The Federal Government yesterday announced that it would from July 1, 2017, impose additional 5 per cent charge on firms that fail to honour their tax obligations as and when due as part of measures to sanction tax defaulters and enhance voluntary compliance on tax obligation.
Speaking on this while announcing the new interest rate spread on unpaid taxes for the year 2017, Minister of Finance, Mrs. Kemi Adeosun, said such defaulters would pay about 19 per cent on their obligation which is 5 per cent above the Central Bank of Nigeria (CBN) 14 per cent policy rate.
She further noted that the new interest rate shall be 5 per cent over the Central Bank of Nigeria’s Minimum Re-Discount Rate (MRR) for 2017.
The finance minister also 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, minimise 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.