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Tax system: Nigeria ranks 170 among 189 nations

By BusinessNews Staff on November 28, 2013

A report by PricewaterHouse Coopers on tax regimes has ranked Nigeria’s tax system 170 out of 189 countries where the study was conducted.

The paying taxes 2014 report, which was released on Tuesday in Abuja, said while Nigeria was globally and regionally competitive in terms of tax rates, it needed significant improvements in the area of tax payments and compliance time.

With the ranking, Nigeria only outperformed 19 countries in terms of measuring all the compulsory taxes that a medium-sized organisation needs to pay within a given period.

The Head, Tax and Corporate Advisory Services at PwC, Mr. Taiwo Oyedele, said the position was in sharp contrast to the 155th position the country was ranked last year out of the 185 countries that were surveyed.

Oyedele lamented the drop in Nigeria’s tax system in the past few years, adding that the paying taxes index was one of the 11 indicators that the World Bank used in determining the ease of doing business globally.

He said the report was based on three major indicators – total tax rate; making of payments; and compliance time.

He said while the report found that 32 economies continued to take steps during the period from June 2012 to June 2013 to make it easier to pay taxes, the compliance burden (the time to comply with tax obligations and number of payments) had continued to decline.

According to him, the average worldwide is 268 hours while the average for Africa is 230 hours; this places Nigeria in a position where it is four times the average for Africa.

He said, “The 2014 report funds on average globally, a medium-sized company has a total tax obligation of 43.1 per cent of profits, making 26.7 payments and needing 268 hours to comply with its tax requirement.

“The report shows that the case study company for Nigeria has a total tax rate of 33.8 per cent, makes 47 payments and spends 956 hours annually to comply with tax obligation.

“This means that Nigeria is globally and regionally competitive in terms of tax rates but needs significant improvements in terms of number of tax payments and time to comply. These two indicators account for the very low overall ranking of Nigeria at 170 out of 189 economies worldwide.”

Oyedele blamed the country’s poor performance on the issue of multiple taxation that compelled companies to pay different types of taxes at the federal, state and local government levels.

[Punch]

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