The Centre for the Promotion of Private Enterprise (CPPE) has said that Nigeria’s current tax regime is stifling investment and economic growth.
Muda Yusuf, director of the organisation, made this known in a statement detailing CPPE’s economic and business environment review for 2022 and 2023 agenda for policymakers.
The policy think tank said that an economy that desires job creation, economic inclusion, investment growth and poverty reduction, should have an accommodating tax regime for investors.
The CPPE said: “Corporate tax in Nigeria is 30 per cent. But effective corporate tax is much more than that. There is a tertiary education tax of 2.5 per cent of profit; NITDA Levy of 1 per cent of profit; NASENI Levy of 0.25 per cent of profit; Police Trust Fund Levy of 0.005 per cent of profit. This brings effective corporate tax to about 34 per cent.
“This rate is one of the highest in the world. The average corporate tax rate for Africa is 27.6 per cent; the Asian average is 19.52 per cent; European Union is 19.74 per cent and the global average is 23.37 per cent. Meanwhile, new taxes are still being proposed by the National Assembly. These include a Tertiary Health Tax of 1 v of profit; and an NYSC levy of 1 per cent of profit. There are numerous other taxes imposed on businesses by the states and local governments.”
The multitude of taxes, the statement said, is crippling investment in the Nigerian economy and there is a need for an urgent review.
“The current tax regime is in conflict with the National Tax Policy which prescribes that there should be less emphasis on direct taxation in order to incentivise investment. Meanwhile, investors are grappling with numerous macroeconomic, structural and regulatory headwinds,” it noted.
“They incur huge expenditure on stuff which the government should normally provide – electricity, security, water, waste management, human capital etc. These are implicit taxes, as they were. There are also numerous state and local government taxes which businesses have to pay.”