FG Approves Higher Interest Rate On Unpaid Taxes

FG Approves Higher Interest Rate On Unpaid Taxes

The Federal Government has approved a new interest rate spread on unpaid taxes for the year 2017. The new interest rate was approved by the Minister of Finance, Mrs. Kemi Adeosun.

According to the Minister, the new interest rate shall be 5% over the Central Bank of Nigeria’s Minimum Re-Discount Rate (MRR) for the year 2017. She explained that Section 32(1b) of the Federal Inland Revenue Service (Establishment) Act 2007 empowers her to approve the new interest rate.

The Minister said the review of the interest rates on unpaid taxes was one of the necessary measures adopted by the Federal Government to enhance tax compliance, minimize tax evasion and deter late payments.

“Majority of Nigerian tax payers (PAYE) have taxes deducted automatically. However, those who do not and are required to file their taxes like companies and business enterprises, must understand that there are financial consequences for late payments. We believe that this will support our efforts to ensure that people pay their taxes promptly, thus providing a sustainable source of revenue to the government to finance infrastructure and other projects”, the Minister said.

It could be recalled that Mrs Adeosun had, during the Finance Ministers’ meeting convened by the G24 Group at the 2017 IMF/World Bank Spring meetings in Washington, stressed the need for Nigeria to embark on aggressive tax revenue generation in order to drive economic growth.

She had emphasized that with a tax to GDP ratio of only six per cent, one of the lowest levels in the world, the country had to intensify effort at tax collection in order to build a sustainable revenue base that will deliver inclusive growth. She made known that the focus of the Federal Government in 2017 was to improve tax revenue through ensuring voluntary compliance with tax laws.

The Minister has accordingly directed the Executive Chairman of the Federal Inland Revenue Service (FIRS) to commence the implementation of the new interest rate on all unpaid taxes from July 1, 2017.