By Modupe Gbadeyanka
Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, has been directed to begin implementation of the new interest rate on all unpaid taxes from July 1, 2017.
In May 2017, the Minister of Finance, Mrs Kemi Adeosun, approved a new interest rate spread on unpaid taxes for the year 2017.
Mrs Adeosun had said in May that the new interest rate would be 5 percent over the Central Bank of Nigeria (CBN) Minimum Re-Discount Rate (MRR) for the year 2017.
The Minister had explained that the hike was approved to improve tax compliance, minimize tax evasion and deter late payments.
She said Section 32(1b) of the Federal Inland Revenue Service (Establishment) Act 2007 empowered her to approve the new interest rate.
“Majority of Nigerian tax payers (PAYE) have taxes deducted automatically. However, those who do not and are required to file their taxes like companies and business enterprises must understand that there are financial consequences for late payments.
“We believe that this will support our efforts to ensure that people pay their taxes promptly, thus providing a sustainable source of revenue to the government to finance infrastructure and other projects,” Mrs Adeosun stated.
It could be recalled that Mrs Adeosun had, during the Finance Ministers’ meeting convened by the G24 Group at the 2017 IMF/World Bank Spring meetings in Washington, stressed the need for Nigeria to embark on aggressive tax revenue generation in order to drive economic growth.
She had emphasized that with a tax to GDP ratio of only 6 percent, one of the lowest levels in the world, the country had to intensify effort at tax collection in order to build a sustainable revenue base that will deliver inclusive growth.
She made known that the focus of the Federal Government in 2017 was to improve tax revenue through ensuring voluntary compliance with tax laws.
Adedapo Adesanya