Connect with us

Business

Govts must reduce tax, VAT for economic growth- FG’s tax committee chair

Published

on

Govts must reduce tax, VAT for economic growth- FG's tax committee chair

Chairman, Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has called on governments to reduce multiple taxes and VAT collected from businesses and individuals for economic growth.

 

Oyedele made the call on Wednesday, May 8 while reacting to a news report alleging he called for increased VAT. Oyeleded said contrary to the report, his committee has identified problems of multiple taxations in the country.

 

The Presidential Committee Chairman on Fiscal Policy and Tax Reforms said “Nigeria’s VAT system places a huge burden on businesses as they are not allowed to claim the input VAT incurred on services and assets. He said some items which should be exempted from VAT are taxed by the federal government.

 

Taiwo also lamented that state governments also apply avoidable multiple taxes on businesses already affected by VAT. He added that both state and federal governments fail to exempt some businesses from VAT and taxes. This, he said, affects the business environment and the survival of small businesses across the country.

 

Taiwo speaking on problems identified by his committee said, “Some items which constitute basic consumptions (food, education, and healthcare) are liable to VAT rather than being exempt or zero-rated.

 

READ ALSO: New minimum wage not tax should be your priority- Seyi Law slams Tinubu

 

“Many small businesses have to contend with VAT compliance in view of the existing low VAT exemption threshold for small businesses.

 

“Many states charge other forms of consumption taxes in addition to VAT thereby creating multiplicity of taxes.

 

“Export of services and intellectual property bear VAT rather than being zero-rated to promote exports.”

 

Oyedele said the presidential committee on physical policy and tax reforms has proposed “full input VAT credit for businesses to reduce their cost of doing business and minimize the strain on their cash flows.

 

“Remove VAT on an expanded list of basic food, educational and healthcare items to protect the poor.

 

“Harmonise all consumption taxes into one (VAT only) and adjust the revenue sharing formula in favour of states to address multiplicity of taxes.

 

“Remove VAT on export of service and intellectual property to promote non-oil exports.

 

“Increase the threshold for VAT exemption for small businesses.

 

“Enhance the VAT refund process to reduce the strain on working capital of businesses.

 

“Introduce VAT fiscalisation and electronic invoicing to curb evasion which makes honest businesses uncompetitive.

 

“Consequential upward adjustment to the VAT rate on items not exempted to avoid a significant drop in revenue.”

 

Oyedele added that discussions are going for the federal government to “reduce companies income tax rate, increase exemption threshold for personal income tax.”