Turning around the Nigerian economy will require reducing the overheads and increasing revenue. Taxation remains one of the areas government needs to grow to achieve theses steps.
In this interview, President, Chartered Institute of Taxation of Nigeria (CITN) Adesina Adedayo on ways to raise government revenue through taxation, structures required to ensure more Nigerians pay taxes and how to efficiently use tax resources. Excerpts:
What are your views on taxing tech giants like google, Facebook, twitter and others that government has severally complained about them not paying the right taxes?
My views are strictly based on the law, international practice, our policy, administration, governance and politics. In my opinion, the logical question is, what constitute the “right taxes”? The international nature of these tech giants shows clearly the necessity of cooperation and collaboration among nations. This is to address what is fair and equitable and we need to get what is justly ours.
What should government do to be able to earn more income from these tech-giants?
We need to review what countries with similar circumstances to ours are doing in addressing this problem, raise it at international fora and do what is needful in terms of engagement to ensure this is addressed.
Our Faculty of International Taxation is following up with the progress in the multilateral agreement on the digitalisation of the economy. October 2021 will be a watershed in this subject as theThe Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting will likely perfect the Agreement signed in July this year. The outcome of the event will determine to a large extent the likely government policy and legislation regarding the taxation of digital companies.
Taxation is a part of human life and has been in existence over the years. Since no society can survive without the payment of taxes, could poor payment of taxes in Nigeria be linked to the country’s current economic challenges?
I will try not to use the chicken and the egg argument. How did we get to the level of current economic challenges, one may ask? How did we deploy our previous revenue for purpose of accountability? It is only when we address accountability that we can talk about attitudinal change, otherwise this will be challenging.
What structures are you going to put in place to ensure that more Nigerians pay taxes, especially corporate tax given the low tax to GDP ratio in the country today?
I will talk from only two angles: advisory and research. Talking from advisory perspective, we should be focusing on infrastructure, enabling environment and investment in data base management based on integrity and not politics. Talking from the research perspective, there is the need if I have to borrow from the religious perspective, for the leaders to know the state of their flock (citizens). Serious minded questions such as, who are the people/entities behind all these companies? As a nation, we need to be deliberate about our developmental objectives, craft appropriate strategies and apply these four actions to track implementation. They are monitor, evaluate, account and learn as you progress from one milestone to another.
The International Monetary Fund and World Bank have consistently advised Nigeria to raise its tax rates and increase tax net. Do you think that Nigerians are paying enough tax when put side by side with the level of infrastructure executed by government with tax income?
The challenge lies in the breadth and depth of our systems, including the tax system. In my view, raising the tax rates is the depth side and I need to say, this must be cautiously approached. If we have to be sincere with ourselves, the social protection of the citizens comes more from friends and family members and, with about 40 per cent of the population operating at poverty level, the next question will be, how far can you go with this option?
On the issue of increasing the population of those in the tax net, this appears logical to me. If you find yourself fishing in an ocean, you do not use a small fishing net. You strengthen your fishing equipment, build capacity and go to the deep part of the ocean and catch the big fish.
The big fish will not only be good consumption for a large family, the economic benefit, including infrastructure deficit, will also be addressed. I think we can do better in terms of our compliance culture relating to payment of taxes and the government can do better in terms of accountability and infrastructure financing.
Nigeria has continued to borrow from the World Bank and IMF to the extent that the country now faces huge debt service costs. What do you think is the solution to Nigeria’s huge debt burden that is threatening the country’s economic stability?
One of the first lessons in street wisdom I learnt is that, if you are in a hole, stop digging. I also learnt in my professional journey as a tax adviser, business planner and turnaround specialist that, if you desire an economic turnaround, you do one of two things or both: reduce your overheads and/or increase your income. In my view, let us plug the leakages and loopholes in governance, programmes and policy frameworks, then we will gradually start our journey out of the hole.
What is your view on the rising complaints against tax practitioners by taxpayers especially as it relates to multiple taxation?
Let me clear a misconception. The complaints cannot be against the tax practitioners, because these are just professionals within the tax system. The complaint can only be against the tax system. We need to review our governance model, tax policies and attitude to compliance while not ignoring tax accountability. Without going into technicality, there is a need to have a proper perspective into our understanding and clarification of what we mean by ‘multiple taxation’ in the Nigerian context. There are some elements of rascality within the system, which is not an issue of multiple taxes but a symptom of governance and systemic failure while other cases have to do with legislative and administrative review which we have always addressed as an Institute.
As the 15th President/Chairman of Council of CITN, what is your vision for the institute?
My vision aligns with the long-term vision already crafted for the Institute, which is, ‘to be one of the foremost professional associations in Africa and beyond’. My part in actualising this vision is to move the ball forward, so that incrementally we get closer to this ultimate goal. I can assure you, each word in that vision means a lot when you break it down. As at today, the institute has gained primacy in tax matters in all its ramifications in Nigeria. We have the intellectual power bank. Everyone that matters in the tax system has one thing or the other to do with CITN.
Could you give us a breakdown of the agenda for your presidency?
I have put together 10 articles of faith that will drive my tenure as the 15th President/ Chairman of Council of CITN.
My plan is to be a team player and run a collective presidency, harvest the diverse intellectual backgrounds and wisdom of Council members in particular, and CITN members in general, in the quest to take the Institute to its apogee of glory and provide a working environment comparable to the best from other Institutes, and to work with Council to provide more opportunities for capacity building for the staff.
Within my tenure, I would reward staff loyalty and dedication to the Institute in line with our motto of “Integrity and Service” while indolence and indiscipline will be frowned at and punished and improve the visibility of District Societies and their impact within their jurisdictions.
It is also an opportunity to engage meaningfully with the District Societies through effective use of the media to ensure that distance and logistics do not constitute barriers to effective communication while ensuring the adoption for operational implementation the Draft 2021 to 2027 Strategic Plan in 2021 to serve as directional compass for this administration and the next two administrations.
My tenure will also give me opportunity to ensure that the contents of the Strategic Plan for Y21-Y27 are holistic, and will be applied for the following purposes. First is by crafting of strategic agenda for recognitions, quality and up-skilling.
In relation to employers, educational institutions and learning providers: crafting of strategic agenda on ethics and standard practices; and concerning regulators, policy makers and the general public: crafting of a strategic agenda on trusts, collaboration and influence.
We will also implement the Strategic Plan in a manner that will connect with stakeholders, build administrative and technical capacity, and effective communication.
We will further implement policies that will influence the emergence of a new tax system that will make Nigerians talk tax. The envisaged new tax system will incorporate the use of Technology (Research/Technical, Administration and Practice), Data Analytics (Descriptive, Diagnostic, Predictive, and Prescriptive), and Environment x-ray (Economic Indicators, Revenue Generation and Fiscal Policy).
To lead the Institute in playing a critical role in national development and growth, and to mobilise its members and the general public to continue to ask the right questions with respect to generation of revenue, accountability for such revenue and productive utilisation of such revenue.
What mechanisms do you have in place to sanction your members and other tax practitioners that go contrary to the ethics of the profession?
We have mechanisms in place from allegation to investigation and discipline once an infraction of what we stand for is breached. We refer allegations to our Investigation Panel to investigate and deal with. A no-case submission discharges the member but if there is a case submission, it is referred to the Disciplinary Tribunal.
It is at the Disciplinary Tribunal that the final decision is made on such cases and it may interest you to know that a representative of the Attorney-General of the Federation from the Federal Ministry of Justice is a member of the Disciplinary Tribunal as an assessor.
What is the approved code of conduct for members and what is the level of compliance and sanctions within the system?
Our members are within the public sector, private sector, academia and in professional practice. The nature of misconduct will vary but in whatever form it manifests, we have zero tolerance for any misconduct. The cases that have been brought to our attention have been summarily dealt with and I can boldly say, our members comport themselves with integrity and high sense of professionalism.
What piece of advice do you have for companies and individuals that vowed not to pay taxes because they are not seeing commensurate development with tax resources?
Interesting choice of words, ‘vowing’ not to pay taxes? Technically, this is an offence against the State. Oliver Wendell Holmes, former Justice of the United States of America Supreme Court, said, “Taxes are what we pay for a civilised society”. The only piece of advice I will give to such individuals and companies is to follow the right path of compliance before it is too late.
How is CITN collaborating with their counterparts in other parts of the world to ensure it achieves its objectives?
We collaborate at global level, through our membership of the Global Tax Advisers Platform. We are presently part of the restructuring of the Association of African Tax Institutes. We were part of the formation of the West Africa Union of Tax Institutes, where I was privileged to serve as the International Honorary Treasurer for eight years. Nigeria was also privileged to lead the Association as President on three different occasions.
We also collaborate in terms of membership development with Association of Certified Chartered Accountants (ACCA). Within Nigeria, we are part of the Association of Professional Bodies of Nigeria. We also have a working relationship with the Chartered Institute of Bankers of Nigeria, Institute of Chartered Secretaries and Administrators of Nigeria, Chartered Institute of Stockbrokers, Association of National Accountants of Nigeria and the Institute of Chartered Accountants of Nigeria.
