Business

Tax evasion by big companies harms the economy -Agbi

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2 years ago

Bayode Agbi is the CEO of Pillar Craft, a seasoned Chartered Accountant and Tax practitioner with an impressive record, spanning over two decades in the fields of accounting solutions and tax management. In this interview with KEHINDE AKINSEINDE-JAYEOBA, he delves into the intricacies of the tax regime, the specialised accounting needs of SMEs and the innovative solutions for SMEs to thrive.

What is your take on the eight-point agenda of President Bola Tinubu?

It is clear that the eight-point agenda addresses some critical challenges facing Nigeria. I appreciate the focus on key areas of food security, poverty eradication, job creation and fighting corruption. However, I would like to highlight the importance of addressing some specific challenges facing SMEs such as infrastructural development, access to energy and the need for a conducive business environment. These are factors closely linked to economic growth and should be integrated into the broader agenda. The agenda is a positive step towards addressing key issues in Nigeria. However, the success will depend on effective implementation, accountability and involvement of stakeholders. I hope to see the tangible results that lead to improved living standards and economic prosperity for the people.

Do you think that the president put round pegs in round holes in terms of those put in charge of the economy?

Looking at the persons of the Minister of Finance and the Coordinating Minister of the Economy, Wale Edun, and CBN Governor, Yemi Cardoso, it is easy to suggest that the president has put round pegs in round holes, especially with the fact that these two men have years of working together and, therefore, must have built synergy as they are both in charge of the fiscal and monetary policies of Nigeria, for which it is important that the are both on the same page.

What can the present government do to shore up its revenue through tax collection, given that companies/individuals are already bleeding from too much taxes?

In truth, shoring up revenue through tax collection while avoiding overburdening companies and individuals with excessive taxes is a delicate balance that requires planning and execution. I commend the initiative of the government in the works it started with the Presidential Tax Reform Committee, a step in this direction of looking at our tax system, including the administration, policy and system, which will ultimately help in shoring up revenue. In my opinion, the critical drivers that need to be focused on to shore up revenue will include policies and strategies on improving tax compliance – this is best achieved by the use of technology in tax administration and collection, simplifying the tax system, reviewing of tax incentives and introducting of specific sector related taxes and reforms. For example, I have argued that the government has not been effective in collection of tax in the creative sector of the economy, because there are no specific taxes and even administration of taxes targeted specifically at the sector.

The Central Bank of Nigeria has initiated moves to unify the exchange rates but the gap keeps widening. What do you think could be done to stop the free fall of the naira?

First, let me state that the result of economic policy initiative takes time, but I know that most Nigerians are not patient to see results. With this context, I know that CBN is doing a lot to stop the fall of Naira and the result of the initiatives of CBN will take months to become visible. To answer your question, I will suggest a bouquet of strategies and policies. First, CBN may need to improve transparency in foreign exchange transactions. This will help reduce market uncertainty. Secondly, export promotion by improving the ease of export by Nigerians and stimulation of domestic production, attraction of Foreign Direct investment into Nigeria and reduction in reliance on foreign or imported goods.

What is your view on big companies evading taxes and what can the government do to change the situation?

When big companies evade taxes, it is detrimental to the overall economy. It is unfair to the economy, the people of Nigeria and our environment. If you consider the impact of big companies on the environment and resources, when big companies, especially the multi-national companies engage in aggressive tax evasion, it deprives government of the needed revenue or public administration. Though there is usually the argument that government officials waste these taxes even if paid, let’s focus on the steps the government can take to change the situation.

First is that we need to strengthen our tax laws and regulation. It is very important that government continuously update and strengthen tax laws and regulations to close existing loopholes that enable tax evasion. This includes addressing transfer pricing abuse, profit shifting and tax haven exploitation. We must enhance enforcement. Tax authorities should invest in robust enforcement mechanisms, including data analytics and international cooperation, to detect and combat tax evasion effectively. There must be promotion of country-by-country reporting by requiring multinational corporations to provide detailed financial information on a country-by-country basis. This transparency can help identify profit shifting and ensure that companies pay their fair share of taxes in each jurisdiction where they operate. There is also a need to review the actions of the tax administrators at various levels. Some are active collaborators of the big companies in tax evasion schemes to shortchange government.

How is Pillar Craft helping SMEs to navigate the challenges they face and to also remain tax-compliant?

In Pillarcraft, we are committed to supporting Small and Medium Enterprises (SMEs) in Nigeria by helping them navigate the challenges they face and remain tax-compliant. We understand that SMEs are the backbone of the Nigerian economy and their success is vital for economic growth and development. We are SME-centric.

The question is how do we do this? First is that we have realised that most SMEs owners are driven by passion and profit making, most don’t really know about tax and their tax obligation, so the first thing we ensure we do to SMEs owners is to provide tax training and education. This we deliver through a mix of physical and virtual classes. The objective of the training and education is to ensure that the SME owners are informed of their obligations and rights. We provide Tax Advisory Service by providing SMEs with expert tax advisory services. We help SMEs understand their tax obligations, including income tax, value-added tax (VAT) and other relevant taxes. Our team of tax experts assists SMEs in optimising their tax structures to minimise tax liabilities while ensuring compliance with tax laws and regulations.

Also, we help record keeping and documentation with the use of Cloud technology. At Pillar Craft, we emphasise the importance of accurate record-keeping and documentation for SMEs. We assist SMEs in establishing proper accounting systems using Cloud accounting software and record-keeping practices, which are essential for tax compliance and financial management.

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