European Union and Economic Community of West African States’ delegation to Nigeria, on Monday, disclosed that the Value Added Tax system in Nigeria is low compared to other countries and also below the normal threshold.
Head of Cooperation of the Delegation of the EU and ECOWAS to Nigeria, Massimo De Luca, made this revelation at the 4th session of the Steering Committee of the Support Programme for Fiscal Transition in West Africa held in Abuja.
But De Luca blamed the low compliance with VAT in Nigeria on corruption and poor implementation.
He noted that while some companies may be willing to pay their taxes, the current taxation system in the country disallows them from doing so.
According to De Luca, “You think VAT works in this country? No, it doesn’t. Fraud makes the business environment unstable for long-term investment. The VAT system is not working because here we have a VAT system that does not allow companies to do what the VAT system is supposed to do- You charge VAT on goods and recover VAT from what you buy.”
De Luca added that many companies in Nigeria may not recover their taxes through consumers, especially the Small and Medium Enterprises.
Chairman of the Federal Inland Revenue Service, Zacch Adedeji, had earlier said that the agency would make the taxation system in the country customer-centric to enable individuals and businesses pay taxes easily.
Adedeji also assured that the FIRS would introduce a one-stop shop for all taxes in the country.