered. Of course they can go and look at the level of activity but we need to improve. It is in the interest of everybody and the businesses to pay tax.”
He said: “If you pay taxes, it would help to provide amenities and this might help to bring down the tax rate. But if taxes are not paid, the cost of doing businesses would be high because of lack of amenities.”
He called for better tax coordination and harmonisation within the continent in view of the fact that it is fast becoming a preferred destination for investors from across the world.
This Day Newspaper 17th May,2013.