Oyedele seeks tax forbearance for critical sectors, N800/$ import duty FX rate

*Warns govt against taxing production, poverty, investment
*CBN changes import duty FX rate for the third consecutive day

The Presidential Committee on Fiscal Policy and Tax Reform has proposed the exemption of small businesses from withholding tax obligations, businesses with low margins.

The committee also made a case for exemptions of manufacturers and farmers from all forms of taxes.

The Chairman of the Committee, Taiwo Oyedele, made the case yesterday in Lagos during an exposure and impact assessment session with journalists.

He said the proposed reform of the country’s tax system will streamline the process, and eliminate ineffective taxes and equity in tax administration while giving forbearance to small businesses and low-income earners.

Oyedele also warned the government at all levels against taxing production, investment and poverty, adding that fruits rather than seeds should be taxed as the government seeks new ways to grow the economy.

He condemned the multiplicity of revenue collection agencies, saying they do not increase tax revenue but inefficiency. Last year, he recalled, the South African government earned N40 trillion from a single tax item, an amount Nigeria (with over 197 taxes in some states) could only dream of.

An efficient tax system would require revenue collection at both federal and state levels to be handed over to a single agency.

Oyedele said the committee had proposed some key changes to withholding tax regulations with the objectives of simplifying the tax system and reducing the burden on businesses including small and medium-sized enterprises (SMEs).

Other proposals are to promote competitiveness, equity and ease of compliance, prevent tax avoidance and detect tax evasion to close the tax gap, reflect emerging issues and adopt global best practices.

Oyedele also stated that the committee has also proposed to the federal government to adopt an exchange rate of N800/$1 for customs import duty, which has been unstable.

He said the unstable Customs FX duty rate does not allow for adequate planning by businesses.

The advice came as the Central Bank of Nigeria (CBN) has reduced the Customs FX duty rate for three consecutive days. The rate was reduced from N1,382.392 on May 27 to N1,327.54 on May 29 and further slashed to N1196.613/$ yesterday.

Speaking further, Oyedele disclosed that the plans outlined by the committee focus on five key areas such as eliminating nuisance taxes, prioritising high-yield taxes, tax base merging, streamlined tax structure and streamlined tax structure.

He said the committee proposed doing away with taxes that generate minimal revenue but require high collection costs, thereby impacting low-income earners and small businesses disproportionately.

Oyedele also stated that the focus will shift towards broad-based taxes that are easier and more cost-effective to collect, ultimately generating a more stable revenue stream.

He said the committee further suggested merging taxes and levies that target the same or similar aspects of the economy, reducing redundancy and simplifying compliance.

Oyedele noted that the proposal aims to limit the total number of taxes levied across all government levels to a single digit, making the system easier to navigate, adding that measures will be implemented to ensure the long-term viability of the reformed tax system.

According to Oyedele, simplifying the tax code, reducing the burden on small businesses, and ensuring fairer taxation practices, will ensure the reforms stimulate economic growth and create a more level playing field for entrepreneurs.

He stated that if this initiative is implemented, it could significantly impact the Nigerian business landscape.