CITA weakens Nigeria's ability to attract investment
Until the provisions of the Company Income Tax Act (CITA), which impose double taxes on companies’ profits are amended, Nigeria may not attract holding company investments, especially the commencement rules.
Operators, who described the development as a huge disincentive to economic growth, and the use of Nigeria as headquarters for group entities, noted that companies are forced to pay tax out of their capital if they make losses or small profits.
Section 19 of CITA LFN 2004, essentially levies an additional 30 per cent on profit if the company reinvested the profit or delayed in dividend payment, rather than pay out all of its profits in same year they are generated.
These were observations raised at the 2nd Annual International Academic Conference on Taxation by the Chartered Institute of Taxation of Nigeria (CITN), in collaboration with Babcock University, Ogun State, themed, ‘Taxation and Business Sustainability’.Participants argued that taxes should be paid only once on actual profit made, not twice given that such start-up companies are often too fragile and therefore unable to bear the extra burden.
They further noted that if this persists, Nigeria will continue to grapple with low revenue flows, as there is a need to sustain investments in critical sectors to stimulate productive activities and attract investments.President and Chairman of Council, CITN, Gladys Olajumoke Simplice, in her keynote address, decried the abuse of tax incentives and waivers, noting that many of the incentives granted by government have not achieved commensurate benefits for the economy, and even abused by investors in some cases.She said if the incentives and waivers are granted at all, it should be sector-based, and industry-focused to ensure a level play, and granted through the tax laws to promote transparency.
Similarly, the President and Vice Chancellor of Babcock University, Prof Ademola Tayo, urged government to implement sustainable economic policies and business models, which foster favourable environment for small, medium and large scale enterprises.
According to him, all economic policies must be built around sustainability concept in which the tax policy is not an exemption. In his remarks, Chairman, Organising Committee, Prof Isa Dandago, said the conference, which promises to showcase the numerous research efforts of scholars and practitioners in the areas of taxation and related disciplines, is also aimed to address issues confronting the sector.
He said the conference is one of the initiatives of the Institute designed to give adequate opportunities to members and academics, to excel in areas of research and publication, as they make reasonable contributions to knowledge in the field of taxation and other related disciplines.