Benefits of tax compliance in Nigeria

A tax analyst, Arabinrin Aderonke Atoyebi, has urged Nigerians to embrace tax compliance, stressing that it is not just a legal obligation but a tool for financial security, business expansion, and national development.

In an opinion piece titled "The Benefits of Tax Compliance in Nigeria," Atoyebi lamented that many Nigerians perceive tax payment as a burden rather than a necessity.

She argued that non-compliance often leads to penalties, financial restrictions, and inaccessibility to government services.

“I have seen it happen over and over again. Someone needs a loan, a contract, or even government service, only to find that their tax records or lack of them are standing in the way,” she wrote.

Highlighting the consequences of non-compliance, she noted that tax defaulters not only incur hefty fines and interest but also face financial roadblocks that could have been avoided.

According to her, avoiding taxes does not save money in the long run, as penalties eventually outweigh the initial tax liability.

Beyond penalties, Atoyebi stressed that tax clearance certificates serve as essential documents that unlock access to government benefits such as free education, healthcare, and housing schemes in states like Lagos. Businesses, she noted, require tax clearance to qualify for government contracts.

“Those who ignore their tax obligations often find themselves stuck, unable to access these services simply because they failed to comply,” she stated.

She also pointed out the financial incentives available for compliant taxpayers. Small businesses that properly file their returns can qualify for exemptions, while larger corporations that make early payments can receive tax credits ranging from 1% to 2%, effectively reducing their tax burden

Additionally, tax compliance enhances financial planning and boosts creditworthiness. Atoyebi explained that lending institutions review tax returns when considering loan applications, and a clean record increases the chances of approval and even secures lower interest rates.

“Tax-compliant businesses have an edge because they are seen as reliable, while those that evade taxes risk damaging their reputation and losing potential business opportunities,” she noted.

Emphasising the civic responsibility of tax payment, Atoyebi urged Nigerians to recognise that taxes fund essential public services and infrastructure.

She cited developed nations like the United States, where citizens understand the role of taxation in national progress.

“If we want a better Nigeria, tax compliance is not an option. It is a necessity,” she asserted.

Atoyebi concluded by encouraging Nigerians to cultivate a culture of compliance, stressing that the benefits far outweigh the costs.

“Do the right thing. Pay your tax today,” she advised.