Nigerian SMEs hit by rise in taxes

The micro-, small- and medium enterprises are being hit hard by fall in crude oil prices as governments at different levels raise taxes from 39 to 57 to make up for the shortfall in federal allocations.

Small businesses have also been hard hit by continued poor infrastructure and technology which have become obvious barriers and prevented them from creating good jobs for Nigerians.

“I can tell you that in the last 14 months, taxes have increased from 39 to 57. Nine taxes are from the federal, 21 from states and 27 from local governments,” said Yinka Oyinlola, CEO, Nigeria Leadership Initiative, at the FATE Foundation Dialogue Series held recently in Lagos.

Multiplication of taxes has continued to pose serious challenges to start-ups and small businesses as there is yet no harmony in taxation among the three tiers of government.

Each federal government agencies has its own tax plans that can hardly be disrupted by another, findings show.

This situation also applies to the three tiers of government, which are battling to meet their obligations in the face of dwindling allocations, occasioned by crude oil market crash.

Mahmud Othman, council member of LCCI and consultant for AG Leventis, told Start-Up Digest recently that it was laughable that local government authorities would visit public liability firms, demanding irrelevant charges such as radio and television fees.

“The problem is that once you challenge them, they go to customary court. Decree No 21of 1998 spells out taxes payable to each level of government.   Most of the taxes they collect today are illegal. There is a provision for a local government, because of its peculiarity, to come up with a specific levy. But due to indiscipline, local governments come up with all forms of taxes. But the Constitution is clear on what they should do if they need to come up with taxes,” Othman said in an interview.

Apart from taxes, the level of technology in the Nigerian MSME space is still poor, owing to the low level of the country’s broadband penetration.

Sam Adeleke, immediate past chairman, Association of Internet Service Providers Nigeria (ISPAN), said last October 2015 that internet content could not grow without the rise of infrastructure.

‘There is no broadband service in the country. Broadband service is when you provide unhindered internet access to subscribers without putting limit to what they can download.  A situation where providers offer subscribers 5g or 10g for certain amount is not broadband. This will lock the subscriber up from using internet as he would love to,” Adeleke said.

ODINAKA ANUDU