PwC Nigeria executive links revenue levels to crude oil prices

Despite economic challenges, real and predicted revenue collection levels in Nigeria continue to rise. According to Taiwo Oyedele of PwC Nigeria, the discrepance between economic conditions and revenue levels boils down to fluctuations in the global price of crude oil, which is a key contributor to Nigeria’s GDP.

Revenue collection levels have been varying considerably from year to year recently, and a notable spike in collections from last year has raised significant questions across the Nigerian market. The Federal Inland Revenue Services (FIRS) in Nigeria reported N5.3 trillion in collections for 2018.

Between 2015 and last year, collections have fluctuated within the range of N3 trillion and N4 trillion, which has cause some raised eyebrows amongst market watchers with respect to last years collections. Partner and West Africa Tax Leader at PwC Nigeria Taiwo Oyedele appears to have an answer to this question.

According to Oyedele, despite the fact that collections last year were high, they still fell short of the anticipated figure, which was in excess of N8 trillion. Such high expectations – despite sluggish economic growth and rampant unemployment – are driven by the price of crude oil, according to Oyedele,

Nigeria has the largest economy in Africa, although a substantial portion of the country’s GDP is dependent on the sale of oil and commodities. A global dip in oil and commodity prices in recent years dealt a significant blow to the Nigerian economy, although some stability appears to have returned in the last two years.

Accordingly, the revenue collection levels also dipped in years following the crisis in 2014, and have since increased following stabilisation. Further evidence can be found in the revenue collections from 2012, when oil prices were at a considerable high, and revenue collections reached a record high as well.

Oyedele has previously offered his take on the discrepancies between expected revenue levels each year and the real collections, arguing that the main cause behind tax defaults is the complexity of the tax paying processes. Digitalisation of these processes, according to Oyedele, is crucial to alter this scenario