Nigeria’s tax authority, FIRS is building networks to track tax evader
Nigeria’s tax authority, FIRS is building network to track tax fraud
To be able to achieve its 2020 revenue target of N8.5 trillion, Nigeria’s tax authority, the Federal Inland Revenue Service (FIRS) has launched a national intelligence gathering system to gather data and track all tax evaders and defaulters, with a view to bringing them all to book and make them pay their fair share of taxes to the country.
Last year, the FIRS targeted N8.8 trillion but was able to achieve a little above N5 trillion, a performance that irked the Federal Government and contributed to the sack of Mr. Tunde Fowler last December.
The new Executive Chairman of the tax body, Mr. Muhammad Nami, who was appointed last December is making efforts to avoid similar fate as that of Fowler.
Nami revealed on Wednesday in Abuja during an inter-agency collaborative visit to the Chairman, Independent Corrupt Practices and Other Related Offences Commission (ICPC), Prof. Bolaji Owansanoye, that FIRS is gathering intelligence to nail tax evaders.
Also, Mr. Nami has said that the Service is restructuring and revamping its system to enable it meet and even surpass its 2020 revenue target. Mr. Nami stated this when he played host to a delegation from the Ministry of Police Affairs at the FIRS headquarters in Abuja. Permanent Secretary, Ministry of Police Affairs, Mazi Nnamdi Maurice Mbaeri, led the ministry’s delegation, according to a statement made available to the media in Abuja by Director, Communications and Liaison Department, FIRS, Abdullahi Ismaila Ahmad.
According to Nami, the intelligence gathering system is information and communication technology (ICT)-based and is being implemented in close collaboration with the ICPC and other anti-corruption agencies as well as financial institutions to tackle economy-based crimes, including money laundering.
Nami said: “The ICPC is our critical stakeholder. We are improving our collaboration with the ICPC to track tax fraud and block all revenue leakages to ensure that we raise the revenue for the government of Nigeria to fund its budget. We need the data and intelligence which you have to help us track tax evaders and bring them into the tax net”.
Responding, Prof. Owasanoye said the ICPC was open to share data with the FIRS to track tax evaders, defaulters and tackle illicit financial flow in Nigeria to raise the revenue profile of the government.
His words: “The collaboration between the FIRS and the ICPC is very important to Nigeria. One of the cardinal objectives of this Board of the ICPC is to widen the tax net. When we come across any company that is not tax compliant, we refer such companies to the FIRS. We have referred over 500 companies to FIRS. We want them to be captured in the tax net so that they continue to pay their taxes.”
Mbaeri congratulated Nami on his appointment as the Executive Chairman of FIRS and Chairman Joint Tax Board, saying it was well deserved.
Nami told the Ministry’s delegates: “Last week, the FIRS held its Management Retreat where we shared our vision and planned for the year so that together, we would be able to generate higher revenue for the government.”
Nami stated that the FIRS Board had approved several reform projects, which the Management of FIRS tabled before it, noting that repositioning the Service is being anchored on four cardinal pillars, namely, “rebuilding FIRS’ institutional framework, robust collaboration with stakeholders, building a customer (Taxpayer)-centric and data-centric institution.”
The Federal Inland Revenue Service (FIRS) has said it will soon begin a nationwide tax enforcement at the expiration of a seven-day grace to defaulters to pay their tax liabilities.
The notice, which quoted the acting Executive Chairman of the FIRS, Abiodun Aina, was contained in a statement signed by the Head of Communication, FIRS, Wahab Gbadamosi.
The statement quoted Aina, as saying that the service had concluded plans to begin tax enforcement against defaulters if they continued to fail in fulfilling their tax obligations.
He therefore advised tax defaulters to settle their tax liabilities within seven days of the publication of the notice to avoid any inconveniences or interruptions in their operations.
It stated: “The FIRS hereby informs all taxpayers (individuals, partnerships, enterprises, corporate organisations, Ministries, Departments and Agencies) who are in default of payment of taxes arising from self-assessment, tax audit, tax investigation, transfer pricing audit, demand notices and any other liabilities, that the FIRS will commence a nationwide tax enforcement exercise from December 18, with a view to prosecuting defaulters and recovering all outstanding tax liabilities.”
The enforcement, according to Aina, was pursuant to the provisions of Sections 8, 26 (2), 33 and 35 of the Federal Inland Revenue Service (Establishment Act, 2007).
The statement also indicated that the taxes covered by the enforcement were Petroleum Profits Tax, Companies Income Tax, Value Added Tax, Withholding Tax, Tertiary Education Tax, NITDA Levy, Stamp Duty and Capital Gains Tax.
“All taxpayers are therefore strongly advised to settle their tax liabilities within seven days of the notice to avoid any inconveniences or interruptions in your operations,” Aina stated.
But Nigerians have reacted angrily to a move by the government to increase Value Added Tax, or VAT, from 5% to 7.2%.
Nigerians angry as govt. increases consumption tax
After months of testing the waters, the Nigerian government has declared about 50 percent increase in Value Added Tax (VAT).
Nigerian residents will now pay 7.2 percent of the cost of items against the 5 percent en-force before.
The tax authority, Federal Inland Revenue Service has justified increase in VAT, stating that Nigeria paid the lowest VAT rate in the world.
But Nigerians have reacted angrily to a move by the government to increase Value Added Tax, or VAT, from 5% to 7.2%.
Opposition party, the Peoples Democratic Party (PDP) in a statement on Friday called the government insensitive while many have taken to social media to vent their frustration. Some have said that, with the already difficult economic situation in the country, the tax increase will only make things worse.
At the opening of African Tax Administration Forum (ATAF) Technical Workshop on VAT recently in Abuja, Fowler noted: “I know there will be a backlash but I believe that an economy like Nigeria should pay more than five percent VAT”, he said.
Fowler said many countries had identified Nigeria as a big market and many of them were doing online businesses, adding that there was the need to tap the potentials to generate more revenue for the country.
He, however, said that the date of commencement of the VAT on online transactions would be subject to the government’s approval.
“We have thrown it out to Nigerians. Effective from January 2020, we will ask banks to charge VAT on online transactions, both domestic and international.
“VAT remains the cash cow in most African countries, with an average VAT-to-total tax revenue rate of 31 percent. This is higher than the Organisation for Economic Cooperation and Development’s average of 20 percent.
“This statistics, therefore, is a validation of the need for us to streamline the administration of this tax with the full knowledge of its potential contributions to national budgets.
“It is, however, also bearing in mind the rights of our taxpayers,” he said.
He said in Nigeria, VAT is critical to the development of projects at all levels of government.
“VAT revenue is shared 15 percent to the Federal Government, 50 percent to state governments and 35 percent to local governments.
“FIRS wrote to all commercial banks in May 2018, requesting for a list of companies, partnerships and enterprises with a banking turnover of N1 billion and above.
“This activity is aimed at ascertaining those companies that are compliant with the tax laws and those that are not,” he said.
Mr Fowler, who is also the chairman of ATAF, said the African tax outlook gave some starting points on the questions to ask regarding some aspects of VAT.
“Why does VAT contribute 51 percent to total tax revenue in Senegal but only 17 percent in Nigeria? Why is the ratio on VAT refunds at 49 percent in Zambia but only one percent in The Gambia?” he queried.
Mr Fowler charged participants at the workshop to find answers to the questions and address the gaps in some countries to improve VAT collection.
The Executive Secretary of ATAF, Logan Wort, said the establishment of the ATAF VAT Technical Committee in 2017 had given rise to various debates aimed at giving better policy options for countries.
Wort explained that this would enable member-states to share ideas and techniques on how best to administer, design and audit VAT.
The Executive Chairman, FIRS Tunde Fowler in a handshake with Chairman of Technical Committee, Amb Adeyemi Dipeolu
Nigeria begins work on implementation of National Tax Policy
Nigeria’s Federal Government has inaugurated a team of tax and economy experts charged with the responsibility for implementation of the National Tax Policy has been inaugurated in Abuja on Tuesday.
This is in line with the Federal Government’s determination to reform Nigeria’s tax system towards effective economic growth, a statement from the Federal Inland Revenue Service (FIRS) added.
Chairman of the Committee who is also the Executive Chairman of the Federal Inland Revenue Service (FIRS) and Chairman of the Joint Tax Board (JTB), Tunde Fowler also inaugurated a Technical Tax Policy Drafting Committee which began a workshop on National Tax Policy Implementation same day.
Fowler said he inaugurated the Technical Tax Policy Drafting Committee same day following the importance and urgency of its assignment to national economy.
Fowler charged the Technical Committee to work harmoniously and assiduously in order come up, within a few weeks, with a tax policy document that will address achieving sustainability in revenue generation, identifying new and enhancing the enforcement of existing revenue streams and achieving cohesion in the revenue ecosystem.
Fowler said: “To support work of the reconstituted National Tax Policy Implementation Committee (NTPIC) Imam inaugurating a Technical Tax Policy Drafting Committee comprising. I am charging the Chairman and members of the Technical Committee with the responsibility of accelerating the drafting and submission of a draft Finance Bill (and if deemed necessary, any draft Executive Order (s), to harmonise the various tax and excise law reform efforts. It is our expectation that the Technical Committee will work assiduously over the next few weeks to produce a singular set of fiscal measures that will be considered and approved by the reconstituted NTPIC. Once agreed, these fiscal measures are to be submitted to the Economic Management Team and the Federal Executive Council for approval and ultimate transmission to the National Assembly, for passage into law as part of the efforts to support the 2020 Executive Budget Proposal”, he said.
The Chairman of the Technical Committee, Ambassador Adeyemi Dipeolu said he understood the magnitude of the assignment given to him and his committee members and promised that they would work hard to achieve a good result.
“The meeting of the Technical Tax Policy Drafting Committee will be convened immediately after this inauguration. We understand the challenges facing the economy and we will work together to produced draft tax policy document that will address the challenges”, he said.
Foreign tax stakeholders in Nigeria such as the International Monetary Fund (IMF), Department for International Development (DFID) were represented at the event. They commended the initiative and offered some insight towards achieving the project.
Country representative of the IMF Mr. Amine Mati, said reform of Nigeria’s tax system is number one in the IMF’s blueprint on Nigeria’s economy.
“I welcome the initiative of the Committee. It is our number one priority in the economic growth plan for Nigeria”, he said.
Mati suggested that the Committee should look into Value Added Tax (VAT) laws and also ways to further improve non-oil revenue for the country.
Head of DFID’s Economic Development for Nigeria, Richard Ough said he felt emotional about the need for reform of Nigeria’s tax system to accelerate economic development, saying “This is absolutely fundamental to Nigeria’s development”.
Other members of the NTPIC include: Comptroller-General, Nigeria Customs Service (Deputy Chairman); The Permanent Secretary (Finance) from Federal Ministry of Finance; Permanent Secretary (Special Duties); Permanent Secretary and Solicitor-General of the Federation, Federal Ministry of Justice; The Director-General of the Budget Office of the Federation; The Director-General of the Debt Management Office; The Director-General of the Securities and Exchange Commission; The Statistician-General of the National Bureau of Statistics; The Executive Secretary of Nigeria Investment Promotion Council; The Executive Secretary of the JTB; The Deputy Comptroller-General of Customs and the Director (Legal) Federal Ministry of Finance.
There has been an on-going effort on tax reforms. In May 2018, former Finance Minister, Kemi Adeosun submitted a Memorandum to the Executive Council seeking approval to the National Tax Policy Implementation Committee Report on Tax Law Reforms. The Former’s Minister’s memo sought the Cabinet’s approval to: 2 distinct Executive Orders namely: the VAT (Modification) Order and review to Goods liable to Excise Duties and Application Rate on Sin taxes; Five separate amendment bills covering Companies Income Tax, Personal Income Tax, Value Added Tax, Individual Development (income and tax relief), Act, and Customs, Excises and Tariffs as well as amendments to the Stamp Duties and associated Gas reinjection Act.
L-R: Executive Chairman of Nigeria’s top tax authority, Tunde Fowler and Governor of Lagos State, Babajide Sanwo-Olu at the TIN flag-off in Lagos. Source/FIRS
Nigeria’s South-West pays 50% of whole country’s bills, says tax chief
South-West region of Nigeria have six states: Lagos, Ogun, Oyo, Ekiti, Osun and Ondo contribute more than 45.6 percent of total internally generated revenue of the country in 2018, Executive Chairman of Nigeria’s top tax authority, FIRS, Tunde Fowler, has said.
Nigeria has six geopolitical regions with 36 states and the Federal Capital Territory (FCT) in Abuja altogether.
In the South-West, Lagos States has the largest stake in terms of business activities and consequent revenue generation. In 2017, data from the tax authority say Lagos alone contributed 50% of the country’s revenue.
Fowler made this remarks in Lagos on Thursday at the South-West regional flag off ceremony of the new TIN registration system and its consolidated database of individual and corporate taxpayers’.
Governor Babajide Sanwo-Olu of Lagos State was at the event and he said the introduction of the new Taxpayer Identification Number (TIN) registration system and its consolidated database marked a new regime in tax compliance and administration. He also called on stakeholders across all levels to support the new initiative in order to deepen tax administration and increase tax revenue collection.
Fowler, who is also the Chairman, Joint Tax Board (JTB), said the said that the economic profile of Lagos State was humongous and that the effect of these economy activities could be felt across the entire South West and the country in general.
“At 45.6%, the South West Geopolitical Zone is the largest contributor to total IGR collection at the sub-national level for the year 2018. This is a trend that has been consistent over the years, and with the vibrancy of economic and commercial activity in the Zone, it holds immense potential which can only be unlocked by a systematic approach to revenue generation.
“The fact of Lagos State being the economic nerve-centre of the nation is not in dispute. Touted as the fifth largest economy in Africa, Lagos is home to the Apapa Port and the Tin-Can Port.
“It is also the hub of the nation’s aviation industry and the nerve centre of the nation’s manufacturing and financial sector, with thousands of manufacturing companies and hundreds of financial institutions having their operational headquarters within its boundaries.
“In simple terms, the economic profile of Lagos is humongous, and the effect of its economic activities can be felt across the entire South-West Geo-political Zone and the nation as a whole,’’ Fowler explained.
Fowler said Lagos State continued to carve a positive niche for itself in terms of innovation and dynamism in tax administration and that the neighboring states within the region were towing similar paths of tax reform.
He noted that the new system would consolidate the efficiency and effectiveness of the tax administration process in region and the entire country.
Fowler added that: “This new reality drives the desire by the JTB to ensure that the identification of individuals and corporate bodies for tax purposes in Nigeria is achievable.
“It is not only important that these records are available, it is equally important that the records are credible and reliable and that they are accessible under a secure environment, online real-time.”
He said the country had in the last four years have seen a number of modest milestones in tax-revenue administration to include expansion of the tax base from 10 million to 20 million taxpayers with the potential for an increase of up to 45 million before the end of the third quarter of 2019 and growth in the IGR of states by 46.11 per cent from N800.02 billion in 2016 to N1.16 trillion in 2018
Also, growth in FIRS collections by 53.81 per cent from N3.30 trillion in 2016 to N5.32 trillion in 2018; with the 2018 total collection of N5.32 trillion being the highest collection ever in the history of FIRS, while Non-Oil Revenue, with a collection of N2.85 trillion accounted for 54 per cent of total revenue collection
A positive movement during the same period by Nigeria moving up 25 points in the Tax Administration Section of World Bank ‘Ease of Doing Business’; it is expected that the country would further move up the rankings by the time the review for 2019 is published among others.
He commended stakeholders including Corporate Affairs Commission (CAC), Nigeria Customs Service (NCS), Nigeria Immigration Service (NIS), Federal Road Safety Commission (FRSC), Central Bank of Nigeria (CBN) and the Nigeria Inter-Bank Settlement System (NIBSS), Nigeria Identity Management Commission (NIMC), Nigerian Communications Commission (NCC) among others for their support.
According to the Governor, “The demand for higher quality of governance and citizens everywhere in the world are seeking to interface with their governments in order to fulfil their obligations in an easier and efficient manner.
“Technology is the way to do this. Leveraging on technology to drive change at our various economic activities,” he said.
Sanwo-Olu commended the Federal Inland Revenue Service (FIRS), National Identity Management Commission (NIMC), SBIRs and various technology providers for putting all of this together.
According to him, this initiative should be communicated as widely as possible in order to have the highest number of taxpayers taking advantage of this initiative.
Earlier, the Executive Secretary of JTB, Mr. Oseni Elamah (mni) said the dynamics of change in Information and Communications Technology (ICT) made it imperative that domestic tax-revenue administration meet up to the emerging trends.
He said the new TIN Registration System and its consolidated database of individual and corporate taxpayers’ have been designed to form the foundation upon which the nation’s automated tax administration system was built.
“The new System is a web-based solution that offers access to authorized users to initiate TIN request from the comfort of their homes/offices real-time online, verify their tax status and print their TIN certificate.
“It is a transparent system that assures timely and accurate collection and recording of basic identification data. It also permits the tax administrator to understand its taxpayer base for effective revenue projections and other planning activities.
“By leveraging on existing data from relevant identity management agencies, the new system reduces the burden of multiple registration of taxpayers as well as promoting the ease of doing business and paying taxes.
“It also ensures seamless integration and exchange of information amongst the various tax authorities within and outside Nigeria, as well as with other authorized stakeholders via web service. The new system is innovative, inspires confidence and provides transparency’’, he explained.
Nigeria’s tax system is weak, aids Illicit Financial Flow, says Oxfam
Nigeria’s tax system is fraught with crippling challenges of weak enforcement, corruption, and outright evasion. This is costing the country losses amounting to billions of naira, both locally and internationally, said Oxfam, an international development organisation.
Oxfam also said about 30 per cent of companies in Nigeria are involved in tax evasion. It said records from the country’s Federal Inland Revenue Service (FIRS), showed that 25 per cent of registered companies in Nigeria do not pay tax.
On the global level, Nigeria loses N580 billion through unnecessary tax incentives annually, a 2015 report by the United Nations Organisation said.
The 2017 Oxfam Inequality Index showed that the Nigerian tax system is largely regressive, with the burden of taxation falling on poorer companies and individuals.
Meanwhile, big multinationals receive questionable tax waivers and tax holidays, making use of loopholes in the tax laws to shift huge profits generated in the country to low tax jurisdictions, the report noted.
Oxfam’s Country Director, Constant Tchona, on Wednesday called on the National Assembly to enact a law that will punish enablers of tax evasion to face fines of up to 100 per cent of the sum evaded.
Mr Tchona made the call at the public presentation of the “Fair Tax Monitor Index Report and the Commitment to Reducing Inequality Index Report” in Abuja.
“The National Assembly should enact a law that will criminalise the actions of banks, auditors, accountants, and lawyers that facilitates illicit financial flows,” the official said.
“When such professionals act contrary to existing regulations, they should be held accountable in Nigeria. This can be enforced through strengthened professional association bodies.
“There is also need for the Nigerian government to fast-forward action on the new National Tax Policy and clamp down on corporate crimes. New legislation and rules to cope with current realities should be enacted along with the introduction to cutting-edge technology.”
Mr Tchona recommended that the government should make tax laws gender-friendly and equitable to women “as they are the drivers of micro and small businesses in Nigeria.
He said Value Added Tax (VAT) could be made less regressive by applying different rates on luxury goods and service items, noting that this would reduce wealth inequality in Nigeria.
“VAT exemption for building materials will have a direct positive bearing on middle and poor class segments of the population and make rent cheaper, thereby reducing housing deficit.
“It is also important to increase the direct tax net rather than the increasing burden of indirect taxes like VAT. Establishing a more progressive tax system will make it possible for the government to deliver on essential public services like education, health, and social protection, among others.”
The Country Director, PLAN International, Hussiein Abdul, in his remark said inequality is the root cause of poverty because it allows a segment of the society to accumulate so much wealth at the expense of the majority.
“We can’t have a conversation about the development of the country without talking about inequality. We need to come to the reality that inequality is bad for development. Tax is not only about income for government but it is one of the best ways to address inequality.”
According to the Oxfam Commitment to Reducing Inequality (CRI) Index, governments in West Africa are the least committed to reducing inequality on the continent.
Cacophony of Tax evasion in Africa
PREMIUM TIMES in 2014 reported how the bulk of Africa’s losses to illicit financial flows annually were through various schemes by multinational companies to evade and avoid the payment of corporate tax in their areas of operations.
The 2015 Oxfam index said Nigeria, Ghana and Senegal had a combined loss of over $5.8 billion every year. The report further showed that tax incentives were not the priority for investors but infrastructure, education and the quality of the workforce.
About $138 billion is given away annually by governments in developing countries in corporate income tax exemptions, findings by the African Union high-level panel on illicit financial flows showed. PT
African countries should not politicise tax administration, says AFoDeC . In Picture, Tunde Fowler, Chairman, African Tax Administration Forum (ATAF) and Executive Chairman, FIRS
Africa can’t afford to politicise tax administration, says AFoDeC
With the current realities in the economy of most African countries, the African Foundation for Development Communication (AFoDeC) has urged countries in Africa to pay more attention to tax revenue than relying on grants or depletable oil revenue sources.
The Executive Secretary of AFoDeC, Ikenna Osu told newsmen in Abuja that for Africa to get taxation right, “they must not play politics with tax administration because taxation is never an all comers affair”.
He said that oil prices are not sustainable and foreign donors are attaching inhuman conditions to lending money to developing economies.
“The truth is that oil prices are not sustainable. Today, you see it rise, the following day, you see it fall. You cannot plan with it. Foreign donors are giving you with one hand and expecting more from you from the other hand. So, we need to fall back on taxation.
“Africa needs to develop her tax system like we have in other continents where taxation is done with the help of data and technology. In developed economies, they make it impossible for you to evade taxes because your information is in the system. We should encourage that in Africa. For instance, in Nigeria, they are making innovations, capturing new taxpayers and those are steps in the right direction. I have listened to the Executive Chairman of the Federal Inland Revenue Service (FIRS), Tunde Fowler and matched it with current trends in taxation and I feel that if we see that somebody is doing the right thing, the best we could do is to encourage that person and not necessarily trying to play politics with issues of the economy”, he said.
AFoDeC, which is an International Non-Governmental Organisation (INGO) noted that currently, the oil jumped more than 3% to above $63 a barrel on Thursday after Iran shot down a military drone belonging to the United States of America (USA) but noted that such sharp increase may not be sustained because of a “push and pull factors”
“For instance, oil jumped more than 3% to above $63 a barrel on Thursday. This is in reaction to Iran shooting down a U.S. military drone. This is already raising fears of a military confrontation between Tehran and Washington. Eventually, this could lead to the fall of the oil in the near future. It is a push and pull thing.
South African President Cyril Ramaphosa has signed into a carbon tax bill into law
Greenhouse effect: South Africa introduces carbon tax, June 1
Days after his inauguration, South African President Cyril Ramaphosa has signed into a carbon tax bill into law to cut emissions in the continent’s worst polluter.
The tax, described as a rare step for an emerging economy, will be levied from June 1 on greenhouse gases from fuel combustion and industrial processes and emissions, the treasury said on Monday, drawing cautious praise from environmentalists.
“Climate change represents one of the biggest challenges facing humankind, and the primary objective of the carbon tax is to reduce greenhouse gas emissions in a sustainable, cost-effective and affordable manner,” the treasury said in a statement.
The tax was first planned in 2010, but has been delayed due to opposition in a country struggling with low growth and unemployment at nearly 28 percent.
“President Cyril Ramaphosa has communicated the urgent need for action around the climate crisis,” WWF said in a statement, describing it as a landmark moment for South Africa.
“While there is still much to be done for the tax to become more effective, we recognise this is a significant first step.”
The ministry said the tax was part of South Africa’s efforts to meet the global climate change agreement negotiated in Paris in 2015.
Set at 120 rand ($8.30) per tonne of carbon dioxide, the tax will be largely offset by allowances to lower it to an effective rate of between six and 46 rand per tonne in the first three years.
South Africa – which relies largely on coal for its energy supply – is the 14th largest polluter in the world and the largest in Africa, according to Greenpeace.
“We definitely welcome this. It is very, very overdue,” said Melisse Steele, senior campaign manager at Greenpeace.
“It is a major step, but Greenpeace has expressed our concern that we don’t think that the carbon tax will be effective enough and the tax level is inadequate.”
The tax is set to rise at two percent above inflation, currently at 4.5 percent, until 2022 and in line with inflation afterwards.
Tunde Fowler has said Nigeria to return embargo on tax defaulters’ bank accounts after 30 days
Nigeria to return embargo on tax defaulters’ bank accounts after 30 days
Tax authority in Nigeria, the Federal Inland Revenue Service (FIRS) has said defaulting taxpayers who have no Taxpayer Identification Number (TIN) or those who have and are not paying their taxes with a turnover of N100 Million in their accounts, have only a 30-day reprieve before lien on their accounts will be returned.
The Executive Chairman FIRS, Tunde Fowler, who said this today in Lagos in a meeting with Manufacturers Association of Nigeria (MAN), disclosed that 59, 000 companies who charge Value Added Tax (VAT) and sometimes Withholding Tax (WHT) do not have TIN to remit the VAT or WHT taxes they charge to the FIRS.
Fowler said the banks will return the lien on tax defaulters’ bank accounts after the 30 days grace period. The lien was lifted last Friday 15th February 2019.
Fowler said to ensure tax justice, protect all taxpayers and also ensure that monies deducted from taxpayers in form of VAT or WHT by business owners are properly accounted for and paid into the right treasury, FIRS had to fall back on ordering restriction of defaulters’ bank accounts.
“Initially, the FIRS did not like to be telling all the stories. But now, with calls for clarification, we have to clarify this. I had a meeting with stakeholders last year where we identified, through records from the banks- that some operators who make a turn-over of between N100 million (One Hundred Million Naira) and N1 billion (One Billion Naira), do not have Taxpayer Identification Numbers. But in the course of their businesses, they charge VAT and perhaps WHT. If these companies do not have TIN, it means that they are not paying their taxes and at the same time, they are not remitting the VAT and WHT they charge on taxpayers to appropriate authority, in this case FIRS.
“But sincerely, it is wrong for any company to deduct monies meant for the government and fail to remit them. Then we said, if these people don’t come forward to get TIN and pay appropriate taxes, we will freeze their bank accounts”, Fowler said.
At a stakeholders’ event late last year, Fowler carped about businesses who are doing well in Nigeria but are not fulfilling their civic obligations: “Tax payment is not only for civil servants or salary income earners alone. Millionaires and billionaires, who make income from this economy need to pay taxes. It is not fair for any business or any person who makes an income from this economy not to pay taxes, while others pay.
“Each of us must contribute to the national till. If any taxpayer has the opportunity to make their wealth in this economy, the least they can do is to pay their tax.”
The Executive Chairman also explained that following turn-up of taxpayers to clear their arrears, the FIRS wrote to the banks to lift lien on bank accounts temporarily for a period of 30 day.
“In the last two weeks, the FIRS office was always besieged by taxpayers who want to clear their arrears. It came to a point we could not attend to all of them at the appropriate time. That is why we sent letters to banks to lift the lien for 30 days to enable taxpayers regularise their accounts.”
The FIRS Executive Chairman assured taxpayers that FIRS’ online solutions have put to rest issues associated with delays in receiving notifications after there are transaction on taxpayers’ accounts.
“Just register your company with your e-mails and phone numbers. Once payment is made on your account, you will get a notification immediately. You can go ahead and download and print the notification for presentation before your Tax Clearance Certificates are ready,” Fowler said.
Some of the initiatives the Service is adopting to improve VAT compliance to include: Auto VAT collect, e-Services, VAT certificates, Central VAT filing, VAT coordination, Tax Audit and Investigation, Joint Tax Force, Taxpayer Education and SAG Platform (State Accountant General Platform), the FIRS Chairman said.
FIRS, Fowler promised, would honour proof of WHT deduction by any government agency.
On behalf of the Service, Fowler apologised to the taxpayers whose accounts were frozen in error in the recent exercise. “We also admit that there was an administrative error and some taxpayers’ accounts were frozen in error. We have expressed our apologies to the affected people. On behalf of the Service, I would like to apologise to them again,” he said.
The President, MAN, Engr. Masur Ahmed, on behalf of the association thanked the FIRS for always giving a listening ear to their demands, requesting that the Federal Government may review VAT charges on animal feed.
“It is important that Nigeria should take a cue from other countries who have zero per cent VAT rate on animal feed. The Federal Government should sign an Executive Order and gazette that animal feed should be VAT exempt in Nigeria. This will go a long way to stabilising the economy because VAT charges on animal feed has adverse multiplier effect on the cost of production,” Ahmed said.
VAT revenue disbursed thus: 15% to Federal Government, 50% to State Government and 35% to Local Government, is critical to development projects at all levels of government. The VAT regime in Nigeria has a rate of 5%, while there are zero rated and VAT exempted goods and services.
Section 31 (1-5) of the FIRS Establishment Act empowers FIRS to appoint banks or any taxable person as a collection agent
(1) The Service may by notice in writing appoint any person to be the agent of a taxable person if the circumstances provided in sub section (2) of this section make it expedient to do so. Section 2 says that: “The agent appointed under sub section (1) of this section may be required to pay any tax payable by the taxable person from money which may be held by the agent of the taxable person.
On the other hand, Section 49 of CITA further empowers FIRS to take all the steps we have taken with respect to recovery of tax debts from billionaire and millionaire tax defaulters.
From L-R Executive Chairman Federal Inland Revenue Service. Tunde Fowler in a handshake with Inspector General of Police Muhammad Abubakar Adamu
Nigeria’s tax agency is going after 85,000 millionaire tax defaulters
The Executive Chairman, Federal Inland Revenue Service (FIRS), Tunde Fowler has said that the Service, in collaboration with other stakeholders like the Nigeria Police Force, will continue to go after wealthy tax defaulters in 2019.
Fowler, who said this on Thursday in Abuja when the Acting Inspector-General of Police, Mohammed Abubakar Adamu paid a courtesy visit to the Revenue House also disclosed that the Service had realized the sum of N23 billion for its closer look at the books of over 45, 000 tax defaulters, each of which had over N 100 million as turnover in their accounts.
The Service, he said is going after another set of 40, 000 millionaire tax defaulters in 2019.
He requested the Nigeria Police to help the Service bring the tax defaulters to pay their taxes.
Earlier at the Management retreat at Eko hotels in Lagos, last month, Fowler spoke of FIRS’s plan to identify and tax bank account holders with over 100 million as turnover but with no evidence of tax payment: “We looked at businesses, partnerships of any activity that has banking turnover between N100 million and N999 million. We have done the review of this group of businesses. We have about seven more banks that we are still waiting for return from and to review their information. So far, we have 45,361 that have TIN and are making payments.
“We have 40,611 that have TIN, that made tax payment and, and we have 44,504 that have no TIN and no pay. So, when you look at it from a glance, we have close to 75,000 in this group that are still not taxpayers and we have said the payment of tax is not only for the civil servants. it’s for all Nigerians. So, the millionaires and the billionaires will pay tax on behalf of what is due to the national coffers”, Fowler said.
On Thursday, he added that FIRS had identified 45, 000 millionaire tax evaders last year, 2018 and recovered the sum of N23 billion through substitution of their bank accounts.
Fowler thanked the Nigerian Police Force for its support and collaboration over the years which he said has helped FIRS to achieve its target and requested for more support to enable it recover due taxes from more 40, 000 rich tax evaders in 2019.
“Let me put on record that the Nigeria Police Force has been extremely helpful to FIRS. Without the Police, I doubt that the Service would have been able to achieve what we have achieved. 2018 was a successful year. The FIRS collected a total of N5.320 trillion of tax revenue. This is the highest revenue collection in the history of FIRS”, he said.
This is significant given that this collection was when oil prices oscillated between $50 and $70 per barrel. Oil price was at an average of $100 to $120 per barrel between 2012 when FIRS collected N5.07 trillion. Oil component of the N5.320 trillion is N2.467 trillion (46.38 percent), while non-oil element of the collection is N2.852 trillion (53.62 per cent)
The Police IG, Adamu said that the Police will continue to support the FIRS because the job of revenue generation is critical to the survival of the nation.
“We feel that the work you do is one of the most important for the survival of the country. And you need to be supported from all angles so that you achieve what you want to achieve to the benefit of every Nigerian. We will continue to work with you to improve security so that people would do their businesses here, make profits and pay their taxes. We believe that with the new Management team of the Nigeria Police Force, which is adopting Community Policing, we would be able to improve security”, the IG said.
The FIRS Chairman said the Service has been steadily increasing revenue collection over the years with reduced cost of collection.
“In 2016 collected N3,307 trillion, in 2017 we collected N4,027 trillion and in 2018 we collected N5,320 trillion. Meanwhile, the cost of collection as a percentage of actual taxes collected has been reducing; in 2016 it was 2.6%, in 2017 it was 2.49% while in 2018 it was 2.14%.”
“The Service has been making tremendous efforts in also increasing the amount of non-oil revenue it collects. Non-oil collection has contributed 64.99% in 2016, in 2017 it contributed 62.25% and in 2018 it contributed 53.62%. This represents the government’s focus on increasing non-oil sources of revenue and the diversification of the Nigerian economy.
Fowler noted that various initiatives were implemented by FIRS to enhance tax administration and make taxation as easy as possible. FIRS deployed ICT initiatives that enable a taxpayer to pay taxes from anywhere in the world, at any time. With the e-payment channel one can pay taxes with the click of a button and one can also download their receipts. Other e-Services are the e-Registration, e-Filing, -Stamp Duty and e-Tax Clearance Certificate.
“Taxpayers can now also choose the tax office where they would like to conduct their tax transactions. Before now, if one was registered with a particular tax office, one had to conduct all of their tax transactions in that office. However, to make it more convenient for the taxpayer, they can now choose which ever office they wish to conduct their transactions with.
He noted that Nigerian taxpayers are embracing the modern way of tax collection, introduced by the FIRS through the 6-e Solutions.
Said Fowler: We are automating the collection of Value Added Tax, VAT in key sectors which will facilitate reduction in compliance cost in the long term. We are doing System to system integration between banks and FIRS. And I am happy to announce to you that we had a 31% increase year on year in VAT collection in the banks that have gone live between Jan 2017- Dec 2018 and collected 25bn so far
“Amongst others, there is also the Government Information Financial Management Information System (GIFMIS), which links FIRS to the Office of the Accountant General of the Federation OAGF for real-time exchange of information and data. We are also automating the payment of VAT by states through the State Offices of Accountant General Platform (SAG). This will ensure that we automate and deduct at source and remittance of VAT and WHT from State governments contract payments directly to FIRS’s account and so far, collected 13bn.
He noted that taxpayers that requested for and processed their Tax Clearance Certificate, TCC through tcc.firs.gov.ng, from the comfort of their homes. “Tax clearance on the platform grew from 9,574 – 59,350 within a year of introducing the platform.
“Auto VAT collection in key sectors has also facilitated in reducing the cost of compliance. Between January, 2017 and December, 2018 VAT collection increased by 31% which translates to a collection of N25 billion”, he added.
You must be logged in to post a comment.