The Minister of Finance, Kemi Adeosun, on Wednesday, said that Nigeria’s tax policy needs to be overhauled because of the low tax to Gross Domestic Product (GDP).
Adeosun, who stated this while inaugurating a tax review committee in Abuja, pointed out that Nigeria has one of the lowest tax to GDP ration in the world.
The Minister noted that the committee will review existing laws in other to minimise the tax burden placed on medium and small scale businesses.
Adeosun said, “As you are all no doubt aware, this administration is committed to diversifying the sources of government revenues away from oil,” she said.
“Oil is just 13 percent of our economy but accounts for 70 percent of government revenue.
“Our challenge is to ensure that the other 87 percent of economic activity makes its own contribution to government revenue. An effective tax system is key to this and such as system must be underpinned by an effective and appropriate tax policy.
“Nigeria has one of the lowest tax to GDP ratios in the world at just 5 percent. There is clearly a pressing need for an overhaul of our tax policy and this is a key function of the ministry of finance.
“Areas of our tax code and laws that are in need of review will be addressed as part of this exercise, as will modalities for simplifying our processes and reducing the tax burden on small businesses.
“As keen as we are to grow revenues and improve our tax collection, we are equally determined to ensure that our taxes are simplified.”