Scores of participants spanning a broad spectrum of the nation’s revenue and economic development space rose from their two-day parley in Lagos with a seven-point agenda for implementation by the fiscal and economic policy authorities in order to improve VAT revenue and avoid misgivings about what constitutes tax-deductible CRS expenses for corporates.
These and other recommendations were the key highlights of the one-day ActionAid Nigeria and Oxfam in collaboration with NACCIMA’s Public-Private Sector Forum On Human Relations Policies, Wages, Corporate Social Responsibility (CSR) and Taxes, held in Lagos.
The forum, which had participants from key private-public sectors from across the nation’s geo-political zones, was held against the background of the study and findings of the Financing for Development (F4D) project initiated by ActionAid and sponsored by Oxfam, which emphasizes domestic resources as an important component of resource mobilization, for social development.
Before agreeing on the seven-point agenda to improve the nation’s tax efficiency and CSR investments by corporate entities, the experts noted that currently some opacity existed in CSR investment for tax deductible purposes and that constraints existed that continue to undermine the optimization of VAT collections.
In addition, the issue of regressive taxation was elaborately discussed following which the experts believed that the fiscal authorities should look into existing tax policies and legislations with a view to making them more proactive and align with global best practices in progressive tax regime.
Specifically, at the end of the deliberations at the forum, the participants observed that taxation remained an important source of funds for development but that unfortunately, the culture of payment of tax was yet to gain expected traction.
Similarly, participants noted that the trend of Tax to GDP ratio in Nigeria remained consistently remained low in comparison with results from other countries at the same level of development; just as they believed that there was a disconnect between the state of social infrastructure development and tax revenue generation
According to the experts, addressing the disparity in the way fiscal policies apply between the formal and informal sector requires urgent attention and steps should be made to reconcile the problem and that there is the need to address the regressive nature of VAT.
In the communiqué issued after the parley, the stakeholders noted further that some companies formulate their human resource policies and practices to undermine employee tax liability to government, adding that this practice provides no real benefit to the company, but it undermines government aggregate tax revenue collections.
They also observed that the unregulated CSR practice in Nigeria continued to expose projects and programmes under CSR to the risk of poor alignment with benefiting community/group needs, multiple execution by practicing companies, poor implementation and maintenance of intervention projects, lack of transparency in intervention reporting and susceptibility of practice to undermining corporate tax remittance
On the way forward to overcome these fiscal lapses, the experts advocated that VAT payments by the informal sector should be improved upon via a public enlightenment campaign and that Business Membership Organizations (BMOs) such as NACCIMA should encourage and support their SME members by assisting in the documentation of their businesses and the engagement of Tax Consultants/Practitioners to render services such as the filing of monthly VAT returns.
Also, the stakeholders recommended that efforts should be made to enhance the “convenience” principle of tax administration, so that taxes are easy to compute and pay; adding that in this regard, there is an urgent need for increased sensitization of the public on the importance of taxation for development.
They clarified further: “Institutions handling tax, such as the FIRS should also be strengthened, and attention should be paid to taxation at the level of State and Local Government to improve Internally Generated Revenue (IGR).
“VAT has emerged as an important source of finance for development and efforts should be made to make it more impactful.
“It was strongly recommended that a National framework be put in place to establish enforceable standards for benchmarking CSR actions in a manner that will prevent the utilization of CSR for tax evasion while promoting transparency and accountability in CSR interventions” the communiqué added.
The stakeholders also recommended that Corporate Social Responsibility (CSR) should be community-driven; hence corporate stakeholders’ engagement should be entrenched in the framework and that there was an urgent need to review the nation’s extant tax laws to help promote the survival of existing and new businesses through a more progressive tax regime.
