Economy

Nigeria Needs Full Tax Reform—IMF

Published

7 years ago

31/10/2017

Dipo Olowookere

By Dipo Olowookere

The International Monetary Fund (IMF) has advised Nigeria to embark on a full Value Added Tax (VAT) reform.

With this in place, according to the global lending firm, the country’s economy would be on the way to full recovery.

The lender’s Mission Chief for Nigeria, African Department, Mr Amine Mati, who was a guest at the 2017 Chartered Institute of Bankers of Nigeria (CIBN) Investiture in Lagos last weekend, said government must raise taxes where necessary, especially on luxury items.

According to Mr Mati, the Federal Government must broaden its VAT system by revisiting exemptions.

At the event themed ‘Coherent set of Policies for Greater Exchange Rate Flexibility, the IMF chief in Nigeria said government should consider cancelling tax holidays and exemptions that erode the Company Income Tax (CIT) base.

In addition, government should also increase taxes on alcohol and tobacco and broaden VAT by revisiting exemptions, he said.

Mr Mati noted that if the Federal Government can work reform its tax system, the economy would be jumpstarted.

Lately, Nigeria has looked toward tax to generate more revenue due to its fall into recession last year.

Minister of Finance, Mrs Kemi Adeosun, has consistently said the government intends to increase its revenue by increasing its tax base.

According to Federal Inland Revenue Service (FIRS), the total number of tax payers in Nigeria is just 12,649,654 [as at April 2017]. Of these, 96 percent have their taxes deducted at source under PAYE and just 4 percent comply with Direct Assessment.

In June 2017, the Federal Government launched the Voluntary Asset and Income Declaration Scheme (VAIDS).

The platform was put in place for defaulting Nigerian taxpayers to work out a flexible way to pay their outstanding tax liabilities due from them relating to the last six relevant tax years, regularize their tax transactions and obtain genuine tax clearance certificates for all the relevant years without fear of criminal prosecution for tax offences and with the benefit of forgiveness of interest and penalties.

Mrs Adeosun had stated at the launch of the initiative that the policy embraces all federal and state taxes such as Companies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax, Technology Tax, Tenement Rates, Property Taxes.

Earlier this month, the Finance Minister said Nigeria will reduce the rate at which it borrows money for developmental projects only if the tax to gross domestic product (GDP) hits 10 percent.

At the moment, the country’s tax to GDP ratio is at 6 percent.

“We must pay taxes properly in Nigeria, if we do this, we do not need to borrow.

“Of course I am not suggesting that there isn’t responsibility on the part of government; we have to be more responsible, to be more efficient (when people citizens pay their taxes).

“We are really focusing on this, we are finding ways to cut cost, but fundamentally, we must invest but we don’t have the power we need, the roads, we are working in progress.

“A lot of money is needed to reposition this economy and we need to generate more through tax.

“We just need to move our tax to GDP from 6 percent from where it is now to 10 percent; it will significantly reduce the amount of money we need to borrow and that will have a wider effect on the economy.

“One, it would reduce the demand for short-term borrowing and help bring down interest rate.

“Two, it would create headroom for the private sector to borrow; that is the strategy,” Mrs Adeosun had said.

At the 3rd International Conference on Tax in Africa (ICTA) held in Abuja from September 25 to 29, 2017, stakeholders highlighted the need for African countries to build stronger domestic tax regimes by strengthening VAT, PIT and CIT.

At the Pan-African Conference on Illicit Financial Flows (IFFs) from Africa organised by Tax Justice Network Africa (TJNA) in Nairobi, Kenya, it was said that Africa has lost over $50 billion to multinationals who take advantage of weak tax laws and unfair trade treaties on the continent.

Economy

61 Equities Inspire NGX Index to 1.76% Week-on-Week Growth

Published

1 hour ago

23/12/2024

Dipo Olowookere

By Dipo Olowookere

The Nigerian Exchange (NGX) Limited recorded 1.76 per cent week-on-week growth last week on the back of a continued buying interest.

The demand for Nigerian stocks has continued to grow as a result of renewed investor confidence in the domestic equity market because of its resilience amid challenging macroeconomic environment.

Last Monday, the National Bureau of Statistics (NBS) revealed that inflation rate jumped by 34.60 per cent in November 2024, but despite this, the All-Share Index (ASI) and the market capitalisation appreciated by 1.76 per cent to close the week at 101,129.09 points and N61.303 trillion, respectively.

In the same vein, all other indices finished higher except the industrial goods and sovereign bond sectors, which depreciated by 0.86 per cent and 0.06 per cent, respectively while the ASeM index closed flat.

In the week, 61 equities appreciated versus 51 equities in the previous week, 26 shares lost weight versus 35 shares of the earlier week, and 66 stocks closed flat versus 67 stocks of the preceding week.

MRS Oil topped the gainers’ chart after it chalked up 36.36 per cent to trade at N180.00, Eterna appreciated by 32.36 per cent to N29.45, Honeywell Flour expanded by 31.52 per cent to N6.05, Livestock Feeds jumped 30.16 per cent to N4.10, and Coronation Insurance increased by 26.87 per cent to N1.70.

On the flip side, John Holt lost 18.67 per cent to N5.88, Multiverse shed 18.58 per cent to trade at N4.60, University Press declined by 16.27 per cent to N3.50, Tantalizers slumped by 13.04 per cent to N1.60, and PZ Cussons dwindled by 8.00 per cent to quote at N23.00.

Business Post reports that in the trading week before Christmas, investors bought and sold 2.536 billion shares worth N91.382 billion in 51,406 deals, in contrast to the 2.729 billion shares valued at N49.845 billion traded in 43,298 deals a week earlier.

Financial stocks led the activity chart with 1.680 billion units sold for N23.486 billion in 22,766 deals, contributing 66.24 per cent and 25.70 per cent to the total trading volume and value, respectively.

ICT equities followed with 201.287 million units worth N3.155 billion in 2,840 deals, and services shares recorded a turnover of 182.275 million units valued at N7.961 billion in 3,019 deals.

The trio Sterling Holdings, Wema Bank and eTranzact accounted for 623.895 million shares worth N3.981 billion in 1,544 deals, contributing 24.61 per cent and 4.36 per cent to the total trading volume and value, respectively.

Economy

Customs Street Suffers First Loss in Nine Straight Sessions

Published

2 days ago

21/12/2024

Dipo Olowookere

By Dipo Olowookere

The Nigerian Exchange (NGX) Limited recorded its first loss in nine consecutive sessions after it finished in the red territory on Friday by 0.12 per cent.

This decline suffered by Customs Street was caused by profit-taking in the industrial goods sectors, which tumbled by 0.31 per cent at the close of trading activities.

It upturned the gains recorded by the other sectors, as the banking space grew by 1.66 per cent, the insurance counter expanded by 1.05 per cent, the consumer goods index appreciated by 1.03 per cent, and the energy sector gained 0.31 per cent.

When the market ended for the day, the All-Share Index (ASI) decreased by 118.93 points to 101,129.09 points from 101,248.02 points and the market capitalisation shrank by N72 billion to N61.303 trillion from N61.375 trillion it ended a day earlier.

Despite the poor performance, investor sentiment was bullish as the bourse finished with 39 price gainers and 15 price losers, representing a positive market breadth index.

Multiverse lost 9.80 per cent to trade at N4.60, Aradel Holdings tumbled by 9.09 per cent to N664.00, International Energy Insurance slumped by 8.13 per cent to N1.47, Coronation Insurance declined by 4.49 per cent to N1.70, and Nigerian Breweries moderated by 3.33 per cent to N29.00.

On the flip side, UAC Nigeria gained 10.00 per cent to close at N30.25, Honeywell Flour also increased by 10.00 per cent to N6.05, Universal Insurance jumped by 10.00 per cent to 44 Kobo, Learn Africa rose by 9.92 per cent to N3.88, and NAHCO improved by 9.89 per cent to N46.10.

During the session, investors transacted 515.6 million shares valued at N16.5 billion in 11,554 deals compared with the previous day’s 411.4 million shares worth N26.3 billion traded in 10,260 deals a day earlier, indicating a decline in the trading value by 37.26 per cent, and growth in the trading volume and number of deals by 25.33 per cent and 12.61 per cent, respectively.

Zenith Bank was the most traded stock for the session with 60.4 million units valued at N2.7 billion, UBA exchanged 43.5 million units worth N1.5 billion, Sterling Holdings sold 43.3 million units for N216.3 million, Universal Insurance transacted 28.3 million units valued at N12.4 million, and GTCO traded 23.5 million units worth N1.3 billion.

Economy

Okitipupa, FrieslandCampina Buoy NASD OTC Market by 0.87%

Published

2 days ago

21/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange grew by 0.87 per cent on Friday, December 20, spurred by Okitipupa Plc and FrieslandCampina Wamco Nigeria Plc.

During the session, the market capitalisation of the trading platform added N8.98 billion to settle at N1.043 trillion compared with the preceding day’s value of N1.034 trillion and the NASD Unlisted Security Index (NSI) ended the day at 3,043.27 points after adding 26.20 points to the previous day’s closing value of 3,017.07 points.

Yesterday, the price of Okitipupa Plc went up by N2.98 to close at N32.72 per unit compared with Thursday’s closing price of N29.74 per unit and FrieslandCampina Wamco Nigeria Plc increased by N3.84 to wrap the session at N43.84 per share versus the preceding day’s N40.00 per share.

Business Post reports that the volume of securities traded at the bourse by investors on the last trading day of the week went up by 182.1 per cent to 1.2 million units from the 419,682 units recorded a day earlier.

In the same vein, the value of shares traded yesterday increased by 2,089.4 per cent to N51.2 million from the N2.3 million achieved in the preceding session, and the number of deals went down by 45.5 per cent to 12 deals from the 22 deals carried out in the previous session.

At the close of business, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with a turnover of 1.7 billion units valued at N3.9 billion, Okitipupa Plc occupied the second spot with 752.3 million units sold for N7.8 billion, and Afriland Properties Plc was in the third position with the sale of 297.7 million units worth N5.3 million.

Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with the sale of 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.3 million units valued at N7.8 billion, and Afriland Properties Plc was in third with 297.7 million units sold for N5.3 million.