Nigeria's fight against tax evasion

The Nigerian government is currently embroiled in a battle against tax evasion, under declaration of taxes by taxpayers, and corruption among tax officials. The government recently announced that it has commenced investigations to address these issues and improve tax compliance in the country. To shed more light on this complex issue, Theo Emuwa, a Partner at Aelex, sat down with CNBC Africa for a discussion on the implications of these investigations on the government's tax plans and the best strategies to tackle tax evasion.Emuwa highlighted that while having the capacity to enforce tax laws is crucial, it is not a panacea for dishonesty. He emphasized that the battle against tax evasion and corruption is ongoing in all societies and can only be mitigated, not eradicated entirely. Embracing technology and implementing effective tax amnesty programs are essential steps in encouraging taxpayers to voluntarily comply with tax regulations. These initiatives provide erring taxpayers with the opportunity to rectify their tax affairs without facing exorbitant penalties and interest charges. Emuwa acknowledged that some individuals have taken advantage of these amnesty programs, resulting in higher tax compliance rates. However, achieving widespread tax compliance requires ongoing efforts to foster a culture of transparency and accountability in tax matters.While discussing the enforcement of tax laws in Nigeria, Emuwa acknowledged that the tax authorities possess significant powers to assess and collect taxes without needing extensive judicial intervention. Tax assessments can be issued based on the tax collector's suspicions of underreporting income, and failure to challenge these assessments promptly can lead to severe financial consequences for taxpayers. Emuwa noted that the legal framework in Nigeria generally supports tax enforcement efforts, with taxpayers having the right to dispute inaccurate tax assessments through established appeal processes.Despite some entrepreneurs expressing frustration with tax officials and enforcement mechanisms, Emuwa urged taxpayers to fulfill their tax obligations diligently to avoid unnecessary conflicts with the authorities. He emphasized that many individuals are unaware of their full tax liabilities, leading to surprise when the tax authorities identify discrepancies in their filings. Emuwa cautioned against painting all tax officials as obstructive, highlighting that compliance with tax laws is a mutual responsibility that benefits both taxpayers and the government.Overall, the fight against tax evasion in Nigeria requires a multi-faceted approach that combines effective enforcement measures, transparent tax policies, and taxpayer education initiatives. By leveraging technology, implementing fair tax amnesty programs, and strengthening legal frameworks, the Nigerian government can enhance tax compliance levels and reduce instances of tax evasion and corruption in the country.