ICAN Urges Tinubu To Scrap Laws Requiring Taxes To Be Paid In Foreign Currencies

The Institute of Chartered Accountants of Nigeria (ICAN) has advised President Bola Tinubu to appoint a new Central Bank Governor and wants the president to scrap laws that demand payment of some taxes in foreign currencies.

Across Nigeria, think tanks are gauging the benefits and associated risks of the floating of the naira by the Central Bank of Nigeria and the vacuum created by the suspension of Godwin Emefiele by President Bola Tinubu.

The disagreement between the suspended CBN governor, Emefiele, and President Tinubu has left the apex bank with an officeholder, Folashodun Shonubi.

ICAN on Thursday applauded the exchange rate unification in a report titled, “Position on the Unification of the Exchange Rate in Nigeria.”

“It is expected that this action will generally lead to short-term pains that will yield long-term gains,” the institution added.

In June, Tinubu suspended Emefiele, and a few days later, the CBN abolished all segments of foreign exchange and re-introduced the “Willing Buyer, Willing Seller” model at the Invetsors’ and Exporters’ Forex Window.

Emefiele had ignored a recommendation by the International Monetary Fund to float the naira due to its impact on prices and the economy.

Following the policy, the naira fell around N760 against the dollar thereby escalating prices of goods. The Bank of America projects that inflation will hit 30 per cent while the naira is now undervalued by 12 per cent.

“Timely appointment of a new CBN governor who will provide a credible long-term direction for this policy. This will provide certainty and stability, and boost investor confidence to inflow capital into the country,” ICAN advised in the report.

ICAN said the unification policy would increase investments, increase capital, and tax revenue but Nigeria’s $42bn debt will soar by N12trn while gross debt will grow by 5 per cent to N90trn.

ICAN recommended “Effective and consistent implementation of the policy. This will ensure that no uncertainty is created by the mode of implementation and there is constant communication with key stakeholders such as businesses and investors amongst others.

“Review the prohibited list of goods to ensure demand is not segmented. This should be complemented by adopting appropriate fiscal and/or trade policies where necessary, for example, by increasing import tariffs etc.

“Review and amend certain tax laws that require taxes to be paid in foreign currency thereby creating artificial demand for foreign exchange.

“Complement this policy with fiscal reforms and discipline, removal of the petrol subsidy (which was recently executed), reduction in the cost of governance, harmonization of multiple tax laws etc; and Benchmarking the Nigerian foreign exchange market with emerging international foreign exchange markets such as Malaysia, Mexico, South Africa, Brazil and Colombia including learning lessons to achieve macroeconomic stability and integration into global value chains.”