The tax records of over 800,000 companies, including some government contractors, are currently being audited, the Minister of Finance, Kemi Adeosun, said on Sunday.
Mrs. Adeosun who disclosed this in an article said the affected companies included those identified as having never paid taxes before.
“This is an unprecedented initiative that entails cooperation between federal and state governments,” the minister said.
Besides, Mrs. Adeosun said, her ministry has also commenced a data-base project to create accurate profiles of individuals and companies liable to pay taxes in the country.
The project, she explained, combines data from the various government ministries, departments and agencies, including bank records, property and company ownership, as well as customs records.
She said the finance ministry has also retained the services of the world’s premier private investigation agencies to help trace overseas assets held by Nigerians and Nigerian companies.
She did not, however, disclose the names of the investigation agencies.
The minister, who sought to dispel the perception of Nigeria as an oil economy, said such descriptions fitted those countries characterised by low population densities and abundant oil resources.
She identified some of such countries as Saudi Arabia, Kuwait and Qatar.
Saudi Arabia, with production capacity of 10 million barrels of oil per day, Mrs. Adeosun said, has a population of only 30 million people, while Kuwait, with a capacity of 2.7 million barrels of oil per day, has four million people.
Qatar, on the other hand, with 1.5 million barrels of oil per day, she said, has 2.5 million people.
Compared to Nigeria, with just two million barrels of oil per day and over 180 million people, Mrs. Adeosun said statistics do not stack in the country’s favour as an oil economy.
“The simple mathematics tells us that 90 Nigerians share a barrel of oil, compared to three Saudis, 1.44 Kuwaitis and 1.69 Qataris.
“With oil at just 10 per cent of GDP, Nigeria simply does not fit into the mould of the traditional oil economies,” Mrs. Adeosun argued.
“These economies (Saudi Arabia, Kuwait and Qatar) pursued an economic model that was built around a large government dependent almost entirely on oil revenue for funding its programmes and activities,” she added.
She said oil economies could afford to have low, or in some cases, no domestic revenue mobilisation, in the form of taxes.
Although Mrs. Adeosun said Nigeria had, for over three decades, pursued the oil economy model, she said “things are changing, with the election of President Muhammadu Buhari in 2015.
She pointed out that the clamour for change, in the areas of good governance, security and economy, had coincided with the collapse of global oil prices, resulting in huge deficit in government revenues.
Describing the economic model as flawed, Mrs. Adeosun said global circumstances informed government’s decision to overhaul the entire economic model after realising that Nigeria was not actually an ‘oil economy’.
The change, she explained, involved the pursuit of the target of transiting the county’s economy, like her peer group, from the oil economies to ‘oil plus’ economies, such as Mexico and Egypt.
This new group, the minister noted, have diversified their economies, with tax-to-GDP ratios of 20 per cent and 16 per cent, respectively, against Nigeria’s six per cent.
The change philosophy, she said, had to be applied urgently to revenue mobilisation, with current data pointing at this “as potentially the master key to unlocking Nigeria’s huge growth potential by funding its ailing infrastructure, including roads, power and rail.”
She said a review of tax rates paid by the huge multinational and local operators, as well as the data on illicit financial flows, revealed a pattern of systematic tax evasion at all levels.
Recent finance ministry statistics showed only 14 million active tax payers in the country, out of an economically active population of 70 million.
Of this figure, Mrs. Adeosun said, over 95 per cent were salary earners in the formal sector, while only 241 persons were known to have paid personal income taxes, PIT, of N20 million (about $65,573.77) in 2016.
Noting government’s apathy towards revenue mobilisation as one of the effects of the wrong perception of Nigeria as an oil economy, the minister said government was determined to correct the identity crisis.
Part of the determination, she pointed out, was the recent launch of tax amnesty policy, called “Voluntary Asset and Income Declaration Scheme’, VAIDS, a nine-month window for corporate and individual tax payers.”
The new tax policy, she said, affords tax payers opportunity to regularise their tax status in exchange for a guarantee of no interest, penalties, tax investigation or further audit.
The minister said the VAIDS would be succeeded by the Automatic Exchange of Information, to provide Nigerian tax authorities information on offshore assets by Nigerians.
“Changing the Nigerian economic psyche is not an easy task. But the present administration understands that the short term lure of political expediency must give way to the long-term best interests of Africa’s largest economy,” Mrs. Adeosun stated.