The Chairman, Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele has explained how the Nigerian government intends to prevent rich Nigerians from evading taxes and make them pay more, through the Tax reform bills.
Oyedele presented his postulation in an X space hosted by Nairametrics in partnership with Business Day, BudgIT, and CODE.
He argued that the top 5 percent earners in Nigeria do not pay enough taxes, unlike their counterparts in other countries.
“Rich people find a way to not pay taxes everywhere in the world but in Nigeria, we make it so easy for them. In fact, I think we offer them the opportunity not to pay. In South Africa last year, they collected personal income tax that is more than 15 times what Nigeria collected and 90% of that revenue was paid by the top 5% earners of their population.
“In the US, the top 5% pay more personal income tax than the remaining 95%. So as much as the rich people would try not to pay tax, they make it hard for them and they still have to pay.
“So, what we have done in those bills is that if you are making a lot of money, we will increase your tax from about 19% to 25% effective immediately and to be honest, that our 25% is still one of the lowest in the world,” he said.
When asked how to avoid tax evasion, which is typical of wealthy people such as politicians, Oyedele noted that the government would track their spendings through data and intelligence.
He disclosed that Nigeria receives intelligence from across the world and wealthy people cannot successfully hide their income from the government as far as they spend.
“And the second thing is to use data and intelligence to know what people are earning. So instead of asking you how much you have earned, we will tell you how much you have earned. This is because when people earn income, there is a third party. So rather than asking you, we will ask the third party. And when you’re spending, the government knows.
“If they can hide their income, they cannot hide their spending. The way a rich person will use their phone is different from the way a poor person will use it.
“Nigeria has signed an international treaty where we are receiving data from over 100 countries around the world. So those people who took money to Dubai, the US, Canada, we have that data. So, once you confront people with data, they will panic.”
The tax bills have provided tax relief for low-income earners. Individuals earning below N83,000 will be exempt from paying taxes, so are businesses with an annual turnover of less than N50 million
The proposed bill also includes exemptions from the new VAT rate for specific supplies. These exempt supplies include oil and gas exports, goods purchased for humanitarian projects (with upfront VAT payment by the donor), baby products, locally manufactured sanitary products, military equipment, hardware, and ammunition supplied to security agencies.
