A recently released report titled, Paying Taxes 2012 Study, has revealed that Nigeria now ranks 138 out of 183 economies on the ease of paying taxes compared to a ranking of 134 in the previous year.

This, according to the report, means that in Nigeria, a medium size company on the average pays nearly one third of its commercial profit as taxes, spends over 23 weeks in a year dealing with its tax affairs and makes a tax payment every 10 days.

A Partner in the Tax and Corporate Advisory Services, PwC, Mr. Taiwo Oyedele, said with this, Nigeria was far behind many of the leading investment destinations in Africa including Mauritius which ranked nine, South Africa 36 and Ghana 87.

He said, “The paying taxes result enable government to benchmark their tax systems with others on a like-for-like basis and to identify best practices. The study measures three separate aspects of paying taxes. Two of these relate to the tax compliance burden and one to the tax cost. All three are equally weighted to arrive at an overall ranking. The three indicators—number of tax payments, total tax rate as a percentage of commercial profit and time required to comply with tax requirements.

“On these sub-indicators for 2012, a medium size company in Nigeria makes tax payments annually, pays 32.7 per cent of its commercial profit in taxes, and spends 938 hours to comply. As a result, Nigeria ranks 123 on number of tax payments, 56 on total tax rate and 180 on time required to comply out of 183 economies covered by the survey.”

He pointed out that Nigeria had been slipping consistently on the ease of paying taxes index because of slow and uncoordinated approach to tax reform.

“Businesses have a key role to play in economic development and taxation is a major consideration in the equation. Reducing tax rates, broadening the base and making it easy to pay, can be important in encouraging local business to register and pay tax,” he added.

Source: Punch (written by Ademola Alawiye)