Nigerian tax evasion scheme set to bring $1bn in revenue

6th July 2017

Regular readers of our blog or our media activities on the likes of Recruitment International will be aware that we’re big proponents of Nigeria as a contracting destination. The country offers huge opportunities for individuals looking to develop their skills as well as firms aiming for expansion, but unfortunately, it’s faced major challenges with tax evasion in recent years. However, according to a new announcement that could be about to change.

Nigeria’s tax evasion scheme

The domestic finance ministry announced last month that a scheme would be launched on June 29th to give evaders immunity from prosecution, penalty charges and interest if they “regularise their tax status” between July 1st and December 31st 2017. The reasons behind the plan make clear sense. Nigeria’s economy heavily relies on the oil industry – in fact, two-thirds of its national revenue is brought in from crude sales – and the government is looking to boost income from non-oil sources.

Major windfall expected

Incredibly, the Nigerian tax evasion scheme is expected to raise at least $1bn in added revenue for the government, highlighting the extent of its problems in this field. This is at a time when taxes are extremely low at just 6%, although plans are in place to take economists’ advice and increase the level to 15% by 2020.

In a statement, the Nigerian finance ministry said, “Anticipated funds to be raised are at least $1bn, which will reduce Nigeria’s borrowing needs, allow investment in vital infrastructure and spur development.” It also said it would increase the interest rate on unpaid taxes to discourage companies and individuals from paying up after the deadline and therefore acquiring even more debt.  In addition, the luxury goods tax will be raised to 15% from its current level of 6%.

Historically, the country has faced major problems bringing in the taxes required to fund a rapidly expanding economy and population. However, the impetus of the new Nigerian tax evasion scheme could mean the finance ministry is finally clamping down on non-compliance and looking to retrieve the masses of lost payments it misses out on every year.

Firms doing business and placing contractors in Nigeria will now have added challenges to face, and while we hope the scheme will lessen levels of bureaucracy in the country, we’re not going to hold our collective breath. It can take time to process registrations for contractors operating here and with the addition of new regulations, firms will have to be careful not to unintentionally land themselves, the contractors they’re placing and their end clients, in hot water.

If you’re unsure about your compliance status in Nigeria then get in touch with the experts.


Live chat with one of our expert staff

Like our LinkedIn page

Follow us on Twitter

Get in touch on Facebook

Contact Us