Driving Tax Compliance in Nigeria

Healthy relationships are all about give and take. Same applies to taxes! 

Time and again we have all heard the tax anthem – “Pay your taxes and government will provide infrastructure, good roads, better jobs, constant power and the other usual stuff”. However, even the blind can see that the Nigerian reality does not promote this gospel. We have been paying taxes, but we have not been seeing our taxes in action. This continues to be a major reason why people evade taxes.

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The Federal Inland Revenue Service (FIRS) announced that about $15 billion is lost annually through tax evasion, this is almost half of the 2021 budget of about $35 billion. Further, over 50% of economically active Nigerians do not pay taxes because they belong to the informal sector which is largely untaxed. What this leads to is existing taxpayers being continuously burdened whereas what we need are innovative ideas to bring the non-taxed into the tax net.

With dwindling oil revenues, taxes are an easy means for Government to generate income. However, there is clearly a tax compliance crisis in Nigeria. What can be done?

1. Innovation

animated-light-bulb-gif-30 | Animated clipart, Motion design video, Light  bulb

The saying goes – you cannot do things the same way and expect to achieve different results. Simplified communication is important but effective communication, even more so!

The Government could consider getting people in esteemed positions to do the talking! For instance, we belong to a highly religious society. Why not enjoin religious leaders who are held in the highest esteem to ‘lead’ by example and encourage their congregation to ‘follow’ in paying taxes?

Also, the Nigerian entertainment sector is thriving. Many shows attract millions of persons in the formal and informal sector as viewers/voters. Communication about taxes can be channeled using widely utilized entertainment platforms. Other means include partnering with intermediaries relied on by the populace, even deploying ads at cinema halls, among others. These may be effectively utilised to bring the tax message down to the grassroots.

2. Accountability

TO WHOM MUCH IS GIVEN MUCH IS REQUIRED Poster | jayper | Keep Calm-o-Matic

Employing conventional, and even unconventional means of reaching the public will not entirely convert taxpayers. Naturally, the Government in demanding taxes from the masses should be equally ready to submit itself to the highest level of accountability. Without public knowledge of what all the taxes being collected are used for, confidence in the Government will not arise, advancing the cause of those in favour of tax evasion.

3. Administration

Easy Button by Isaiah Cardona on Dribbble

It is not enough to be accountable and to also enjoin the public to pay taxes. Tax authorities must ensure ease in the end-to-end taxpaying process and avoid taxpayer frustration through outrageous alleged sums. Tax authorities in Nigeria should embrace technology for a seamless taxpayer experience. The FIRS’ automated platform (TaxProMax) is lauded in this regard as it enables relatively quick filing of returns, updates taxpayers on outstanding tax obligations and computes accrued tax liabilities and reduces bureaucracy.

Though government strives to ease taxpayer’s burdens by offering various incentives, this is not enough. Higher levels of accountability, creativity and simplicity in the tax process will be even more effective in converting taxpayers and preventing evasion.

Fiyinfoluwa Adeosun is a Final Year Law Student of the Obafemi Awolowo University. She is the current president of The Tax Club, OAU. She has keen interest in Taxation and she is passionate about reading, writing and data science.

Interested in publishing your Taxy article with the TaxVille? Shoot us an email at www.thetaxville@gmail.com

Image credits

Image 1 – GIPHY; Image 2 – Dreamstime.com, Image 3 – Pinterest, Image 4 – Keep Calm-O-Matic; Image 5 – Dribbble; Image 6 – Shutterstock.

1 thought on “Driving Tax Compliance in Nigeria

  1. Taiwo Alabi Reply

    Apt! Its a nice read. Better accountability, innovation and sensitization will help. In fact, meeting various associations to communicate same to their members will assist the seeming dwindling economy at least with a little tilt.
    Thank you.
    God bless you.

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