This isn’t just a minor inconvenience; it’s a serious threat to Nigeria’s prosperity. BACCIMA’s President, Hon. Aminu Mohammed Danmaliki, is calling for a level playing field. He insists that the same rules – timely payments, penalties, and interest – should apply to everyone, whether you’re a private company or a government agency. It’s not about asking for special treatment, he stresses, but about demanding basic fairness.
The Withholding Tax (WHT) Conundrum
One of the biggest pain points BACCIMA highlights is the issue of Withholding Tax (WHT). While the Federal Inland Revenue Service (FIRS) diligently deducts a 10% WHT on contract sums from businesses, the process for refunding these monies to compliant companies is notoriously slow, if it happens at all. This effectively means the government is holding onto money that rightfully belongs to the private sector until a full reconciliation is done, which can take ages. Imagine your bank holding onto your salary for months without explanation – that’s the kind of situation businesses are facing!
SMEs Bearing the Brunt
The impact is felt most acutely by Small and Medium Enterprises (SMEs). These businesses, which form the backbone of Nigeria’s service sector, are often the most vulnerable to cash flow issues. Delayed payments from government contracts and withheld WHT refunds can cripple their operations, making it difficult to meet their own financial obligations, pay salaries, or reinvest in their businesses. It’s a vicious cycle that needs to be broken.
Proposed Solutions for a Fairer System
BACCIMA isn’t just complaining; they’re offering concrete solutions. They propose:
- Jointly Managed Accounts: Holding WHT funds in accounts co-supervised by FIRS and the Organized Private Sector (through NACCIMA). This would ensure transparency and accountability in the handling of these funds.
- Timely Contract Payments: Governments at all levels should be legally bound to pay for certified executed contracts within a strict timeframe, ideally 30 days.
- Interest and Penalties for Delays: Just as companies face penalties for late tax remittances, government institutions should incur interest and penalties for delayed payments or refunds.
- Dedicated Refund Accounts: The establishment of a Joint WHT Refund Account in selected banks, co-managed by FIRS and NACCIMA, to expedite refund processing within the proposed 30-day window.
Currently, the system is rigged. Government agencies can impose harsh penalties on taxpayers, but there are no real consequences when they hold onto payments or delay refunds. This imbalance of power isn’t just unfair; it’s actively harming the economy. As Danmaliki put it, “This asymmetry of power is fundamentally unfair and economically destructive.”
Nigeria’s economic future depends on a tax system that is just, equitable, and predictable. Without these reforms, the country risks losing valuable investment and hindering the growth of the businesses that drive its economy.
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