The Federal Government needs to overhaul its tax policy due to the country’s low tax to Gross Domestic Product (GDP) ratio, Minister of Finance, Kemi Adeosun has said.
While inaugurating a tax review committee on Wednesday in Abuja, Adeosun said the ministry would ensure that taxes are simplified to Nigerians.
She explained that in the view of reducing tax burden on small and medium enterprises, laws that are in need of review would be addressed by the committee’s work .
“As you are all no doubt aware, this administration is committed to diversifying the sources of government revenues away from oil,” she said.
“Oil is just 13 percent of our economy but accounts for 70 percent of government revenue.
“Our challenge is to ensure that the other 87 percent of economic activity makes its own contribution to government revenue. An effective tax system is key to this and such as system must be underpinned by an effective and appropriate tax policy.
“Nigeria has one of the lowest tax to GDP ratios in the world at just 5 percent. There is clearly a pressing need for an overhaul of our tax policy and this is a key function of the ministry of finance.
“Areas of our tax code and laws that are in need of review will be addressed as part of this exercise, as will modalities for simplifying our processes and reducing the tax burden on small businesses.
“As keen as we are to grow revenues and improve our tax collection, we are equally determined to ensure that our taxes are simplified.”
She added that in keeping up with the domestic socio-economic realities, the review would be a continuous exercise in line with global best practices.