Experts Warn Employers Against Tax Reform Transition Risks
As Nigeria transitions into a new tax regime, industry leaders and policy experts have raised significant concerns over the capacity of businesses to adjust effectively. They warn that poor transition planning could heighten operational risks and weaken productivity in the short term, posing challenges for corporate Nigeria.
Concerns Highlighted at CIPM Roundtable
The concerns came to the forefront at an advocacy roundtable hosted by the Chartered Institute of Personnel Management of Nigeria (CIPM). Insurers, economists, and human resource professionals gathered to examine the implications of the reforms on the business landscape. Omowunmi Mabel Adewusi, General Counsel and Human Resource Director at AXA Mansard Insurance Plc, emphasized that organisations must move beyond mere compliance. She advocated for the adoption of structured change management strategies to navigate the transition successfully.
"Tax reforms of this scale come with operational complexities. There needs to be a serious change management strategy that every employer must embark upon," Adewusi stated. She noted that internal systems, policies, and workforce structures must be aligned with the evolving regulatory framework to ensure smooth adaptation.
Importance of Transparent Communication
Adewusi stressed that transparent communication would be critical to maintaining stability within organisations. She urged employers to engage employees proactively to reduce uncertainty and foster a supportive environment. "Employers need to be more open, more transparent, and more understanding as they move towards adopting the new tax framework," she added, highlighting the need for clear dialogue during this period of change.
Challenges for SMEs and Workforce Management
Other experts at the forum echoed similar concerns, pointing out that the transition phase could pose significant challenges, particularly for small and medium-sized enterprises (SMEs). Olusegun Mojeed, President of the CIPM, explained that the reforms would have direct consequences for workforce management and payroll systems. "Tax reforms will impact compensation structures, employee benefits, and compliance processes. HR professionals must take the lead in helping organisations adapt without disrupting productivity," he said.
Call for Careful Implementation
Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, warned that while the reforms are necessary, implementation must be carefully managed to avoid unintended consequences. "The transition phase is critical. Businesses are already dealing with cost pressures, and any abrupt adjustment without adequate clarity could create disruptions. There must be consistency in policy implementation," Yusuf emphasized, underscoring the need for a phased and well-communicated approach.
Potential Benefits and Preparedness Gaps
Johnson Chukwu, Managing Director of Cowry Asset Management Limited, noted that the reforms could ultimately strengthen the business environment if properly implemented. However, Wole Obayomi, a tax consultant and partner at KPMG Nigeria, added that many organisations are still unprepared for the operational impact of the reforms. "Beyond understanding the law, companies need to retool their processes, retrain staff, and upgrade systems; without this, compliance gaps could expose them to penalties," he cautioned, urging businesses to invest in readiness measures.
In summary, experts unanimously advise employers to prioritize structured planning, transparent communication, and proactive adaptation to mitigate risks and leverage the potential benefits of Nigeria's new tax regime.
