Against the backdrop of complaints by small business owners over harassment by revenue collectors and multiple taxation mostly by states and local governments, it appears that the Federal Inland Revenue Service, FIRS, the federal tax authority, is looking at increasing their revenue from small and medium enterprises, SME, taxing.
The Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, has stated that micro, small and medium enterprises (MSMEs) have the potential to greatly enhance the tax revenue profile of the country if adequately harnessed.
Fowler said this in a presentation on strategies for optimising the contribution of MSMEs to the country’s tax revenue profile at the National Economic Council (NEC) meeting in Abuja, last week.
The presentation centred on the contribution of MSMEs to GDP, national export and tax collection for 2015 – 2018, while also highlighting the challenges impeding the optimization of MSMEs’ contribution to tax revenue.
He stated: “When adequately harnessed, MSMEs can have much impact on the profile tax revenue for the country, especially considering their direct correlation with Personal Income Tax, Value-Added Tax (VAT) and Withholding Taxes.”
MSMEs are classified into micro enterprises, small enterprises and medium enterprises. The most recent survey conducted by the National Bureau of Statistics (NBS), in partnership with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), revealed that the number of MSMEs in Nigeria is more than 37 million.
The FIRS boss enumerated the challenges impeding the optimisation of MSMEs’ contribution to tax revenue in Nigeria to include: Poor record-keeping and information management; Inability to distinguish personal capital from business money; Low awareness of Nigerian tax laws and; Little or no business research leading to close of business.
To remedy the situation, Fowler said FIRS has deployed adequate man-power to promptly attend to all tax related challenges by MSMEs.
He also recommended that respective organs of government saddled with disbursement and utilisation of tax revenue should endeavour to be transparent and ensure accountability in order to motivate voluntary tax compliance by the MSMEs. In addition, he called on government at all levels to endeavour to provide infrastructural facilities and enabling business environment to allow MSME businesses to thrive.