Experts task informal sector businesses to imbibe Culture of Tax Compliance

Businesses in the informal sector have been charged to imbibe the culture of paying tax for economic growths of small firms.

Experts gave the charge last Thursday in Lagos during the 6th Blakey’s National Tax Conference with the theme, “Transforming the Informal Economy Through Taxation: Opportunities and Challenges”.

According to the experts, with an appropriate tax model and education,taxing the informal sector will help build morale and culture of tax compliance.

Engr Anthony Chinwe in his lecture on “Transforming and Growing the Informal Sectors of MSMES through Appropriate Tax Regime”, said MSMES played important roles in the development of the Nigerian economy.

According to Engr. Chinwe, these businesses account for nearly 90 per cent of the jobs in the country and contribute over 45 per cent to the countrys Gross Domestic Product (GDP, with 98.8 percent in the micro cadre.

However, Chinwe noted that most of these business entities were not registered or captured by the regulatory authorities.

He gave some of the challenges facing this sector as lack of access to suitable finance, multiple taxes and levies, insecurity, limited access to justice, stifling business climate due to inappropriate government policies, legal and regulatory frameworks and poor record keeping.

Engr. Chinwe advocated education and awareness, incentive and benefits, reviewing the constitution and tax laws, support infrastructure development, social dialogue and single tax authority to make the informal sector tax compliant.

Founder and Managing Partner of Modilim & Co, Dr Patrick Modilim, in his lecture on “Taxation in The Informal Economy,” gave strategies for encouraging tax compliance in the informal sector as strengthening firms incentives, capacity and collective action and strengthening political and administrative commitment.

Dr Modilim said the slow progress in taxing the informal sector was due to the challenges of locating and taxing large numbers of small firms eager to evade the tax net and lack of commitment of political leaders and tax administrators with little incentive to focus resources on taxing the informal economy.

Dr Modilim stressed the need for revenue authorities to encourage the development of informal economy associations, negotiations, taxpayer education programmes and dialogue between the State and informal economy firms.

The Convener of the event, Chief Blakey Okwudili Ijezie,who is also the founder & Managing Partner, Okwudili Ijezie & Co.(Chartered Accountants), in his keynote paper on “The Future of Taxation- the Game Changer: Transforming the Informal Sector through Taxation”, said that transforming the informal sector through taxation was a complex task but with Artificial Intelligence, it would be more efficient, effective and equitable.

Maintaining that Artificial Intelligence is a veritable tool for integrating the informal sector into the formal economy, Chief Ijezie said the future of taxation was not about compliance but collaboration adding that Artificial Intelligence would facilitate an era of cooperation between tax authorities, taxpayers and technology providers.

Earlier in his opening remarks, Chairman of the occasion, former Executive Director of Federal Inland Revenue Services (FIRS), Chief Mark Dike, who spoke on the importance of taxation, stated that it helped the government to provide meaningful and gainful employment to the teeming population as well as promote economic growth and development.

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