The Central Bank of Nigeria (CBN) has revealed that multiple taxation remains a major obstacle for businesses in Nigeria, despite the federal government's efforts to streamline the tax system. According to the CBN's latest Business Expectation Survey, multiple taxation is still cited as the most significant factor constraining business activity in the country.
Survey Highlights Persistent Challenge
The survey, which polled over 1,600 businesses across various sectors, found that 68% of respondents identified multiple taxation as a severe constraint to their operations. This figure represents a marginal improvement from the previous survey, where 72% of businesses reported the same issue, but it underscores the persistence of the problem.
Business owners have repeatedly called for a unified tax framework to reduce the burden of paying multiple taxes at federal, state, and local government levels. The CBN survey aligns with these concerns, noting that the complexity and duplication of taxes continue to hinder business growth and investment.
Government Reforms and Their Impact
In response to these challenges, the federal government has introduced several reforms, including the establishment of a Presidential Fiscal Policy and Tax Reforms Committee. The committee, headed by Taiwo Oyedele, has proposed a series of recommendations aimed at consolidating taxes and eliminating redundancies.
Despite these initiatives, the CBN survey indicates that the reforms have not yet yielded the desired impact on the ground. Many businesses still report dealing with multiple tax authorities and unclear tax obligations, which increases compliance costs and diverts resources from productive activities.
Sectoral and Regional Variations
The survey also reveals significant variations across sectors and regions. For instance, the manufacturing sector is particularly affected, with 74% of manufacturers citing multiple taxation as a major constraint, compared to 61% of service-based businesses. Regionally, businesses in the Southwest and North Central zones report the highest incidence of multiple taxation, while those in the Northwest and Southeast are relatively less affected.
These disparities suggest that the problem is not uniform, and solutions may need to be tailored to specific contexts. The CBN survey recommends that the government work with state and local authorities to harmonize tax collection and reduce the number of taxes imposed on businesses.
Impact on Business Confidence and Economic Growth
The persistence of multiple taxation has broader implications for the Nigerian economy. It undermines business confidence, discourages foreign direct investment, and hampers the government's efforts to diversify the economy away from oil. The CBN survey notes that addressing this issue could significantly boost business optimism and contribute to sustainable economic growth.
According to the survey, if multiple taxation were effectively addressed, 82% of businesses said they would be likely to expand their operations, and 75% would consider increasing their workforce. This highlights the potential benefits of tax reform for job creation and economic development.
Looking Ahead
As the federal government continues to implement its tax reforms, the CBN survey serves as a reminder of the urgency of the situation. The government has committed to simplifying the tax system and reducing the number of taxes by 2025, but businesses are eager to see tangible results.
In the meantime, the CBN advises businesses to engage with tax authorities and seek professional advice to navigate the existing complexities. The central bank also encourages the government to accelerate the implementation of the reform recommendations and to ensure that all tiers of government are aligned in the effort to create a more business-friendly environment.
The full report of the CBN Business Expectation Survey is available on the central bank's website, providing detailed insights into the challenges and opportunities facing Nigerian businesses.
