Audit, Accounting & Taxation in Nigeria
Tajudeen Akande is Senior Partner at PKF Nigeria (PKF Professional Services) and a member of PKF International – a global network of legally independent accounting/business advisory firms bound together by a shared commitment to quality, integrity and the creation of clarity in a complex regulatory environment. Here, Mr. Akande tells us about the transformation of […]
Tajudeen Akande is Senior Partner at PKF Nigeria (PKF Professional Services) and a member of PKF International – a global network of legally independent accounting/business advisory firms bound together by a shared commitment to quality, integrity and the creation of clarity in a complex regulatory environment. Here, Mr. Akande tells us about the transformation of the tax system in Nigeria, as well as the challenges of providing tax advice in the African country.
What would you say are the challenges of providing effective accounting and tax advice in Nigeria?
The main challenges of providing effective accounting and tax services in Nigeria include:
- The Economic situation of the country, which has constrained people’s ability to pay for professional service, having to, in most cases, resort to use of quacks and unqualified people.
- Regulators – Professional accountants in Nigeria are regulated by the Financial Reporting Council of Nigeria (FRCN) as well as two professional accountancy organisations operating in the jurisdiction—the Association of National Accountants of Nigeria (ANAN) and the Institute of Chartered Accountants of Nigeria (ICAN), and of course there is the Chartered Institute of Taxation. The multiplicity of bodies saddled with the responsibility of regulating the practice of accounting and taxation is a challenge to practitioners in terms of proper monitoring and discipline of erring members.
- Challenges in the area of tax practice include:
- Lack of clarity on taxation powers of each level of government (There are three tiers of Government in Nigeria);
- Insufficient information available to taxpayers on tax compliance requirements thus creating uncertainty and non-compliance;
- Use of aggressive and unorthodox methods for tax collection by tax authorities;
- Failure by tax authorities to honour refund obligations to taxpayers.
How has the tax system in Nigeria transformed throughout the years?
Nigeria’s tax system has evolved a lot over the years – from the pre-colonial era to the latest tax reform codified into a National Tax Policy.
In the traditional Nigerian society, the formalisation of taxation was practically non-existent. Citizens were only exposed to a variety of levies as dictated by paramount rulers and different traditional rulers created their different forms of taxes and levies.
To achieve conformity and uniformity in taxation, Raisman Commission was set up in 1958 by the colonial Government, which advised that basic income tax principles should be introduced and standardised across the country, which was accepted by the Government. Thus, direct taxation was incorporated into the constitution of the Federal Republic of Nigeria, after which the Companies Income Tax Act and Income Management Act of 1961 were established. This marked the foundation of Nigeria’s modern tax laws.
As a result of the increasing complexities in commercial transactions and glaring issues relating to practical interpretations of the laws, the Acts were repealed and reenacted giving rise to Companies Income tax Act CAP C21 LFN 2004 and the Personal Income tax Act CAP P8 LFN 2004, as well as other tax regulations which have changed the face of tax administration and practice in Nigeria.
Nigerian taxes are currently administered through the three levels of Government, as outlined in the Taxes and Levies (Approved List for Collection) Act (Amendment) Order of 2015.
The National Tax Policy (NTP) was first published in 2012, as part of the efforts to entrench a robust and efficient tax system in Nigeria. This was reviewed in 2016 in response to the rapidly changing commercial environment and persistent low tax to Gross Domestic Product (GDP) ratio.
Recently, Nigerian tax administration has been reshaped and expanded to focus on international tax. Various measures have been put in place to curb base erosion and profit shifting, so as to improve government revenue. Some of these measures include Transfer Pricing Regulations, Double Tax Treaties and Multilateral Agreements. Also, the tax payment system has been automated. Tax payers can now pay, generate receipts and even file tax returns and obtain Tax Clearance Certificate (TCC) online.
What are PFK Professional Services’ philosophy and top priorities towards its clients? How has this evolved over the years?
PKF is a global family of entrepreneurial minds working together, pooling our collective resources, experience and skillsets to add significant value to clients. We combine our understanding of local regulations, international perspectives and grasp of niche markets to create a simple, seamlessly executed approach. When you engage with PKF, you can be confident that the work will be carried out by dedicated and experienced professionals. We know the importance of having teams who have real sector experience.
The PKF ethos is about working together. We believe in giving teams the same encouragement as the individuals within them. We pursue a philosophy of shared responsibility and shared success. The most distinctive feature of PKF practice is our attitude towards our clients. Our people are good at building and developing relationships. This means getting to know our client’s organisation to understand their long-term needs.