High taxation hinders SMEs’ contribution to economy –ACCA

The expected sterling contribution which Small and Medium Enterprises, SMEs, should be contributing to the Nigerian economy is currently being hindered by the imposition of high taxations on small businesses.

The global body for professional accountants offering the Chartered Certified Accountant qualification, Association of Chartered Certified Accountants (ACCA), stated this during a workshop for small businesses held in Lagos.

The President, ACCA, Mr. Martin Turner, in his paper ‘Understanding the Leaders of the Recovery’ said SME sector has been recognised as the driving force in helping to return the economy back to health.

Turner said as the big corporate companies have become victims of the global financial crisis, SMes have come through, and thrived, in the face of adversity.

“But it has not all been plainsailing for you, due mainly to the tax challenges you face in this country as small and mediumsized businesses,” he said.

According to him, starting up any business, and ensuring it runs smoothly thereafter, is a financial challenge in any scenario.

“The taxation of investing in SMEs here, as well as the actual day-to-day running of things, is making it more difficult for you to help the economy. There are reasons for the tax -a regulation, as I am sure you are aware of taxation of small businesses has been implemented to regulate and ensure reputability in these testing times.

“The costs of these taxes are, of course, an extra strain on you, particularly when you first start up. This is where accountants come into play, as I will tell you about a bit later on,” he said.

Turner said on the other hand, there had been discount initiatives for incentives to potential investors such as tax holidays and capital allowances which reduced annual taxes by up to two-thirds in various industries, stressing those non-petroleum businesses also had a low corporation tax rate of 30 per cent.

While noting that it is not just tax and competition which create challenges for SMEs, Tuner said they also faced the cautiousness of the banks to lend money, as a direct result of the financial crisis.

“Access to finance is a big issue, especially for start-up businesses, because banks are now too afraid to take the “risk” of lending money to them, because of the uncertain future,” he said.

Stating that a recent report by at the ACCA Global Forum for SMEs, urged governments to take greater policy action to help SMEs access finance, Turner said similarly, “A report we published last year called High-growth SMEs: understanding the leaders of recovery concludes that the success of SMEs comes, in part, from hiring an accountant to advise them on their financial matters.”

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