Tackling tax invasion in Nigeria

Nigeria's Minister of Finance, Kemi Adeosun, recently highlighted the issue of massive tax evasion in the country, pointing out that many Nigerians' lifestyles do not align with their tax returns. In response to this challenge, the Nigerian government has introduced a voluntary assets and income declaration scheme aimed at broadening the tax net and encouraging individuals and businesses to come clean. To gain insights into the effectiveness of this initiative and its implications, Taiwo Oyedele, Partner and Head of Tax Regulatory Services at PwC Nigeria, shared his perspectives in an exclusive interview with CNBC Africa. Oyedele commended the government's efforts, emphasizing the need for a fundamental shift in both public perception and administrative approach toward taxation. He noted that the current scheme, known as VAIDS, differed significantly from past initiatives, encompassing a wider scope of taxpayers and extending over a longer timeframe. While the target revenue of one billion dollars appears conservative, Oyedele expressed confidence that the scheme could potentially yield up to ten billion dollars, given Nigeria's economic size and low tax-to-GDP ratio. Addressing concerns about the scheme's alignment with the nation's anti-corruption agenda, Oyedele underscored the pivotal role of taxation in combating illicit financial activities. By leveraging tax records to trace wealth accumulation, the government aims to enhance transparency and deter corrupt practices. While acknowledging existing capacity constraints within tax authorities, Oyedele highlighted the recruitment of additional personnel and a planned awareness campaign to bolster enforcement efforts during the nine-month voluntary disclosure period. One of the recurring debates surrounding tax compliance pertains to its impact on economic growth. Oyedele countered fears of a slowdown by emphasizing the long-term benefits of formalizing the informal sector and fostering competitive parity among compliant businesses. Drawing attention to the interconnectedness of tax policy with broader economic objectives, he stressed the importance of harmonizing tax reforms with the National Tax Policy and the Economic Recovery and Growth Plan. Moreover, Oyedele emphasized the need for streamlined tax administration to reduce complexities and inefficiencies plaguing the current system. He advocated for a unified approach across federal, state, and local levels to address multiple taxation and regulatory redundancies. While technology presents opportunities for enhancing tax compliance through data analytics and digital platforms, Oyedele cautioned that effective implementation hinges on stakeholder engagement and institutional reform. In projecting the scheme's impact on Nigeria's tax-to-GDP ratio, Oyedele forecasted a gradual increase to 10% within the next two years and a target of 15% by 2020. However, he identified political will as the primary risk factor, pointing to recent legislative actions that could undermine public trust in the tax reform agenda. Upholding the integrity of the scheme and ensuring accountability in resource allocation will be critical to sustaining momentum and eradicating the longstanding trust deficit among taxpayers. As Nigeria embarks on this ambitious tax reform journey, the synergy between policy implementation, technological innovation, and civic engagement will be essential in reshaping the country's fiscal landscape and fostering a culture of transparency and compliance. The success of VAIDS hinges not only on financial gains but on the restoration of public trust and the consolidation of Nigeria's position as a progressive and accountable tax jurisdiction.