Bayode Agbi, a Chartered Accountant and Tax Practitioner with over two decades of experience in accounting, accounting solutions and tax management is the CEO of Pillar Craft. In this interview, he bares his mind on the implication of tax evasion by big companies on the economy, fall of the naira and the way forward. Kemi Olaitan presents the excerpts
What is your take on the eight-point agenda of President Bola Tinubu?
It is clear that the President’s 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 conducive business environment. These are factors that are 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 personalities of the Minister of Finance and the Coordinating Minister of the Economy, Wale Edun and the CBN Governor , Yemi Cardoso, it is easy to suggest that the President has put round pegs in round hole especially with the fact that these two men have years of working together thus must have built synergy as they both are in charge of the fiscal and monetary policies of Nigeria for which it is important that they are both on the same page. But the judge of the President’s decision on the drivers of the economy will be the economic indicators and indices in the coming months.
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 over burdening companies and Individuals with excessive taxes is a delicate balance that requires planning and execution. I commend the initiative of the government with the works it started with the Presidential Tax reform Committee, it is 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 of improving tax compliance – this is best achieved by use of technology in tax administration and collection, simplifying the tax system, review of tax incentives and introduction of specific sector related taxes and reforms. For example, I have argued that government has not been effective in collection of tax in 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 keep widening. What do you think could be done to stop the free fall of the naira?
First let me state that result of economic policy initiative takes time but I know that most Nigerians are not patient to see the results. With this context, I know that the CBN is doing a lot to stop the free fall of the naira and the result of the initiatives of CBN will take months to become evident. Therefore, some of the initiatives I will suggest are either have been thought or turned into policy but the result is yet to be evident. However to answer your question, I will suggest a bouquet of strategies and policies, first the CBN may need to improve transparency in foreign exchange transaction, this will help reduce market uncertainty. Secondly, export promotion by improving the ease of export by Nigerians and stimulation of domestic production, improving the attraction of Foreign Direct Investment (FDI) into Nigeria and reduction of the reliance on foreign or imported goods.
What is your view on big companies evading taxes and what can government do to change the situation?
When big companies evade taxes, it is detrimental to the overall economy and 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 multinational 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, but let us focus on the steps 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 updates 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 enhanced enforcement while tax authorities should invest in robust enforcement mechanisms including data analytics and international cooperation to detect and combat tax evasion effectively. Promote 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 that shortchange government
Question : How is PillarCraft helping SMEs to navigate the challenges they faced and also remain tax-compliant?
Agbi : 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 SMEs-centric. The question is how do we do this? First is that we have realised that most SMEs owner are driven by passion and profit making while most of them don’t really know about tax and their tax obligation, so the first thing we ensure we do to SMEs owner is to provide tax training and education. This we deliver through a mix of physical classes and virtual classes. The objective of the training and education is to ensure that the SMEs owners are informed of their obligations and right. 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 optimizing their tax structures to minimize tax liabilities while ensuring compliance with tax laws and regulations.
Also, we help record keeping and documentation with the use of Cloud technology. At Pillarcraft we emphasize 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. We similarly provide unique outsourced services to SMEs to ensure that they comply with relevant tax obligation through outsourced accounting, bookkeeping and outsourced tax compliant service. Thus with our support, SMEs will concentrate on building their business while we manage tax matters for them.
