Oyedele Advocates for Lower Corporate Tax Rates to Boost Investment

Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has called for a reduction in Nigeria’s corporate tax rates to stimulate business growth, attract investment, and improve compliance.

Key Points of His Proposal:

1. Lower Corporate Tax Rates

- Nigeria’s current 30% corporate tax rate (for large companies) is seen as uncompetitive compared to peers like:

- South Africa (27%)

- Kenya (30%)

- Egypt (22.5%)

- Rwanda (30%) but with incentives.

- Suggests a reduction to 20-25% to attract FDI and reduce tax evasion.

2. Harmonization of Multiple Taxes

- Businesses face over 60 taxes and levies, creating a burdensome environment.

- Proposes consolidating taxes to reduce complexity and cut compliance costs.

3. Incentives for SMEs & Startups

- Lower rates for small businesses (e.g., 0-15% for SMEs) to encourage formalization.

- Tax holidays for startups in critical sectors like tech and manufacturing.

4. Link Tax Cuts to Compliance & Revenue Expansion

- A simpler, fairer tax system could increase voluntary compliance, offsetting lower rates with a wider tax net.

- Improved enforcement via technology (AI, data tracking) to curb evasion.

5. Global Benchmarking

- Points to Ireland (12.5%), Singapore (17%), and Dubai (0-9%) as models where lower rates boosted investment.

Potential Benefits:

More Foreign Direct Investment (FDI) – Nigeria could become a more attractive business hub.

Formalization of Informal Sector – SMEs may join the tax net if rates are reasonable.

Higher Compliance & Revenue – Easier tax systems reduce evasion.

Job Creation & Economic Growth – Businesses reinvest savings into expansion.

Challenges & Counterarguments:

Short-term revenue loss – Government may resist cuts without alternative funding.

Need for Broader Fiscal Reforms– Must be paired with reduced loopholes and better enforcement.

Subnational Tax Issues – States and LGAs must align to avoid multiple charges.

Conclusion:

Oyedele’s push aligns with global trends where moderate tax rates + tech-driven compliance boost revenues more than high, evaded rates. If implemented, Nigeria could see more investment, formalization, and sustainable tax growth.