Federal Ministry of Finance on Tuesday announced introduction of five per cent interest spread on unpaid taxes for the year 2017.
This it says is to enhance tax compliance, minimize tax evasion and deter late payments.
Minister of Finance, Mrs. Kemi Adeosun said the new interest rate shall be five per cent over the Central Bank of Nigeria’s Minimum Re-Discount Rate (MRR) for 2017.
She explained that Section 32(1b) of the Federal Inland Revenue Service (Establishment) Act 2007 empowers her to approve the new interest rate.
“Majority of Nigerian tax payers (PAYE) have taxes deducted automatically. However, those who do not and are required to file their taxes like companies and business enterprises, must understand that there are financial consequences for late payments.”
“We believe that this will support our efforts to ensure that people pay their taxes promptly, thus providing a sustainable source of revenue to the government to finance infrastructure and other projects,” the Minister said.
The Minister has accordingly directed the Federal Inland Revenue Service (FIRS) to commence the implementation of the new interest rate on all unpaid taxes from July 1, 2017.
Adeosun had at the Finance Ministers’ meeting convened by the G24 Group at the 2017 IMF/World Bank Spring meetings in Washington, stressed the need for Nigeria to embark on aggressive tax revenue generation in order to drive economic growth.
At the meeting, she emphasized that with a tax to GDP ratio of only six per cent, one of the lowest levels in the world, the country had to intensify effort at tax collection in order to build a sustainable revenue base that will deliver inclusive growth.
She made known that the focus of the Federal Government in 2017 was to improve tax revenue through ensuring voluntary compliance with tax laws.