By Tony Obiechina, Abuja
Worried that revenue generation is relatively low compared to its huge responsibilities, the government is making concerted efforts to prioritize expenditure and place emphasis on resource mobilization, Minister of State Budget and National Planning, Prince Clem Agba has disclosed.
According to him, taxation of the Digital Economy is one of such options as it is expected to raise Government revenue profile by about 15 percent of our GDP by 2025.
The Minister stated this in his keynote address at the 2022 Edition of Punuka Annual Lecture themed “Taxation of the Digital Economy: The Challenges and Prospects for the Nigerian ECONOMY” on Thursday.
He said the Federal Government has also put in place the Strategic Revenue Growth Initiative (SRGI) and the annual Finance Act to mobilize domestic funds necessary for human capital and infrastructure development that are both drivers and enablers of sustainable economic growth and development.
He said, “the SRGI is designed to improve government revenue and entrench fiscal prudence with emphasis on achieving value for money. A total of 47 Strategic Revenue Growth Initiatives were identified across three Thematic areas to achieve sustainability in revenue generation, identify new revenue streams and enhance the enforcement of existing ones as well as achieve cohesion in the revenue ecosystem.
“The digitalisation of the economy has revealed some challenges and shortcomings in the existing tax practice as it affects the allocation of taxing rights and administration of taxes, especially with respect to non-resident taxpayers.
“Nigeria so far, has sought to tackle these issues through a three-pronged approach that consists of strategic changes to tax policy, administration and the legislative framework they are hinged on. Agba further said, “accordingly, Nigeria has taken major strides in providing responses to the challenges posed by the digital economy to both direct and indirect taxes.
” The immediate policy focus of Nigeria was to provide in-house solutions to the tax challenges posed by the digitalisation of the economy, while working with international bodies to achieve a consensus based multilateral solution.
According to him, “the in-house solutions, in the form of the Significant Economic Presence rules introduced to tackle the nexus issues in corporate income taxation, as well as the Simplified Registration and Compliance Regime introduced to collect VAT on digital supply of services and intangibles, are all yielding appreciable positive result. This is more noticeable with the fact that FIRS has been contributing substantial parts of revenue shared from the Federation Account in recent months.
The Minister pointed out that despite Nigeria’s feat in this regard, “we are not unaware of other challenges that uncoordinated unilateral action can cause to the global tax system, especially with regards to double taxation and its impact on trade and investment.
“As such, Nigeria participates actively in the global discourse around tax issues arising from the digital economy under different fora, importantly at the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting; the UN Committee of Tax Experts and the African Tax Administration Forum (ATAF)”.
He further explained that the country’s participation in these fora is predicated on the dual objective of being proactive in the exploration of a sustainable consensus-based solution, as well as an alternative solution in the event that no consensus is reached adding that under the OECD/G20 Inclusive Framework, “the basis of our involvement was the understanding that a coordinated, universal solution to the tax challenges of the digitalised economy is necessary but must be fair and acceptable for all members”.
However, the he also noted, the prevailing realities, supported by negative revenue results from internally conducted economic impact assessments, has raised the question of fairness of the multilateral approach by the OECD/IF, necessitating re-evaluation of the country’s expectations of the project outcomes.
” In the light of this, we must commend the efforts taken so far by all key stakeholders in adapting our tax system in a digitalised era. Digitalisation of the economy does not only bring with it tax challenges but also opportunities that we must seize. It has therefore become imperative, more so now, that we prioritise securing Nigeria’s tax base by intensifying efforts in blocking tax leakages and ensuring transparency, while also working towards securing a fair deal that provides for equitable global re-allocation of profits to all market jurisdictions on the international front.
“This is the expectation for all of us, whether as a policy maker, tax administrator, tax consultant, professional body or taxpayer. We must unite in exploring a solution that works for the benefit of our dear country. This should be the focus of the deliberations at this meeting today”, Agba added.
The Minister stressed the importance the current administration has placed on citizens’ participation in governance, tracking service delivery and development in their communities, pointing out that in order to ensure transparency and accountability in the delivery of government’s capital projects countrywide, the Budget and National Planning arm of the Ministry has been working on a Web Application called Eyemark which will assist citizens to “eye mark” and report on government’s projects and programmes “earmarked” for their communities using their mobile phones and laptops in “real time”.
“I am happy to inform you that the Eyemark App is currently in beta and can be accessed by all via the URL www.eyemark.ng. The Eyemark App allows users to view and explore projects without registing but would require user registration to review and follow projects.
“With the full launch of the App in the coming weeks, the government requires your active participation in the process of tying budget provisions to projects and getting time value of money earmarked for capital projects, as “governance is a collective responsibility by all citizens”, he further explained.