LAGOS – The need to optimize Nigeria’s tax administration and enforcement system, while exploring a multi-pronged approach, leveraging technological advancements and robust governance frameworks, was a strong recommendation made at an annual conference on taxation.
The keynote speaker and Professor of Accounting at Covenant University, Ota, Ogun State, Professor Olubukola Uwuigbe, advocates the need for more investment in modern ICT infrastructure, encompassing electronic filing systems, automation tools, and blockchain technology, which can significantly streamline tax collection processes.
According to her, for such initiatives to garner public trust and encourage compliance, the concomitant implementation of robust data security and privacy measures are crucial, as the non-provision of infrastructure in Nigeria adversely affects tax administration by creating inefficiencies, hindering enforcement, and reducing taxpayer compliance.
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Professor Uwuigbe, who delivered a paper titled: ‘Strengthening Tax Administration and Enforcement in Nigeria’ at the 7th International Academic Tax Conference at the Bayero University, Kano State, stated that a risk-based approach to tax administration is recommended because it will make room for tax authorities to allocate resources more effectively, improve compliance, and enhance overall efficiency.
She called on the government to evolve policies to further incentivize compliance, while embarking on improved public awareness campaigns, fostering a culture of tax responsibility and highlighting the benefits of a modernized tax system.
“Bolstering anti-corruption measures within tax authorities through robust internal controls and enhanced accountability mechanisms is paramount to mitigate bribery and manipulation, thereby safeguarding the system’s integrity.
“Addressing the infrastructure gaps is essential for improving the overall effectiveness and integrity of the tax system,” she added.
Professor Uwuigbe said the nation’s tax administration system is seen to face significant challenges that undermine its effectiveness and revenue potential.
According to her, despite several efforts to modernize the tax system, systemic issues persist, adding “The fragmented tax system and inefficiencies in enforcement further hinder progress, illustrating the need for a more robust and streamlined approach,” she posited.
Professor Uwuigbe, who has twice served as Head of Department of Accounting at Covenant University, said taxation is fundamental to national revenue generation and essential for financing public services and infrastructure and plays a fundamental role in nation-building, serving as one of the primary means by which governments can generate the revenue needed to foster economic development.
Citing a 2023 World Bank report, she noted that there was a total of $150 billion estimated financial losses that Nigeria incurred majorly due to tax evasion and poor tax administration over the last ten years, between 2014 and 2023.
The Professor of Accounting, with specialization in corporate governance and accounting ethics, said there were plethora of challenges associated with tax collection, administration, and compliance which have hindered the ability of the Nigerian government to generate sufficient revenue needed to drive economic growth, reduce poverty, and improve infrastructure.
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“In Nigeria, the effectiveness of tax administration has been historically undermined by issues such as tax evasion, inadequate regulatory frameworks, insufficient administrative capacity, etc.,” she averred.
She highlighted tax evasion, fraud, complexity and confusion in tax laws, corruption and lack of transparency, limited technological integration, inadequate taxpayer education and services, and non-availability of visible infrastructure as problems hindering the ability to collect sufficient revenue, ensure compliance, and foster trust in the tax system.
Professor Uwuigbe said implementing risk-based approaches in tax administration was a strategic way to allocate scarce resources more efficiently and prioritize high-risk areas. This method, she said, focuses on identifying and managing risks to improve compliance and reduce the likelihood of tax evasion.
“Effective tax administration depends on the efficient allocation of resources and the prioritization of high-risk areas. By using risk-based approaches, tax authorities can direct their efforts towards areas most likely to exhibit non-compliance and fraud and by assessing the probability and impact of different risks, tax authorities can better allocate resources and focus their efforts accordingly,” she added.
The tax expert highlighted inherent benefits of adopting the risk-based approaches in tax matters, noting that the process would help in efficient resource allocation, improved compliance rates and enhanced detection of fraud.
Professor Uwuigbe, however, noted that while risk-based approaches offer numerous benefits, they also present challenges. These include, ensuring the accuracy and reliability of risk assessments which is largely dependent on having high-quality data and sophisticated analytical tools to work with.
She said the current digital age, streamlining tax administration procedures requires a strong use of technology and data analytics, and integrating these technologies can greatly improve tax compliance and collection efficiency and effectiveness in Nigeria.
According to her, utilizing data analytics and technology offers Nigeria a game-changing chance to improve tax administration procedures and simplify compliance. Electronic Filing Systems: Tax administration can be modernized with the use of electronic filing technologies.
She averred that by eliminating the need for paper documentation and cutting down on errors, they enable taxpayers to file their forms and payments online, in addition to adopting blockchain technology.
“Nigeria can improve transparency and lower the possibility of fraud by employing blockchain technology to establish unchangeable records of tax transactions,” she posited.
Other keynote speakers at the 2-day conference were Prof Kabiru Isa Dandago, Department of Accounting, Bayero Universitry, Kano State and Prof Kabiru Tahir Hamid of the Department of Accounting, Bayero University, Kano State.
The conference, with the theme ‘Building Resilient Tax System in Times of Economic Uncertainty’ got underway with a welcome address delivered by the President, Chartered Institute of Taxation of Nigeria (CITN), Mr Samuel Agbeluyi, attracted members of the academia, industry players, policymakers and thought leaders from various sector of the economy.
