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350,000 companies not rendering tax returns – FG

By on May 17, 2013

The Federal Government has decried the practice of tax evasion by many companies operating in the country and that in the last few years; about 350,000 companies have not filed tax returns.

Tax returns are forms used to record income taxes with the Federal Inland Revenue Service. They are used to calculate the tax liability of a company and must be filed every year for individuals and businesses that receive income during the year.

The Minister of State for Finance, Dr. Yerima Ngama, gave the figure in an address delivered at the opening ceremony of the African Tax Forum on Thursday in Abuja.

The forum with theme ‘Tax coordination in Africa,’ was convened to enable tax authorities on the continent to brainstorm on how to use taxation as a pivot for national development.

Ngama lamented the low tax to Gross Domestic Product ratio in the country, adding that the current rate of about seven per cent showed that most Nigerians were not paying taxes.

He said, “Five years ago, 54 per cent of the business that take place in this country was informal, but today, that has been reduced to 46 per cent. More people are organising their businesses better and registering them, and more importantly, adopting well known accounting principles.

“If you look at Ghana, the level of formality and organisation of business is better than Nigeria’s. Today, the tax collected in Ghana is about 21 per cent of the Gross Domestic Product.

“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.

“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 can be done to improve tax rendition and tax collection, and what can be done to encourage accounting for activities.”

The minister added, “There is nothing the taxman will 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.

“If you pay tax, it will help to provide amenities and this may help to bring down the tax rate. But if taxes are not paid, the cost of doing businesses will be high because of lack of amenities.”

 

 

[Punch]