- Non-compliance is inarguably one of the biggest hindrances to tax collection one every country.
One of the scorecards of the just concluded year is that Nigeria lost over ₦3trn VAT to non-compliance. The Budget office of the Federation is saying that for 2022 alone, Nigeria lost over ₦3trn due to non-compliance with the Value Added Tax Act.
In the words of the Director General Budget Office of the Federation, Ben Akabueze, back in 2022, the Nigerian government lost a big chunk of tax revenue due to the refusal of certain companies to remit taxes.
AficaTaxReview gathered that the Director General earlier this week, revealed this shocking news while attending to issues about the 2023 budget.
Recall that in 2022, the National Bureau of Statistics (NBS) disclosed that between January and September 2022, the federal government only generated the sum of ₦1.83trn from VAT.
Although the above figure generated may be said as an improvement in tax generation but tax experts have reiterated that VAT generated could be more if the underlying loopholes are taken care of.
More on VAT Deficiencies
Akabueze blamed the loss in VAT on loopholes capitalized on by foreign shipping companies who operate their business in Nigeria but refuse to remit the tax to the government.
Nigeria Lost Over ₦3trn VAT: Solutions To The Issue
The Finance Bill 2022 slated to be the Finance Act 2023 has been identified by tax experts as one of the means to combat the issue of non-compliance with the VAT Act.
According to the Director General, the Finance Act 2023 will include a means to rectify the issue of non-compliance by foreign shipping companies, and also a plan to optimally generate revenue from this source.
Another way out, according to Akabueze, is through the perpetual technology drive of the Federal Inland Revenue Service (FIRS).
He also added that as the VAT loss to non-compliance is on the high side, the government is hoping to optimally generate customs revenue through the execution of the E-custom project that is effectively run by the Federal Inland Revenue Service (FIRS).
Even as each government strives to implement strict tax laws and policies to curb this rebellious act, some taxpayers still find ways to avoid paying taxes.
Taxpayers need to know that non-compliance with any form of tax payment costs the government a sizable revenue that can be used to fund certain projects that will be of benefit to the general public.
It is important to know that non-compliance can result in a loss of tax revenue for the government, which can affect funding for essential services such as education, healthcare, and infrastructure development.
The Nigerian tax administration may also need to devote additional resources to enforcement activities such as audits and investigations to identify and penalize non-compliant taxpayers, which can increase administrative costs.
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