The Nigeria Customs Service (NCS) has reported that Nigeria lost a significant sum of N1.8 trillion to Import Duty Exemption Certificates (IDEC) in 2023. The revelation was made by the Comptroller General of NCS, Wale Adeniyi, during an interactive session with the House of Representatives Committee on Appropriation and Government Owned Enterprises (GEO). Despite the substantial financial loss, Adeniyi emphasized potential benefits if IDEC is managed effectively.
Key Points:
- Fiscal Deficit Due to IDEC:
- The Comptroller General disclosed that Nigeria lost N1.8 trillion to IDEC in 2023. While acknowledging the impact on government revenue, he highlighted the potential benefits that could be derived if IDEC is well executed.
- Waivers and Tax Incentives:
- Minister of Finance and Coordinating Minister of the Economy, Wale Edun, stated that waivers and tax incentives represent one percent of the country’s Gross Domestic Product (GDP). He emphasized the need for a balanced approach, considering both the revenue loss and potential benefits.
- Revenue Target for 2024:
- Adeniyi mentioned that the revenue target for the Nigeria Customs Service in the 2024 fiscal year is N5 trillion. He expressed confidence that this target could be raised to N6 trillion with the right environment, including a review of concessions and excise duty on certain products.
- Unrealized Revenue from Goods in Ports:
- Adeniyi pointed out that goods in the ports that are yet to be cleared represent unrealized revenue for the government. He estimated around N500 billion revenue related to some vehicles outside the ports and emphasized the need for proper assessment and collection.
- Possibility of N6 Trillion Revenue:
- The Customs boss believes that achieving N6 trillion in revenue is possible, provided certain issues in the operating environment, such as concession reviews, are addressed. He highlighted potential revenue from excise duty on single-use plastic products.
- Efficient Tax Administration:
- Minister Edun clarified that the government’s focus is on increasing revenue from taxation without necessarily increasing tax rates. The goal is to improve tax administration efficiency, aiming to increase tax returns as a percentage of GDP from around nine percent to 18 percent within three years.
Conclusion: The revelation of Nigeria losing N1.8 trillion to IDEC in 2023 underscores the challenges in balancing revenue generation and providing incentives for economic activities. The discussions at the interactive session emphasize the need for careful consideration of waivers and tax incentives to ensure they contribute positively to the economy. Efforts to improve revenue collection and administration efficiency are crucial for achieving fiscal targets and sustaining economic development.
