The European Union and Economic Community of West African States’ delegation to Nigeria has said that the Value Added Tax system in the country falls short of the ideal standard.
The Head of Cooperation of the Delegation of the EU and ECOWAS to Nigeria, Massimo De Luca, noted this during the 4th session of the Steering Committee of the Support Programme for Fiscal Transition in West Africa held in Abuja, on Monday, March 11.
According to De Luca, the poor compliance of VAT is caused by corruption and poor implementation.
He noted that while some companies may be willing to pay their taxes, the current taxation system in the country does not allow them to do so.
De Luca said, “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.
“The reality of many companies in Nigeria is that there is no certainty that the companies are going to recover the VAT from whatever you buy. Especially for SMEs, it is extremely difficult to have proper VAT compliance.
“The tax system requires a lot of Cooperation between the authorities and the companies but unfortunately, that is not the case here.
“VAT in Nigeria is very low. It is five per cent for everything which does not allow for proper generation of revenue,” he added.
Earlier, the Chairman of the Federal Inland Revenue Service, Zacch Adedeji, said that the agency would make the taxation system in the country customer-centric so that, individuals and businesses could pay taxes easily.
