The Centre for the Promotion of Private Enterprise has said that the current tax regime in Nigeria is stifling investment. According to Dr. Muda Yusuf Director Centre for the Promotion of Private Enterprise“An economy that desires job creation, economic inclusion, investment growth and poverty reduction, should have an accommodating tax regime for investors. Corporate tax in Nigeria is 30%. But effective corporate tax is much more than that. There is tertiary education tax of 2.5% of profit; NITDA Levy of 1% of profit; NASENI Levy of 0.25% of profit; Police Trust Fund Levy of 0.005% of profit. This brings effective corporate tax to about 34%. This rate is one of the highest in the world. Average corporate tax rate for Africa is 27.6%; Asian average is 19.52%; European Union is 19.74% and global average is 23.37%. Meanwhile new taxes are still being proposed by the National Assembly. These include Tertiary Health Tax of 1% of profit; and NYSC levy of 1% of profit. There are numerous other taxes imposed on businesses by the states and local governments.
“This multitude of taxes is crippling investment in the Nigerian economy. There is need for an urgent review. The current tax regime is in conflict with the National Tax Policy which prescribes that there should be less emphasis on direct taxation in order to incentivise investment. Meanwhile, investors are grappling with numerous macroeconomic, structural and regulatory headwinds. They incur huge expenditure on stuffs which the government should normally provide – electricity, security, water, waste management, human capital etc. These are implicit taxes, as it were. There are also numerous state and local government taxes which businesses have to pay.
He further said“the maritime sector is a very crucial sector of the Nigerian economy. It is a sector where reform imperatives have become very urgent. Legacy trade facilitation issues had persisted and becoming intractable. There is a pressing need to ease the cargo clearing processes and vessel turnaround time at our ports. These are major components of ease of doing business to which government had severally expressed commitment. The following have become priority: shorter vessel turnaround time by reducing delays, curtailing bureaucracy and curbing extortions in the clearance of vessels. Vessel turnaround time should be reduced from the current four weeks to a maximum of one ten days; shorter Cargo dwell time at the sea ports from the current 20 days to less than one week; better engagement of stakeholders in the implementation of the Vehicle identification System by the Nigeria Customs Service; fixing the problem of frequent breakdown of customs server which causes undue delays and demurrage payments by importers; reduction in the number of agencies and approvals needed for clearance of cargo at our ports; deployment of technology at all stages of approvals and documentation”.
According to him “others are acceleration of the implementation of single window system in order to minimise human interface at the ports; review of the current call up system with a view to making the system efficient and less vulnerable to corruption and extortion; introduction of credible, independent and speedy Dispute Resolution System between the service providers, government agencies and importers; installation of scanners at off dock terminals and border posts across the country; fixing the traffic constraints on the Lagos ports corridor to improve access to the ports; need for prompt decision on the renewal of Port concession agreements”.
He said “the political environment has a major impact on economic and business performance. Therefore, the quality of the political transition process, especially the credibility of the 2023 elections would be of contextual significance for the economy in 2023. The elections must be free, fair, transparent and credible. And it must be seen to be so. This underlines the need for the independence, neutrality and credibility of the key institutions involved in the election management process – INEC, Judiciary and the Security agencies. The quality of the democratic transition and choices would significantly impact economic outcomes in 2023.
