Olaleye Adebiyi is the Group Managing Partner, Andersen Tax in Nigeria. With over 30 years’ experience in tax planning, advisory, and compliance transactions in Nigeria, he tells KINGSLEY JEREMIAH the way forward for the tax sector as well as plans by Andersen Tax, a global firm to contribute significantly to the growth of the sector in Africa, and Nigeria in particularly. Excerpt:
Why is Andersen Tax making debut in Nigeria and Africa at a time like this when the country is facing economic downturn?
Let me first say that Andersen Global is an international association of member firms with over 2,000 professionals, and a presence in more than 64 locations worldwide. Andersen Tax makes debut in Africa,
We are here in Nigeria to stay, and we are here to offer best services to our clients. In a time of recession you need to go back to the root of the problem. In Nigeria, we went into recession because we operate a mono product economy. We depend so much on crude oil to finance government revenue. So when the price of crude oil fell in the international market we are affected. Government is now concentrating on diversifying oil revenue, and one of the ways to do that is to get more tax revenue into government coffer. So this is the right time for us to work with stakeholders in the economy to ensure this kind of issue don’t catch us unaware again. Our focus is to work with client and regulators to improve the country’s economy.
There are other organisations that offer similar services like Andersen Tax, what difference is the company bringing on board?
We deliver quality at a cheaper price to clients. Our focus is to work with our clients to move businesses forward. We are unique in our own way because we prioritise quality service delivery at a reasonable price. In the Nigerian and African market, we will provide tax and legal services for international, multinational and individual clients. Our basic specialisations include Tax Advisory & Regulatory Services, Transfer Pricing, Energy & Infrastructure, Consumer & Industrial Markets, Family Wealth and Private Clients, and Tax Adjudication/Litigation. Let me mention that Andersen Tax no longer handle auditing. We had a court case relating to auditing in the past but Andersen Tax was deemed innocent and we won the case. So we are back into the market with a global presence to offer first class service to our clients.
What is your take on the tax system in Nigeria, considering the new national tax policy? In particular, what is your view of the new Presidential order with regard to taxation & ease of doing business?
The issue with tax in Nigeria is in the area of implementation. The rules on taxation are spelt out but the implementation is weak. We have all the information that we enable us collect taxes adequately but we asking people to come and pay their taxes, in the whole world nobody wants to pay tax. It is not only in Nigeria but the enforcement makes the difference from one country to another. How do we make sure that people pay taxes either forcefully or willingly? In other countries people don’t joke with taxes. The tax authority in Nigeria needs to do more to make people pay tax.
The Presidential order is on track but it is beyond the order. We must make sure that the order is deployed and enforced to ensure that people comply. However, the Federal Government is actually doing well, particularly in the area of corporate tax. But we are lacking in personal taxes, which is the responsibility of the states government. I had a meeting with a state government and when we compare the figure of those who are supposed to pay tax in the state to those who actually pay the difference is so huge. We try to partner with the government in the awareness and we have translated the Personal Income Tax Act into different Nigerian languages, particularly, Hausa, Igbo, Yoruba and Pidgin. The advantage is to sensitise the people to pay their tax. There is need to sensitise people on the issue of tax. Right now we are working with Benue State, and we will further translate the act into local dialects of Igede, Idoma and Tiv. We are also working on application that will enable people pay taxes at a click of a button.
It is one thing to ask citizens to pay taxes, and another for the taxes to be used to the advantage of tax payers. Do you think the situation in Nigeria encourages people to pay their taxes?
Those who live in Lagos State for example have seen the impact of tax. The previous and the present governors have used tax to improve the lives of the citizens and those things are noticeable. So in a state like this it is going to be harder for anybody to say I have not felt the impact of the tax. What other states need to do is to copy what Lagos has done so that people can see and be encouraged to pay their taxes. The issue of corruption is not going to be solved in a day. There is no country in the world where you don’t have corruption but we must get to a state where we can hold government accountable, and you will see that corruption will be eliminated. If we see that last month government collected N1 billion and out of that money we can see what is done with it, and if we don’t see we have to make them accountable, then corruption will reduce. The money we spend now is not tax money. It is oil money. When you put money differently into government coffers you will want to demand for what has been done with the money. We have to pay tax first before we demand accountability of the money.
Nigeria’s tax contribution to GDP is considered the lowest in the world, why is this so, and how would you advice it can be reversed?
It is so because we still have oil money to spend, we don’t care about boosting revenue from other sector. But this does not happen in other countries. Now there is this drive for diversification because the price of oil is down. Government now want to collect taxes but as long as we have price of oil at $100 to $150 then we don’t see the need to collect more taxes but when the price comes to $40 there will be drive to collect more taxes. So the moment Nigeria sees the need to diversify the economy, tax contribution to GDP will go higher.
It has been argued that the tax system in Nigeria is skewed in favour of the rich against the poor. How can the rich be made to pay more tax?
The tax law does not discriminate against the rich and the poor. The tax law is pay as you earn. But has government been going after those who make more money than you and I? I don’t see any discrimination in the law. The enforcement could discriminate. The poor don’t even have money to eat so you can’t really say the rich and the poor maybe the rich and the middle class. The law doesn’t discriminate; it is the enforcement that focuses on you and me than the rich.
Tax remittances are an issue in Nigeria, self-evaluation is also another. How can these become more effective for higher revenue for the government?
It is the money that is being collected that will be remitted. But we don’t even collect enough tax in this country. The treasury single account has actually helped to curb cases of non-remittance. So since there is only one account now the problem is largely solved. Now all the money goes into a single account and no one can touch it without approval, so the TSA has solved the challenge.
It’s been argued that the Government grants too many tax waivers, tax holidays especially for ‘pioneer’ companies thereby losing the much-needed revenue. Do you think this is so and what would you advice government do in this regard?
In all countries there is a need for incentives to encourage businesses to thrive, and all governments in the world grant incentives one way or the other. Tax incentive is a good incentive. But it must be limited to what it was granted for. Granting incentives to pioneer companies is good but the problem started when government started granting incentives to oil companies. The incentive was basically designed for certain manufacturing companies, particularly those producing what we were not producing in the country. The incentive itself is not a bad thing but incentive abuse is the problem. Granting the incentive to oil companies is an abuse because the law that established the incentive is not an oil company law. It is a law meant for non-oil companies so to grant pioneer incentive to oil companies has gone out of what the law is set for.
Statistic shows that Nigeria needs above $2 trillion to address its Infrastructure deficit, what really needs to change if the country must bridge the gap?
We need more infrastructure. We may have to borrow and find a way to pay back but we need to get infrastructure right. We need to also strengthen the law to make Public Private Partnership work in the country. The system needs to be made stronger for PPP to flourish.
How will you rate tax adjudications and litigations in Nigeria?
Since the tax tribunal came some years ago the relationship between taxpayers and tax authority has actually been very robust. So we have seen principles, which we can rely on in the future, and in the last two years we have won multimillion dollar cases for some of our clients. Our focus is to save the taxpayer.