Experts want FG to include larger firms in proposed tax reduction for MSMEs

Some trade experts on Friday appealed to the Federal Government to include larger firms in the proposed Company Income Tax reduction for MSMEs to stimulate economic growth and development.

The experts spoke in separate interviews with our reporter in Lagos.

They were reacting to the proposed Companies Income Tax Act (Amendment) Bill that seeks to reduce tax payable by Micro, Small and Medium Enterprises (MSMEs) from 20 per cent to 15 per cent.

Mr Muda Yusuf, the Director-General, Lagos Chamber of Commerce and Industry (LCCI), said that the present 30 per cent being paid by large firms on Company Income Tax should be reviewed downwards to 25 per cent.

“The government should identify critical sectors that could drive growth and development in the economy, especially those in the manufacturing, agriculture and services sector, and give them preferential consideration.

“The government should not just stop at the MSMEs but look at the real sector and extend this kind of concession to them.

“The proposed tax reduction for MSMEs is commendable because they play very important role in the economy, also in employment generation, income distribution and poverty reduction.

“I believe this will enhance the capacity of MSMEs to do more,” he said.

Taiwo Oyedele, the Head, Tax and Corporate Advisory Services, PricewaterhouseCoopers (PwC), said that companies do not exist without the people behind them.

“Companies are just vehicles for investment, when you over tax companies, you are overtaxing investment.

“It makes sense not to tax investment too heavily so that investments can grow.

“That is the trend we see around the world and Nigeria needs to go in that direction. When tax rates are reduced, government collects more, because more money is ploughed back into the economy for reinvestment.

“I know it won’t happen overnight, I hope we get to that point sooner rather than later when the corporate tax rate of Nigeria will be competitive around 20 per cent,” he said.

Oyedele maintained that a competitive tax rate would stimulate economic growth, boost investment, productivity, employment and revenue generation for the country.

It was recalled that the Federal Executive Council (FEC) on June 6 approved two Executive Orders and five Amendment Bills to the country’s tax policies.

The amendment is aimed at reducing tax burden on Nigerians and boosting Ease of Doing Business.

The approval followed the presentation of a memorandum to seek the consideration and approval of the Council for the report of the National Tax Policy Implementation Committee on Tax Laws Reform.

It would be recalled that FEC had also on Feb. 1, 2017, approved the revised National Tax Policy in order to have a robust tax system that would promote investment and improve revenue for sustainable national development.

The new tax policies would remove obsolete, ambiguous and contradictory provisions in the laws, increase government revenue and simplify the process of paying taxes and doing business.