The Federal Government of Nigeria
has announced a new initiative that is expected to generate
approximately N12
billion annually. The initiative involves the introduction of a Proof of
Ownership Certificate verification fee of N1,000 for motorists. The Permanent
Secretary of the Lagos Ministry of Transportation, Abdulhafiz Toriola, revealed
this information, highlighting the importance of the certificate in ensuring
the integrity of registered vehicles on the National Vehicle and Identification
Scheme database, as well as aiding in the tracking of car theft and recovery of
stolen vehicles.
Toriola explained that the Proof
of Ownership Certificate will serve as official documentation for a vehicle’s
legal ownership. The certificate will contain essential information, including
the vehicle’s registration details such as license plate number, model, year of
manufacture, as well as the owner’s name and address.
According to the National Bureau
of Statistics, as of Q2 2018, there were 11.76 million vehicles in Nigeria,
with a vehicle per population ratio of 0.06. Reports indicate that Nigeria
imports approximately 400,000 vehicles each year. In the first 10 months of
2021, a total of 192,287 vehicles were imported through the Ports &
Terminal Multipurpose Limited into the country, while only 114,159 vehicles
came through the same terminal in the corresponding period of 2022.
In light of the benefits of the
Proof of Ownership Certificate and the need to ensure safety and security, the
Joint Tax Board adopted a resolution during an emergency meeting on May 9,
2023. The resolution stated that proof of ownership should be issued to
motorists on an annual basis nationwide. While Lagos State has announced the
collection of POC fees from July onwards, other states are yet to confirm their
positions on the matter.
The introduction of this new fee
has elicited mixed reactions from the public. Taiwo Oyedele, the Fiscal Policy
Partner and Africa Tax Leader at PwC, expressed his concerns about the tax,
labeling it retrogressive, ill-conceived, and poorly designed. In a LinkedIn
post, he criticized the fee for adding complexity to the already burdensome
multiple tax system, which hinders business operations and dampens tax morale.
Oyedele suggested that the tax is primarily a revenue-generating measure that
benefits non-state actors more than the government itself.
He further argued that the timing
of this tax is inappropriate, given the recent removal of fuel subsidies.
Oyedele called for sensitivity and empathy, urging the government to refrain
from imposing new or higher taxes on transportation, energy, or food, as these
sectors have already been significantly impacted by the subsidy removal. He
also recommended reconsidering the recent attempt to collect VAT on diesel,
emphasizing the need to avoid setting a bad precedent and to prioritize good
order in tax policy.
Overall, the implementation of
the Proof of Ownership Certificate verification fee is expected to generate
substantial revenue for the Federal Government. However, it has sparked a
debate regarding its necessity, potential impact on businesses, and the broader
tax landscape in Nigeria.
