Tax payers survival imperative
With the understanding that tax administration is not meant to cripple businesses, or to strangulate the citizens, it is rather a social contract that is meant to benefit all. Hence in formulating tax policies, the goose that lay the golden egg must be protected.
But, at a recent stakeholders meeting on tax payment system in Nigeria and the need to protect tax payers, organized by the IIADRI, the need for Alternative Dispute Resolution mechanism (ADR) was advocated to ensure that all parties in the tax dispute attain better bargain, while the growth trajectory of the economy upheld.
Stakeholders Thursday in Lagos fingered appropriate utilisation of tax revenue to enhance standard of living and per capita income of the average citizenry, as one of the critical conditions that need to be met in order to raise confidence in Nigeria’s tax systems.
This was the focus of stakeholders at the second edition of the Issuers and Investors Alternative Dispute Resolution Initiative (IIADRI), workshop themed “the Nigerian Tax Laws: Matters Arising “where it was fingered that there are opportunities to bring the Nigerian vast real sector into the tax net, but they should also be empowered to excel in their businesses, taking account the high mortality rate of the country’s Micro Small and Medium Scale Enterprises (MSMEs).
While calling for the adoption of Alternative Dispute Resolution (ADR) in resolving tax matter, they also charged tax administrators in the country, to not only be focus on the revenue they will get from tax payers, which in most cases, are estimated, but also to be mindful of the growth of companies and individuals that pay tax.
According to them, what is the need of heavy tax burden on dying businesses or unprofitable entities, which has lost potential for growth and creating further employment to alleviate the rising unemployment in the country?
The pace of the workshop was set by the IIADRI, chairman, Moses Igbrude, who in his opening remark, said that that the theme for this year’s symposium was carefully selected to address the numerous complaints raised by corporate organizations on the administration of taxes in Nigeria such as Multiple Taxation, Enforcement Procedures, Dispute Resolution Mechanisms, endless audit cycle etc.
He said that such disputes arising from taxation, which could be handled by Alternative Dispute Resolution (ADR) windows, have always led to protracted litigations and in come case, alleged to have be responsible for exit of some corporate companies from the country, to other countries where tax policies align with growth potentials of corporate organisations.
On the issue of bringing the informal sector into the tax net, Ademola Idowu of the KPMG, expressed that the sector is the key driver of Nigeria’s economy and government is fixed at ensuring that they are covered in tax duties, through the new finance Act, which made provisions for Tax Identification numbers (TIN) of firms.
“’ that is geared towards bringing the informal sector into the tax net” he further argued that “you seem encouraged to do that, when you see that the tax you are paying is used judiciously. The government has been doing a lot, but need to do more”’
According to him , in Nigeria, cost of building same kilometre of roads in Nigeria outstrip that of other countries by very high margin, yet the projects will remain uncompleted while that of other countries , same west African countries, are completed on time.
The stakeholders maintained that corporate and citizens that are saddled with tax payment, requires friendly legislation to boost their endeavours, security, provisions of infrastructures to drive their operations amongst other supportive initiatives to further create conducive environment that would further empower many others for future tax payments.
Vice president, marketing and membership drive, the Institute of Chartered Mediators and Councilors (ICMC), Chidy Martins Lasbrey-, in his presentation “A case for ADR option” maintained that relationship between tax payers and tax administrators has never been cordial, and will never be, thus leading to litigations.
“’ tax administrations are not to suffocate businesses, the people that pay tax must be protected”’ Which is why the ADR provides the third alternative, to quick, timely and cost effective resolution of tax disputes, for the benefit of all parties” Chidy said.
He disclosed “The relationship between the tax managers and citizens, including corporate citizens in any clime, is not always cordial for obvious reasons. More so when there is little to show in terms of social benefits from Government. Since there is no end in sight to this bad blood between the citizens and the tax managers, the only option available is to find ways to manage the disagreements to the benefit of both parties.
This relationship between citizens and Government, he added, is supposed to be symbiotic in nature, saying “The whole essence of tax payment is to get the citizens to contribute their quota towards the development of the society, while Government on their part is to use the tax paid by the citizens to provide social structures and infrastructures that will benefit the people. Both the Government and the citizens need each other, in fact, there is no Government without the citizens. Both must be present and contribute their bit for there to be a sane society.”
Tax administration is not meant to cripple businesses. It is not meant to strangulate the citizens rather, it is a social contract that is meant to benefit all. Therefore, in formulating tax policies, the goose that lay the golden egg must be protected.
He disclosed that the Nigerian tax system has remained awash with, Picketing, disagreements, mistrust, legal battles, outright hatred for each other, reflecting that over the years, the tax managers have pursued an aggressive tax management and enforcement policy. “’This approach may stem from a saying that people don’t willingly like to pay tax. With this in mind, it behooves on the tax managers to design processes and strategies that will encourage citizens to pay their taxes with less acrimony. This is why we are advocating that informal and Alternative Dispute Resolution processes be deployed by tax administrators in the resolution of tax disputes.
By Alternative Dispute Resolution processes we are looking at a flexible tax policy that will take into consideration the peculiarities of each sector of the economy and deal with them with understanding for the benefit of all”
Lead, International Tax & Regulatory, Deloitte Nigeria, Asiata Atinuke Agboluaje, in her presentation on Multiple Taxation vis-à-vis coercive regulatory actions, adding that tax laws should be simplified and easy to understand.
And for tax managers to embark on hudicial advocacy, ensuring that decisions on tax dispute should consider the effect of multiple tax and the aims of the NTP, as well as also, streamlining the tax collection process to be more conducive and amicable. “Regular review of the tax laws. The FA 2019 is a good start. We expect frequent reviews of the tax laws
Asiata Atinuke Agboluaje maintained that “taxes should be like shopping. What I buy is government services. What I pay are my taxes” adding “’ As government seeks to raise revenue principally through taxes, the question as to whether it has built sufficient ‘trust capital’ whereby the taxpayers can see their tax in action becomes relevant.
Also, the social contract between the government and the taxpayer should be cordial. An unusually aggressive tax collection process may provide more revenue in the short run but may cause long term damage for businesses”
Vice President, Lagos Chamber of Commerce and Industry (LCCI) Gabriel Idahosa, stressed that tax challenges has been unbearable for manufactures, who have to contend with the challenge of providing their own infrastructures, such as roads, power, security amongst all.
Bloated running cost and in some cases unprofitable, yet forms are saddled with heavy tax charges that, can only worsen the plight of the firms, their employees and the overall economy at large, adding that alternative dispute resolution (ADR) need to be applied in tax issues.