OPINION

Two Takeaways From Nami’s ATAF Speech, By Muhammad Gulani

Muhammad Nami, a well-trained Tax, Accounting and Management professional with three decades of practical working experience in Auditing and Tax Management was appointed months ago to head Nigeria’s tax collection unit: The Federal Inland Revenue Service.

Mr. Nami’s vast experience brought him onboard working with the Presidential Committee on Audit of Recovered Stolen Assets in November, 2017 as inaugurated by President Muhammadu Buhari.

Here are Two Takeaways from his speech today where he spoke on the theme: “The Taxation of the Informal Sector in Africa” during the 9th African Tax Administration Forum (ATAF) Country Correspondents Conference:

1 – That while the Informal sector is driving about 21 to 70 percent of the GDP of African countries and also accounts for between 30 to 90 percent of employment in the region, it is one of the most difficult sectors to tax.

“… the sector remains one of the most difficult sectors to tax, with most of the businesses operating in the sector concealing their activities from the Tax Authorities. Such businesses also operate on a cash basis and maintain poor or no accounting records. Most of the businesses in the sector are also small and fragmented making it inefficient for the revenue administrations to enforce compliance. “

2 – That while it is not politically popular to tax the informal sector, this must be done if Africa is to reduce its budget deficit

“Taxing the informal sector is viewed as politically unpopular and politicians are unwilling to risk losing the high number of votes represented in the sector. This is because politicians usually promise informal workers protection from taxation in exchange for their votes…If Africa is to reduce its budget deficits and increase revenue mobilization, it must widen its tax base and the informal sector provides an opportunity to do so”

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