Driving automation can help meet Nigeria’s tax goals – Sage

By Ihesiulo Grace

1 November 2017

Business

Regional Director for Sage West Africa, Magnus Nmonwu, has said that comments from the International Monetary Fund (IMF) on Nigeria’s low tax-to-GDP ratio, highlight the importance of driving higher levels of payroll and accounting automation among the country’s businesses, especially small, micro and medium-sized enterprises.

The IMF has warned that Nigerian governments’ ability to effectively finance infrastructure and services is constrained by low tax collection. Despite recent tax reforms by the Federal Government, Nigeria needs to grow tax revenue by registering more tax payers and enhancing collections and compliance, says Nmonwu.

“Initiatives such as the government’s Voluntary Assets and Income Declaration Scheme (VAIDS), which gives taxpayers an opportunity to voluntarily declare all previously undisclosed assets and income are steps in the right direction,” he said, adding, “Higher levels of automation and modernisation among tax authorities as well as increased use of digital filing and payment are also positive developments.”

Says Nmonwu: “Another way Nigeria’s Federal and State Governments could enhance compliance is by encouraging businesses of all sizes to use technology to streamline capturing of transactions and automate payroll calculations. These solutions can help minimize the risk of non-payment of tax or incorrect remittances of taxes to the relevant government agencies.

“What’s more, the ability to generate financial statements, tax certificates, reports and electronic payslips with the click of a button is a major timesaver. An automated, cloud-based solution also means that businesses have an audit trail and reliable backups for all of their financial transactions, so that they can demonstrate their compliance with tax laws.”

Such software can help address some of the complexity Nigerian businesses face in paying tax. Nigeria aims to move from its current position of 181 out of 189 countries to top 50 on the Ease of Paying Taxes World Report, which means that we will see a lot of reform of the tax system in the years to come, says Nmonwu.

“Spreadsheets and other manual methods are no longer sufficient to keep up with the growing complexity of today’s tax environment,” Nmonwu says. “As the tax authorities digitise and automate processes, they should be supporting small and medium businesses in doing the same in an effort to accelerate Nigeria’s integration with the global economy. They could, for example, run seminars or workshops together with vendors to showcase how cloud technology eases the compliance burden for small businesses.”
AfDB supports Nigeria’s economic recovery efforts
Azubike Nnadozie
The African Development Bank refuted the statement that it has “called off loans to Nigeria”, as reported in Reuters and credited to AfDB Vice-President for Power, Energy, Climate and Green Growth Amadou Hott.

According to a statement signed by its Director of Communication and External Relations, Dr. Victor Oladokun, “the African Development Bank is highly encouraged by the economic recovery of Nigeria from recession and salutes the Government’s efforts towards diversification of the economy. The Bank also strongly supports the Economic and Growth Recovery Plan of the Government and efforts to stem corruption and strengthen fiscal consolidation and efficiency.”

In November 2016, the Board of the African Development Bank approved a $600-million loan to support Nigeria’s efforts to cope with macroeconomic and fiscal shocks that arose from the massive decline in price of crude oil. An additional $400 million in support could be considered, if requested and approved by the Board, as part of a larger coordinated effort with other development partners, including the World Bank and the International Monetary Fund.

It added that the African Development Bank is in consultations with the Government on how best to continue its support for its laudable Economic and Growth Recovery Plan through investment projects that will help address existing structural challenges, including infrastructure, power, agriculture and support to boost private sector and job creation.

The Bank, through the statement assured the Nigerian Government of its full support for its continued reforms to diversify the economy and boost economic growth and development.