Multiple taxation pushes Nigerian hospitality outfits to the brink

(eTN) NIGERIA – The Nigerian hospitality sub-sector is currently faced with an avalanche of taxes: Registration of Hospitality Premises, Stamp Duty, Nigerian Social Insurance Trust Fund (NSIT), Indust

(eTN) NIGERIA – The Nigerian hospitality sub-sector is currently faced with an avalanche of taxes: Registration of Hospitality Premises, Stamp Duty, Nigerian Social Insurance Trust Fund (NSIT), Industrial Training Fund (ITF) National Pension Commission (PENCOM), Nigerian Tourism Development Corporation (NTDC), Value Added Tax (VAT), Pay As You Earn (PAYE), Company Income Tax, Withholding Tax, Liquor License, Food Handlers and Health Certificate; other costs include Visual Advert, Waste Disposal, Bill Board, Sign Post, Operation Permit, Vehicle Emission Fee, Contravention Charges, Business Premises, Administrative Charges for Environmental, Audit, Copyright Society of Nigeria (COSON), water supply, electricity supply, copious levies by the local government councils, as well as other fees charged by regulatory agencies across the sectors at the state and federal levels has pushed the sector to the brink.

The reality is that the current burden of taxes and levies is heavy, especially when situated within the context of the high operating cost for business. The sector wants to be very clear and certain of its tax obligations, the number of taxes, the rates, period of payment, mode of payment and so on; a tax system that is devoid of arbitrariness and not driven by the whims and caprices of state officials

Engr. Onofiok Ekong, President, Hotel Owners Forum of Abuja (HOFA), said, โ€œThe local governments are the main culprits here.

โ€œWe crave for a tax regime that is fair and flexible enough to respond to changing circumstances; [a] tax regime that takes into account the prevailing economic conditions and the harsh investment climate, with attributes that could promote an investment-friendly tax regime.โ€

According to him, โ€œWe are aware that the challenge of inadequate funding continues to confront government agencies with greater intensity; these agencies, however, must design new strategies to explore tax revenue options in order to close the gaps between the available resources at their disposal and growing development agenda.โ€

Engr. Ekong noted that rather than government and its agencies adopting an aggressive revenue generation approach to boost their revenue potential, they are using the most daunting hurdles to businesses in Nigeria โ€“ multiple taxation.

He noted that this has become a cancerous leach in the body of corporate entities in the hospitality sub-sector.

In recent times, HOFA has been faced with daunting challenges in which apart from losing members of the association through closure and outright change of purpose, the lamentations of the existing ones over multiplicity of taxes can only be ignored to the detriment of the economy.

The association is of the opinion that government will need to engage all stakeholders in a holistic discourse in order to enable it to understand the magnitude and dimensions of the challenges facing the industry and come out with recommendations that will help Nigeria have a more investment-friendly tax regime.

HOFA believes that if the right measures are put in place to tackle the challenges, it will naturally have positive effects on governmentโ€™s tax revenues as well as offer macroeconomic benefit to all stakeholders in the long run.

As done elsewhere, HOFA President is also of the opinion that it would be necessary to engage legislative provisions in the conduct of the exercise to streamline the incidence of multiple taxations arising from tax imposition by sub-national tiers of government, particularly local government, in their attempt to generate revenue for undertaking development projects to provide democratic dividends.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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