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

Renaissance Finally Completes Acquisition of Shell Onshore Assets

Published

3 minutes ago

14/03/2025

Adedapo Adesanya

By Adedapo Adesanya

Renaissance Africa Energy has finally completed the acquisition of the entire 100 per cent equity holding in Shell Petroleum Development Company of Nigeria (SPDC).

This is according to a statement on Thursday by the spokesman of Renaissance Africa Energy Holdings, Mr Tony Okonedo who said the acquisition was completed on the same day.

“This follows the signing of a sale and purchase agreement with Shell in January 2024, and obtaining all regulatory approvals required for the transaction. Going forward, SPDC will be renamed as ‘Renaissance Africa Energy Company Limited,” the statement added.

The deal had hit a snag last year October because the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) raised issues about the ability of the firm to takeover the $1.3 billion asset.

However, it was then approved in December.

Renaissance Africa Energy Holdings is a consortium consisting of four successful Nigerian independent oil and gas companies: ND Western Limited, Aradel Holdings Plc, First Exploration and Petroleum Development Company Limited and the Waltersmith Group, each with considerable operations experience in the Niger Delta, and Petrolin, an international energy company with global trading experience and a pan African outlook.

Speaking on the deal, Mr Tony Attah, the Managing Director/CEO of Renaissance noted that “We are extremely proud to have completed this strategic acquisition. The Renaissance vision is to be ‘Africa’s leading oil and gas company, enabling energy security and industrialisation in a sustainable manner.’

“We and our shareholder companies are therefore pleased that the Federal Government has given the green light for this milestone acquisition in line with the provisions of the Petroleum Industry Act.”

“We extend our appreciation to the Minister of Petroleum Resources, the CEO of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), and the GCEO of Nigeria National Petroleum Company Limited (NNPCL) for their foresight and belief, paving the way for the rapid development of Nigeria’s vast oil and gas resources as a strategic accelerator for the country’s industrial development,” he added.

Economy

Again, FrieslandCampina Wamco Sinks NASD OTC Exchange

Published

2 hours ago

14/03/2025

Adedapo Adesanya

By Adedapo Adesanya

For the second consecutive session, FrieslandCampina Wamco Nigeria Plc plunged the NASD Over-the-Counter (OTC) Securities Exchange by 0.04 per cent on Thursday, March 13.

The milk producer was the only price loser during the session, weakening the gains reported by three other securities.

At the close of transactions, the price of FrieslandCampina Wamco Nigeria Plc went down by N1.88 to settle at N35.57 per share from Wednesday’s closing price of N37.45 per share.

However, Okitipupa Plc gained N3.00 to end at N330.00 per unit compared with the N327.00 per unit it traded at midweek, Geo-Fluids Plc improved its value by 20 Kobo to N3.15 per share from N2.95 per share and UBN Property Plc grew by 10 Kobo to N1.95 per unit from its previous rate of N1.85 per unit.

Yesterday, the market capitalisation of the bourse went down by N770 million to settle at N1.954 trillion compared with the preceding day’s N1.955 trillion and the NASD Unlisted Security Index (NSI) dropped 1.32 points to close at 3,384.18 points, in contrast to the previous trading day’s 3,385.50 points.

The volume of securities traded at the bourse at midweek increased by 1,204.5 per cent to 3.9 million units from the 298,845 units achieved on Wednesday, the value of securities traded by investors went up by 126.9 per cent to N23.6 million from the N10.4 million quoted at the preceding session, and the number number of deals decreased by 32.00 per cent to 17 deals from 25 deals.

Impresit Bakolori Plc was the most active stock by value (year-to-date) with 533.9 million units worth N520.9 million, followed by FrieslandCampina Wamco Nigeria Plc with 12.7 million units valued at N493.2 million, and Afriland Properties Plc with 17.2 million units sold for N352.8 million.

Also, Impresit Bakolori Plc was the most active stock by volume (year-to-date) with 533.9 million units worth N520.9 million, trailed by Industrial and General Insurance (IGI) Plc with 69.9 million units worth N23.7 million and Afriland Properties Plc with 17.2 million units valued at N352.8 million.

Economy

Naira Stable at N1,540/$1 at Official Market as FX Pressure Persists

Published

2 hours ago

14/03/2025

Adedapo Adesanya

By Adedapo Adesanya

The Naira closed flat against the Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, March 13 at N1,540.68/$1, though FX pressure remained.

It was the first time in the last few sessions that the value of the local currency did not depreciate in the official market against the greenback.

However, the domestic currency weakened against the British Pound Sterling at the spot market yesterday by N4.19 to close at N1,990.13/£1 versus the previous day’s N1,985.94/£1.

It was also a similar situation for the Euro at NAFEM, where the Nigerian currency lost N60 Kobo to quote at N1,676.08/€1, in contrast to the preceding session’s value of N1,675.48/€1.

In the same vein, the Nigerian Naira crumbled against the US Dollar in the black market during the trading day by N5 to sell for N1,590/$1 versus Wednesday’s closing price of N1,590/$1.

Recent interventions have failed to ease pressure on the market with the country’s foreign reserves losing over $2 billion in the last month and projected to lose more as the Central Bank of Nigeria (CBN) sustains US Dollar sales to banks and debt servicing payments.

Meanwhile, in the cryptocurrency market, tokens rose despite persisting US trade war fears which are dampening risk-asset trader appetites.

Market analysts noted that concerns about a President Donald Trump triggered tariff war and a slowing economy in the US, the world’s largest economy, is not offering a clear direction.

The February print of the US Producer Price Index (PPI) came in below median expectations, copying the Consumer Price Index (CPI) results from the day prior.

On an unadjusted basis, the index for final demand advanced 3.2 percent for the 12 months ended in February, the US Bureau of Labor Statistics (BLS) stated.

Ripple (XRP) gained 3.3 per cent to finish at $2.30, Ethereum (ETH) added 1.5 per cent to sell at $1,891.13, Solana (SOL) jumped by 0.9 per cent to $124.71, Binance Coin (BNB) also appreciated by 0.9 per cent to $580.79, and Dogecoin (DOGE) rose by 0.8 per cent to $0.1685.

On the flip side, Bitcoin (BTC) crashed by 1.2 per cent to $82,033.71, Cardano (ADA) declined by 0.7 per cent to $0.7154, and Litecoin (LTC) depreciated by 0.3 per cent to $88.95, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.