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Nigeria targets elusive small traders in new tax drive

Apr 7, 2016 Nigeria’s National Bureau of Statistics recently revealed that the country’s informal sector accounts for 48 percent of the country’s economy.

In a bid to offset a slump in oil revenues, President Muhammadu Buhari wants to squeeze the sector to boost tax revenues by 33 percent this year.

However the government faces a big challenge as most entrepreneurs have poor accounting practices.

Nigeria-targets-elusive-traders-in-tax-drive1

Speaking on this, Jaiyeola Laoye, CEO of Nigerian Economic Summit Group, said:

“The common agreement among all economists is that explore the tax base, not the amount you charge but the base so that at least you bring more people to the tax net so that it can generate more revenue for the nation,”

According to Nigeria’s National Bureau of Statistics, there are over 37 million informal sector businesses in Nigeria, which employs 60 million people.

“The bulk 85 percent of employers of labours are in this MSMEs so they are the ones growing in number. Now and unfortunately, most of them are not captured in our database. In fact, if you want to go and register a corporate name you know how long it takes? The processes are long, the cost is unreasonable, if you want to do permits, there are too many bottlenecks, 13 different processes you go through,”

Yemi Kale, chief executive at the statistics bureau, explained the tax calculation formula saying:

“So the way we calculate it is that we conduct household based surveys, so we go to a house, we select households strategically, we go to their houses we get an idea of the businesses – the small businesses they run and we get an idea of the resources that they use in conducting those businesses it is from that there that we get this information to estimate the size of the informal sector, which we include in our GDP projections,”

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