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Expose tax evaders – Dangote advises FIRS

By on May 17, 2014

In order to boost revenue, the President, Dangote Group, Alhaji Aliko Dangote, has called on the Federal Inland Revenue Service to expose tax evaders by making public their identities, and at the same time appreciate companies and individuals who faithfully fulfil their tax payment obligations.

Dangote gave the advice in Lagos on Thursday at a stakeholders’ engagement forum organised by the FIRS.

His advice came just as the Minister of Finance, Dr. Ngozi Okonjo-Iweala, decried the high rate of tax evasion in the country.

Quoting from the findings of McKinsey & Company, which conducted a study on the nation’s tax system, the minister said 65 per cent of the registered tax payers had not filed their returns for the past five years; 75 per cent of small and medium businesses were currently not in the tax system, the businesses are registered but are not captured by tax system; while 30 per cent of companies operating under pioneer status incentives abused their tax exempt status.

Dangote said the FIRS should adopt the “naming and shaming strategy” to expose tax defaulters as well as partner with the Corporate Affairs Commission to capture registered companies that indulged in the act.

He said since the Value Added Tax number was one of the conditions of opening a corporate bank account, the FIRS should work closely with the CAC to expose defaulting companies.

“The FIRS should organise an annual event where it will present certificates of good behaviour to those that pay their taxes regularly, while naming and shaming those that have done badly. This will help essentially. Ordinarily, if you don’t use force, many people will not come forward,” he said.

The billionaire businessman also urged the Federal Government to go after oil companies that were cheating on government through high project costs.

“We should be collecting more taxes. Today most of the oil companies, though they pay 85 per cent of Petroleum Profit Tax and royalty, but what they do is to collect the money on the other side by raising their project costs. What is to cost $10, they will make it $30. The government should check that,” Dangote said.

Referring to the McKinsey & Company report, Okonjo-Iweala said, “Some of the interesting findings were that 65 per cent of registered tax payers have not filed their returns for the past five years; 75 per cent of small and medium businesses are currently not in the tax system, the businesses are registered but are not captured by the tax system; 30 per cent of companies operating under pioneer status incentives abuse their tax exempt status, avoiding paying tax for a long time. We must honour those that are paying.”

She said in the recently released rebased Gross Domestic Product, the tax to GDP ratio had fallen from 20 per cent to 12 per cent.

The minister said, “This is one of the indicators that do not make us so good. Non-oil tax to GDP is about four per cent. This is very low unlike other countries. South Africa’s tax to GDP ratio is 27 per cent; Kenya, 20 per cent; and Ghana, 15 per cent.

“If you are below 15 per cent as a country, you are not doing so well. At 12 per cent, we need to step up our efforts considerably otherwise the economy will be threatened.”

The Acting Executive Chairman, FIRS, Mr. Kabir Mashi, explained that the forum was organised to reassure taxpayers that the organisation appreciated their contributions to national development over the years by paying their taxes.

 

 

[Punch]