FG okays higher interest rate on unpaid taxes
To attract five per cent interest over CBN’s rate
The Federal Government has approved a new interest rate spread on unpaid taxes for the year 2017 as to raise the current low tax to GDP ratio of six per cent to higher level.
The development may be the implementation of the recent recommendation of the country’s National Tax Policy. The new interest rate was approved by Minister of Finance, Mrs. Kemi Adeosun, and is coming on the heels of the tax amnesty declared by the Federal Inland Revenue Service (FIRS) last year for tax debtors to liquidate their indebtedness without the prescribed penalties.
Attempts last night to confirm if the amnesty window has lapsed was not successful as officials of the FIRS and the Federal Ministry of Finance could not be reached on phone.
However, in the new tax fiscal regime announced by the minister as contained in a statement by the Deputy Director in charge of Information, Mrs. Patricia Deworitshe, the new interest rate shall be five per cent over the Central Bank of Nigeria’s Minimum Re-Discount Rate (MRR) for the year 2017.
She said that Section 32(1b) of the Federal Inland Revenue Service (Establishment) Act 2007 empowers her to approve the new interest rate. Adeosun said the review of the interest rates on unpaid taxes was one of the necessary measures adopted by the Federal Government to enhance tax compliance, minimise tax evasion and deter late payments.
According to her: “Majority of Nigerian tax payers (PAYE) have taxes deducted automatically. However, those who do not and are required to file their taxes like companies and business enterprises must understand that there are financial consequences for late payments. We believe that this will support our efforts to ensure that people pay their taxes promptly, thus providing a sustainable source of revenue to the government to finance infrastructure and other projects.”
The minister has accordingly directed the Executive Chairman of the Federal Inland Revenue Service (FIRS) to commence the implementation of the new interest rate on all unpaid taxes from July 1, 2017.
It would be recalled that Adeosun had, during the finance ministers’ meeting convened by the G-24 Group at the 2017 IMF/World Bank Spring meetings in Washington, stressed the need for Nigeria to embark on aggressive tax revenue generation to drive economic growth.
She had emphasised that with a tax to GDP ratio of only six per cent, one of the lowest levels in the world, the country had to intensify effort at tax collection to build a sustainable revenue base that will deliver inclusive growth. She made known that the focus of the Federal Government in 2017 was to improve tax revenue through ensuring voluntary compliance with tax laws.