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Tag: FIRS

  • FIRS to impose VAT on online transactions, says Fowler

    The Federal Inland Revenue Service (FIRS) says it will soon begin collection of Value Added Tax (VAT) on online transactions.

    The Chairman of the agency, Mr Babatunde Fowler, made the disclosure in an interview with the News Agency of Nigeria (NAN) in New York on Saturday.

    Fowler said: “soon, we will ask banks to impose VAT on online transactions for purchases of goods and services.

    “Not that it is something new; it actually should be in existence.

    “We will certainly follow up to make sure that every VAT that is due to be collected is collected.”

    He explained that the move was part of measures by FIRS to meet its N8 trillion revenue target for 2019.

    Fowler said the agency had started taking action against companies and businesses that refused to embrace the Federal Government’s tax amnesty programme.

    Read also: Fowler, FIRS and more cash for Fed Govt

    According to him, FIRS hopes to generate between N750 billion and N1 trillion from the clampdown, which includes closure of defaulters’ bank accounts.

    “We are going after everybody. I am sure you have heard that we have placed lien on some accounts of defaulters that have a billion naira turnover annually.

    “So certainly, we are not leaving anyone out of the tax net,” he said.

    Officially known as the Voluntary Asset and Income Declaration Scheme, the tax amnesty programme was launched in 2017.

    It gave tax defaulters a one-year period of grace to declare and settle their unpaid taxes.

    There have been complaints by some taxpayers of being wrongly targeted by FIRS in the clampdown.

    Asked to comment on that, Fowler admitted, blaming it on “administrative error,” arising from the huge number of accounts involved.

    “Well, there is certainly one or two instances where we made administrative error, but when you are looking at over 50,000 accounts, there is a tendency that sometimes an error might be made.

    “For those that we made errors on, I wrote them personally apologising and of course we lifted the lien on their accounts.”

    On plans by the Joint Tax Board to raise the country’s tax population to 45 million, Fowler said the agency was relying on multiple information sources.

    These, according to him, include the country’s Bank Verification Number database and sister agencies with relevant information. (NAN)

  • FIRS Chairman commends Wale Adenuga’s ‘Knockout’

    EXECUTIVE Chairman of the Federal Inland Revenue Services, FIRS, Dr Babatunde Fowler, has commended the film, ‘Knockout.’

    Fowler said this when the management of Wale Adenuga Productions hosted him to a private screening of the movie at Genesis Deluxe Cinemas Lekki, Lagos.

    News of a boxing competition with a cash prize of  N1 billion  ($3m) hits the town and sends a group of people into a hilarious frenzy, as they devise mischievous means to participate. The clumsy boxer they choose and the crazy characters they meet along the way result in a myriad of mayhem and madness.

    “It’s a very interesting movie which shows the talents we have in Nigeria,” Dr Babatunde Fowler said.

    “When people think about movies, their minds go to the foreign movies, but this is certainly a first-class movie and I think it would be acceptable and watched all over the world.

    The movie which was released into the cinemas on Easter Friday featured Sola Sobowale, Hafeez “Saka” Oyetoro, Patience Ozokwor, Chiwetalu Agu, Toyin Abraham, Odunlade Adekola, Desmond Elliot, Ngozi Nwosu and Yaw. Others are Funky Mallam, Charles Okocha, Josh2funny, Akpan & Oduma, MC Lively and Princess among others.

    Wale Adenuga praised the FIRS boss’ work and support for the entertainment sector.

    “I am greatly impressed by the unprecedented performance of FIRS under Dr Babatunde Fowler,” said Adenuga.

    “He has contributed immensely in revenue generation for the provision of amenities and the overall betterment of the country. He has also been very supportive of the Nigerian entertainment industry thus creating jobs for millions of our youths and turning their dreams into reality.”

     

     

  • Mischief-makers and FIRS

    Sir: The social media was recently awash with wild insinuations about “widespread, massive sleaze” in the Federal Inland Revenue Service, FIRS. This was apparently based on unverified accounts by some online media platforms.

    A true picture however came following in-depth reports by leading national dailies detailing what really happened. The earlier impression created was that the financial malfeasance permeated the top echelon of the service. Humongous figure of “several billions of naira” was being bandied about.

    But we now learnt that it only involved a few junior and middle-level officials and that credit for ensuring that the erring workers answered the Economic and Financial Crimes Commission (EFCC) actually belongs to the management of the service.

    Again, the figure later authenticated to be involved was a far cry from the amount the social media had put in their screaming headlines. In anyway case, considering the massive scale of the service’s operation involving more than 300 outstation offices, it would have been humanly impossible for the organization to achieve zero-infraction.

    What really happened? Since the current management came on board three years ago, a lot of institutional mechanism has been put in place to plug leakages so much that the bad eggs increasingly began to find it difficult to game the system.

    Even at the management level, a murmur was beginning to grow that the “fat cats” no longer had discretion to incur expenses under the guise of maintenance. For instance, professionals are now engaged to maintain scores of outstation offices the service run across the country at a reasonable cost, far below the amount being spent in the past when such responsibilities were in the hands of the sitting administrative heads.

    The result was that some elements became desperately ingenious by filing bogus Duty Tour Allowance (DTA) claims for trips. Thanks to the automation of processes by the new management, it was discovered that, fairly on a regular basis over a period of time, the accused officials were collecting DTA for trips not embarked upon.

    It is therefore curious that the impression created initially by the social media platforms was to paint the management of the service black when it should be praised for ensuring that the erring officials were being made to cough out the money they had gamed from the system.

    Given the persistence of such false narrative in a section of the social media, there is no prize for guessing that some elements are out with a sinister agenda aimed at discrediting the service. Of course, the goal could only be to distract the management from sustaining ongoing reforms which has led to tax revenue almost being doubled within three years that the Muhammadu Buhari administration came on board, thereby enabling governments at the federal and state levels to deliver on their development agenda to the teeming populace.

    Rather than be demoralized, one can only hope that the board and management of the service will continue to keep their eyes on the ball in order to improve on the mileage already achieved.

     

    • Ibrahim Idrisu, Asokoro, Abuja. 

  • Kudos for Fowler over FIRS reforms

    Aseasoned economist and retired director in the federal civil service, Dr. Aina Iluyomade, has lauded the management of the Federal Inland Revenue Service (FIRS) led by Mr Tunde Fowler introducing reforms that have not only led to reduction in cost but has improved revenue generation to the Federal Government.

    He urged the Service to sustain the reforms in order to boost revenue and enable the government meet the 2019 budget expectations.

    Recent World Bank reports downplayed the economic prospects of Third World nations particularly mineral-dependent economies in this financial year.

    But speaking on the sidelines of a national workshop on the revenue and growth opportunities in the telecom sector, Iluyomade said steady increase in the nation’s tax revenue in the past three years is an indication that the economy is equipped to withstand whatever shock from the international commodity market.

    From the N3.3trillion in 2016 to N4trillion generated in 2017, the FIRS netted over N5.3trillion last year.

    Whereas contribution from oil tax averaged less than 40 per cent, non-oil taxes accounted for 60 per cent.

    Analysing the statistics, Iluyomade attributed the improvement in revenue generation to the adoption of modern infromation technology (IT) tools to drive operations even while introducing drastic measures to cut down on the costs of tax collections.

    “Whatever it is worth, one must appreciate the innovation made by Mr Fowler at the FIRS since he took over. At a time of economic contraction caused by a severe recession experienced by the country in 2015, it is a thing of a miracle that the service has been able to nearly double revenue in the past three years,” Iluyomade said.

    Sweeping reforms introduced at the FIRS include automation through the electronic tax pay solution, a self-service channel available on all commercial banks internet banking platforms aimed at complementing the existing manual method.

    The former top bureaucrat, whose autobiography will soon be presented, also cited aggressive cut-cutting measures in operations as a factor responsible for the steady increase.

    “My finding is that the cost of chasing revenue has been cut down drastically by Fowler. You know before he came on board, the practice was to release lump sum of money for hundreds of offices maintained by FIRS across the federation in the name of operations monthly.

    “What did they mean by operations? It is a cost the head of such branches have discretion over to buy diesel and petrol. But that still did not stop reports of inefficiency in such stations as some outstation officials were citing lack of diesel to power generators in the office and lack of fuel in their operational cars as the reason they were not meeting revenue target.

    “So, being a sensible man, what Fowler did was to first of all cut down that monthly impress before putting in place a system to completely eliminate such abuse and enhance cost efficiency. Before long, the FIRS management introduced a voucher system by which operational vehicles go to designated filling stations for petrol across the federation and sign off vouchers which are now submitted to FIRS for payment directly at the end of the month. Same thing was done to the supply of diesel. Before you knew it, the abuse stopped and productivity improved. Operation costs fell by more than 60 per cent.

    “The good news is that many of the tax board at the state level have started keying into the template set by FIRS to boost their own revenue.”

    Iluyomade’s forthcoming book which chronicles his thirty years odyssey in the federal civil service is due for public presentation soon.

     

     

  • Conundrum of banks as FIRS’ collecting agents

    Olisa Agbakoba Legal (OAL) Senior Associate/Practice Manager Ifeatu Medidem examines the legality of banks mandatory obligation as collecting agents for FIRS.

    The Federal Inland Revenue Service (FIRS) has intensified its drive to recover out-standing tax liabilities from tax payers in default of tax obligations.

    To this end, FIRS has been writing to tax payers’ bankers, appointing the banks agent of the banks’ customer, to collect outstanding tax liabilities from the tax payers’ bank account balance. This is referred to as tax substitution.

    FIRS bases its appointment of the banks as collecting agents on the provisions of Section 49 of the Companies Income Tax Act 2004, and Section 31 of the Federal Inland Revenue Service (Establishment) Act 2007.

    Section 31 of the Federal Inland Revenue Service (Establishment) Act 2007 provides:

    “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 makes it expedient to do so.

     The agent appointed under sub-section (1) of this section may be required to pay any tax payable by the taxable person from any money which may be held by the agent of the taxable person

    Where the agent referred to in subsection (2) of this sectiondefaults, the tax shall be recoverable from him.

    For the purposes of this section, the Service may require any person to give information as to any money, fund or other assets which may be held by him for, or of any money due from him to, any person.

    The provisions of this Act with respect to objections and appeals shall apply to any notice given under this section as if such notice werean assessment.”

    Section 49 of the Companies and Income Tax Act, 2007 also empowers the FIRS to collect tax due from companies and appoint agents to collect tax due from companies, thus:

    “The Board may by notice in writing appoint any person to be the agent of any company and the person so declared the agent shall be the agent of such company for the purposes of this Act, and may be required to pay any tax which is or will be payable by the company from any monies which may be held by him for or due by or to become due by him to the company whose agent he has been declared to be, and in default of such payment, the tax shall be recovered from him”.

    Typically, FIRS instructs the bank to set aside an amount equivalent to the tax payer’s outstanding tax liability, and remit same to FIRS.

    FIRS also directs that the bank place a restriction on the tax payer’s accounts and inform FIRS of any transaction on the tax payer’s account prior to execution on the accounts. The bank is also expected to release the tax payer’s bank statements and other financial records to FIRS.

    The banks, probably concerned about compliance and cooperation with government agencies are quite swift to comply with the directives. Some valued customers are lucky to receivesome notification, prior to the bank’s execution of FIRS’ directives; others, not so much.

    Understandably, given how difficult it often is to recover outstanding debts from recalcitrant debtors, it may not be so surprising that FIRS devised this strategy.

    But the appointment of banks as collecting agents has stoked several fundamental issues in relation to the propriety or otherwise of the action. Chief of which, is the constitutionality of FIRS’ appointment of banks as collecting agents to collect and remit outstanding tax liabilities of tax payers, without court orders.

    This is besides the conversation around the hardship that may be occasioned the tax payer who has had its bank account restricted, particularly where it turns out that the restriction is unjustifiable.

    However, a salient issue that seems to have eluded discussion is the query, “Is a bank legally enabled to act as collecting agent to collect outstanding tax liabilities from its customers’ bank account(s) on behalf of the FIRS?”

     

    Appointment of a bank as a collecting agent imposes mandatory responsibility

     

    On a cursory reading of the provisions of Section 31(3) FIRS Establishment Act and Section 49 of theCompanies Income Tax Act, it may appear that the provisions create an ordinary principal/agent relationship between FIRS and the appointed collecting agent. By principles of law an agency relationship presumes a payment obligation between the principal and the agent. This is not the case with tax substitution, because the appointed/declared agent is the agent of the tax payer, and not FIRS.

    The provisions of Section 31(3) of the Federal Inland Revenue Service (Establishment) Act 2007 and Section 49 of the Companies and Income Tax Act, 2007 impose a mandatory responsibility on the Bank appointed as collecting agent, rather than a commission earning activity.

    By these provisions, where the FIRS appointed Bank fails to remit the outstanding tax liability from the tax payers’ funds in its custody, such bank would be personally liable to FIRS for the tax payer’s outstanding liability. This certainly places the banks between the devil and the deep blue sea.

     

    Banks owe a duty of confidentiality/secrecy to their customers with some exceptions

     

    A pressing issue for concern, as to the propriety of the banks’ appointment as collecting agents for FIRS, is the unavoidable breach of a bank’s fiduciary duty to its customer. This issue has raised a lot of hue and cry, over FIRS’ appointment of banks as collecting agents over their customers’ outstanding tax liabilities.

    A bank and its staff are obliged to keep secret, information regarding the business and account(s) of its customers.

    In Tournier v National Provincial and Union Bank of England, (1924) 1KB 461, BankesLJ of the Court of Appeal of England held that confidentiality was an implied term in the customer’s contract and that any breach could give rise to liability in damages if loss results.

    As with every general rule, there are exceptions to the duty of the bank to keep secret, every information regarding the customer’s account(s). These exceptions are:  (a) Where the bank has duty to the public to do so. (b) Where the bank’s own interest requires disclosure: – This occurs for example, where legal proceedings are required to enforce the repayment of an overdraft or where a surety has to be told the extent to which his guarantee is being relied upon. (c)  Where the bank has the express or implied consent of its customer to do so: – where he supplies a reference to its customer or where it replies to a status inquiry from another bank. (d) Where disclosure is required by law.

    FIRS’ appointment of banks as collecting agents in respect of the bank’s customer’s outstanding tax liability, ostensibly falls under the exception (d) above; given the provisions of Section 31(3) FIRS Establishment Act and Section 49 of theCompanies Income Tax Act.

    Yet, the manner in which the banks typically respond, with swift compliance, undeniably raises issues of conflict of interest and breach of the bank’s fiduciary duty to its customer. The banks’ compliance with the directives imposed by the FIRS,against ‘tax defaulters’(customers of the banks) involve a glaring breach of the duty.

    A bank cannot perform the obligations of tax substitution, without impairing the confidential obligation it owes its customers. This confidentiality obligationis the pillar of banking.

    Clearly, the banks, as collecting agents for FIRS, are conflicted, in that they are torn between complying with directives of FIRS, a government agency; and fulfilling their obligations to their customers.

    There is however no positive law to safeguard the relationship between a bank and its customers. It is advisable that banks tread with caution, and take steps to secure their position.

     

    Banks as collecting agents for FIRS – possible safeguards

     

    In light of the foregoing, where a bank is faced with tax substitution directives from FIRS, the bank may rely on Section 31(5) FIRS Establishment Act to protect itself. The bank ought to take into consideration that as with all tax assessments and notices, a tax payer has the right to object or appeal.

    Banks rather than rushing to comply with FIRS’ directives, should ensure that adequate inquiries are made, to confirm that the notice in respect of a tax payer relates to a tax liability that is final, due and outstanding.

    A tax payer’s liability is payable when a tax payer defaults in paying its tax liability on a tax assessment that is undisputed, either on the basis of a self-assessment, or upon the tax payer’s specific agreement to FIRS’ assessment. Where an assessment is disputed, the tax liability is payable when the assessment has become final and conclusive.

    This may either be uponexpiration of statutory time for objection or payment, and the tax payer fails to object to the assessment, or upon determination by the Tax Appeal Tribunalor the Courts, in the absence of an appeal of decision of the Tribunal or Court.

     

    Final word

     

    Pending the interpretation of the Courts on the constitutionality of FIRS’ powers to appoint a tax payer’s banker as its agent to collect outstanding tax liabilities from the tax payer’s bank account, tax payers are best advised to take steps to comply with statutory requirements to compute and remit their outstanding tax obligations.

    Where, however, the tax payer has already had its bank accounts restricted under FIRS’ directives, it would be prudent to seek professional counsel to explore resolution mechanisms best suited to the peculiar circumstances.

    FIRS’appointment of banks as collecting agents in respect of the banks’ customers’ outstanding tax liability, places the banks in the precarious position of potentially impairing the confidentiality obligation owed to customers. Banks are also exposed to legal action, particularly where the tax liability is disputed.

    It is the writer’s view that a bank should consider all possible options to secure its position, in addressing the mandatory obligation imposed by FIRS’ appointment to act as collecting agents from its customer’s bank accounts.

    The banks are also at liberty to test their appointment by FIRS, as collecting agents, pursuant to the provisions of the Federal Inland Revenue Service (Establishment) Act 2007 and Section 49 of the Companies and Income Tax Act, 2007.

    A determination by the Courts would certainly bring welcome development to our jurisprudence.

    Besides, there is the danger of taking the now largely banked economy a few steps back. Individuals and business organizations may refuse to bank, for fear of having their funds subjected to seizure without recourse to them, or to avoid having their financial activities monitored, or to maintain their financial privacy.

    Tax evasion is a criminal offence under the law. FIRS may choose to lay more emphasis on prosecuting offenders as a deterrent to intending tax evaders.

    It is quite commendable that FIRS is actively widening the tax net, particularly with the proposed imposition of five per cent value added tax on lottery and gambling activities.

  • EFCC arrests 40 Federal Inland Revenue workers over N2.1b scam

    The Economic and Financial Crimes Commission (EFCC) has arrested 40 senior management and junior Federal Inland Revenue Service (FIRS) officials for an alleged N2.1billion scam.

    The cash was said to have been siphoned through alleged payment of Duty Tour Allowances (DTA) to the staff.

    Some of the suspects were paid as much as N101million, N97million, N89million, N84million, N65million, N52million and N46million as Duty Tour Allowances.

    Some of those arrested have started paying back the illicit payments made to them.

    The international passports of 10 of the officials have been seized to restrict their movement to the country pending investigation.

    The EFCC has also written some embassies to retrieve the passports of some of the officials.

    The anti-graft commission said it was expecting the most senior director for interrogation as the approving authority of the DTA allowances.

    Although the official is said to be on medical treatment abroad, the EFCC said there was no evidence before it to show that he is ill.

    Detectives have, however, quizzed the Director of Finance, Mr. M. Auta, who claimed to have acted on the instructions of the Coordinating Director.

    There has been no evidence of any fraud link to the Executive Chairman, Mr. Babatunde Fowler.

    According to a fact-sheet obtained yesterday, the EFCC is “investigating alleged inflation of Duty Tour Allowances, humongous payments to staff, diversion of funds and outright stealing of public funds”.

    The document said: “There was information that some senior management staff were using some middle and junior cadre of the service to siphon funds from the accounts of the Federal Inland Revenue Service (FIRS) in the guise of travelling allowances.

    Read also: EFCC to re-arraign ex-judge Ajumogobia today

    “For the records, the fraudulent practices were perpetrated between 2017 and 2018. Initially, the accounts of the staff were scrutinised and over N2.1billion was discovered to have been paid to them by the FIRS.

    “However, a proper scrutiny was carried out. During investigation, their normal salaries, DTA were deducted and finally what was illegally paid to these staff was N1.6billion.

    “The funds were paid to the staff and after little deductions, the bulk of the money was usually given to the senior management staff. Prominent among those who have a case to answer is a Coordinating Director.

    “As civil servants, some of the suspects were paid as much as N101million, N97million, N89million, N84million, N65million, N52million and N46million as Duty Tour Allowances. There is no way a civil servant can earn about N101million in his or her 35 years in service. In some instances, some staff claimed to have been in Lagos, Sokoto, Calabar on the same day and collected DTA.

    “Most of the DTA allowances were actually not used for official purposes or public service. This is a case of  stealing and money laundering.

    “So far, about 40 staff were involved but about 10 staff were detained and released on bail after scrutiny.

    “We are looking for the most Senior Coordinating Director in the agency but the FIRS claimed he travelled out for medical treatment abroad. We invited him to come on or before last Tuesday but he is yet to report. We  have not yet seen any medical report.

    “We won’t be able to determine how much was credited to him until he is interrogated. We are looking for him. Even if he resigns, as being speculated, he has to answer the allegations against him.

    “So far, the Director of Finance of FIRS, Mr. M. Auta has been quizzed by detectives. He admitted that he acted on approvals and instructions by the Coordinating Director.”

    The document gave an update on the status of investigation by EFCC detectives.

    It said: “The commission has seized the passports of Auta and nine other staff to restrict their movement to the country. We are trying to retrieve the passports of some of the staff from a few embassies pending the conclusion of investigation.

    “This is just one case out of many fraud alerts in the FIRS. Some sections in EFCC are also handling same matters on other amounts.

    “Some amounts have been recovered from those invited, interrogated and detained.”

    The Acting Head of Media and Publicity of EFCC Tony Orilade said: “I am not aware, I have not been briefed.”

  • Tax expert urges FG to review VAT law

    A tax expert, Taiwo Oyedele, has urged the Federal Government to review its Value Added Tax (VAT) law and better policing of its borders to improve its VAT collections.

    Oyedele, Head of Tax and Corporate Advisory Services, PricewaterhouseCoopers (PwC), West Africa, gave the advice in an interview with the News Agency of Nigeria (NAN) on Monday in Lagos.

    He said the government could shore up its revenue through a review of VAT waivers and come up with a framework for VAT on imported services and digital transactions.

    “At the moment, we have a lot of issues with Nigerian VAT law because most times policymakers talk about the rate alone without saying anything about the rest of the law.

    `For instance, the country loses lot of revenue from the importation of a lawyer from Ghana who pays nothing for services rendered in Nigeria because he pays no VAT for such services whereas his Nigerian counterpart does.

    “The implication is that it makes the country’s lawyer less competitive because there is no legal provision in the VAT law that imposes five per cent VAT on such imported services.

    “The Federal Inland Revenue Service (FIRS) has seen this loophole and it is trying to block the leakage through the back door by issuing circulars to that effect.

    “The truth is that you cannot use circulars to impose tax, it has to be by law, so the government needs to amend the law to block this leakage and others,” he said.

    Oyedele said that the government should also have a regulatory framework for generating revenue from digital transactions.

    NAN reports that digital economy (transaction) is the worldwide network of economic activities, commercial transactions and professional interactions that are enabled by Information and Communications Technologies (ICT).

    He said that though some of the digital transactions operators such as Uber, Bolt (Taxify), office sharing and even technology platform providers like Facebook, Google, online stores and blogs pay VAT, the taxes were not backed by law.

    According to him, people place adverts on these platforms.

    “The government should explore these opportunities and back it up with law to ensure that not just few people pay taxes but all operators,” he said.

    He said South Africa had just released a regulation on its digital economy, adding that Nigeria should follow suit.

    Besides, Oyedele noted that four per cent cost of VAT collection by FIRS was too high by global benchmark standards, while 15 per cent allocation of VAT to Federal Government was no longer justified.

    “VAT law was introduced in 1993 and took effect in 1994; all over the world, including Nigeria, consumption tax is usually a state and local government tax.

    “But along the line, it was discovered that some states do not have capacity to collect the tax and agreed that the Federal Government should collect the tax on behalf of states.

    “That is why the Federal Government gets 15 per cent as cost of administering it while states get 85 per cent.

    “Technically for VAT, Federal Government gets 15 per cent and FIRS gets 4 per cent bringing total accrued to the Federal Government to 19 per cent.

    “Globally, the standard benchmark for collecting tax is one per cent, even many tax authorities in some countries collect less than one per cent,” he said.

    He added that should Federal Government take lesser percentage it would free funds for states to meet their financial obligations and become more financially stable.

  • We will recover all revenues accruable to FG — FIRS

    The Federal Inland Revenue Service (FIRS) says it is determined to recover all revenue accruable to the Federal Government.

    To achieve the objective, the service said it had already listed companies and organisations indebted to the government in fiscal year.

    The Executive Chairman, FIRS, Mr Babatunde Fowler, made this known in an address at  the ongoing 30th Enugu International Trade Fair, in Enugu on Thursday.

    Fowler, who was represented by Mr. Ben Obiorah, Tax Controller, Micro and Small Office, Enugu, said that to fish out all outstanding revenue owed the federal government; they had, since 2018, focused on businesses with huge annual turnover.

    “You may be aware that since 2018, FIRS, has focused attention on businesses with huge turnover, but no record of commensurate payment of their tax obligations.

    “This will continue in 2019, several of such companies have already been contacted by the device leveraging on various data sources.

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    “We urge you all to comply with the provisions of the tax laws as we are duty bound to recover all revenue due to the FG  and the people of Nigeria,” he said.

    He, however, urged the business community, law enforcement agents and well-meaning citizens to continue to partner with FIRS to ensure that tax defaulters were traced to face the consequences while compliant businesses would receive all the support they required.

    Fowler said that the service was working hard to ensure that national revenue continue to grow through tax remittances.

    “We at the FIRS are working hard to ensure that we are in full alignment with all efforts to grow national revenue from taxation while easing the administrative burden inherent.

    “We place emphasis on human resources as one of several tools to achieving our aim of expanding the tax net which is why we recently recruited more young Nigerians to effectively provide adequate services to all the nooks and crannies of the country,” he said.

    Mr Emeka Udeze, in a welcome address by the President of the Enugu Chamber of Commerce Industry Mining and agriculture (ECCIMA) welcomed participants to the event and to congratulated the management and staff of FIRS for the successful organisation of the event.
    (NAN)

  • FIRS eyes N750b from millionaire tax defaulters

    The Federal Inland Revenue Service (FIRS) says it hopes to pull in about N750  billion from about 55,000 defaulting taxpayers.

    Its  Executive Chairman,  Mr. Tunde Fowler, in a statement, said from the Bank Accounts substitution exercise, “we used banking information to bring non-compliant taxpayers with N1 billion and above turnover to comply. It has so far resulted in the recovery of N23.35 billion. The exercise has been extended to cover those with turnover of N100 million and above.”

    Fowler spoke when he met with the House of Representatives joint committees on Finance, Appropriations, Aids, Loans and Debt Management, Legislative Budget and Research and National Planning and Economic Development on the 2019/2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

    He said: “To date, about 500 of them have come forward and they have paid and we have collected in the region of about N24 billion. We believe we should be able to go through the 55,000 before the middle of this year which will be, 30th June.

    “In terms of estimates, which we should be able to generate from this exercise alone, that will be about N750 billion.”

    The FIRS chief told the committee that  through enforcement activities in respect of defaulting taxpayers from various tax offices, tax audit and investigation assessments, FIRS has generated the sums of N28. 51 billion and 77. 83 million dollars has been recovered.

    “FIRS and the Economic and Financial Crime Commission (EFCC) Joint Tax Force (JTF) was introduced in 2018 to enhance the fight against tax related economic fraud. As at December 2018, a total of N6. 94 billion and 278,430 dollars had been recovered by the JTF. This and other such initiatives are continuous and will be continuous going forward.’’

    He said FIRS also initiated income tax on property owners in Abuja and Lagos as part of efforts to deepen tax revenue collection and expand the nation’s tax net as well as increase the revenue base.

    “This project which initially targeted property owners in Abuja and Lagos has so far yielded N4.3 billion, and is being extended to other locations. In this regard, Oyo and Kaduna states have commenced.

    “It is important to note that this is not a property tax but rather the use of the provisions of the law to bring into the tax net companies that own properties but failed to file necessary tax returns and pay appropriate taxes due,’’ Fowler, explained.

    On tax audit, Fowler said: “This covers both the National Tax Audit (NTA) and the Pioneer Audit (PA). The NTA exercise contributed the sum of N212. 79 billion to tax collection in 2018. Following improvements to the audit process and resultant increased efficiency, the exercise is expected to produce increased audit yield in 2019.”

     

    Fowler  noted that FIRS recorded an increase in Value Added Tax (VAT) collection between 2015 and 2018 and the FIRS is broadening its VAT collection scope with the adoption of States Accountants Generals (SAG) collection platform, VAT Auto-Collect, integration of the GIFMIS platform with Ministries, Departments and Agencies (MDAs) and through e-Service payment options.

    He reiterated that VAT is not for the poor arguing that: “out of about N5.3 trillion, a large percentage is shared between states and local governments. In VAT, there has been a growth of over 44  per cent between 2015 and 2018. And that is at the current rate of five per cent.

    “Now when you look at Africa as a continent, Nigeria still has the lowest VAT rate. When we look at the items that are not VATable, basic food is not VATable, medicals, education. But if you decide and you have the ability to go to a restaurant to eat and drink the same thing you can buy in the open market, then you pay VAT.  So VAT basically is a consumption tax and those who choose not to go to the open market to buy their food and cook at home are subject to VAT. So VAT is not a hardship on the low income earners because normally they don’t even go to hotels when their wives can cook at home and they can have something very nice.

    “The same Nigerians who are complaining about an increase are the same ones who go to Ghana and go and pay triple the amount in VAT or go to London and pay higher amount. So we are just saying, like the minister said that we should get used to the idea. 85 per cent of VAT goes to the state governments who  are supposed to be closer to the people. So they can use that money as approved by their State Houses of Assembly. So they can use that money on education, infrastructure, etc.

    “Yes, we had an increase of about 32 percent from N4.02 trillion in 2017 to N5.3 trillion in 2018. At the Federal level, clearly we can see all the projects that are being completed, based on the available funds at the Federal level. I’m just saying that if we keep on the same way, the expectations cannot be different.

    “For those who have the ability and the desire to take the choice, of going to  areas where  they have to pay VAT, then they should be allowed to pay VAT.”

  • Foul call by Fowler?

    Just as well – the Federal Inland Revenue Service (FIRS) has denied that hiking value-added tax (VAT), by 35% to 50%, from its current five per cent, is imminent.  Given that the economy is just making it out of recession and the government is about implementing the new minimum wage, the move would have been counter-productive.

    Wahab Gbadamosi, FIRS head of communication and Servicom department, put the record straight on what Babatunde Fowler, FIRS executive chairman, told the Senate committee: “Though he indicated that there should be an increase in VAT rate by the end of the year, he never for once suggested a 50% hike or any percentage increase at all”

    Before that denial, Mr. Fowler was quoted to have told the Senate Committee on Finance, on the imperative to increase VAT to shore up the government’s revenue, as part of the Federal Government’s Medium Term Expenditure and Fiscal Strategy Framework (MTEF).  Jacking up VAT, he was reported to have insisted, was necessary to raise more cash, so the government could meet its obligation to citizens.

    “Nigerians should be ready for increase in VAT before the end of the year,” he reportedly declared. “VAT is higher in other countries, including Ghana and many others.  There should be increase in rate but not immediately.”

    To further underscore the imperative of making taxes – and less oil revenue – as primary basis of government spending, Mr. Fowler told the committee that the government’s tax revenue projection for 2019 was N8 trillion, out of which VAT was projected to rake in N3 trillion.  He also painted the progressive increase in tax receipts, in the last three years: 2016 (N3.31 trillion), 2017 (N4.03 trillion) and 2018 (N5.3 trillion), suggesting that for FIRS to gross the 2019 N8 trillion target, VAT should be pressed into service.

    “I can certainly see an increase in VAT of at least 35% to 50% this year, based on our enforcement activities.  There certainly will be an increase in company income tax (CIT) and also petroleum profit tax (PPT),” he said, adding that “A lot of Nigerians travel to Ghana and other West African countries and they can see that theirs is much higher.  They pay when they go for those trips.  We should be ready for an increase on VAT.”

    There is a lot to be said for making taxation the main driver of public spending; just as there is much to be decried in the present practice of oil money, driving public expenditure.  Taxation could be the single antidote to combat public sector corruption, since citizens are much likelier to exert control and demand accountability, if the cash, by tax, is hard earned money, coming from their pocket.

    Indeed, the present endemic corruption could well have emanated from the feeling that oil money is nature’s manna, and not anyone’s direct sweat.  So, tax as main engine of public spending, is near-unassailable. Since VAT is consumption tax, the points that push other taxes should, other things being equal, push the case of VAT.

    Still, the weakest argument is clearly the one that presupposes that since Ghana’s VAT is 10%, Nigeria’s should automatically be so.  That is soft and emotive; and commands little or no merit, beyond a mere wish.  First, it shuns the economy of scale VAT should enjoy, with Nigeria’s huge population.  Then, it underplays the lack of enforcement, that the FIRS boss himself admitted.  If these two factors are harnessed, VAT earnings should soar, other things being equal.  So, instead of making a lazy, surface-to-surface comparison with Ghana and other West African countries, FIRS should first revamp its enforcement machine.  But there is also talk of some West African ECOWAS tax protocol, to which Nigeria is bound.  That is true.  But even regional protocols should not be at the expense of locals’ economic benefits.

    The argument is, therefore, not ever to increase VAT.  That would come when the economic indices allow it.  Right now, however, it is bad timing: with Nigeria’s economy slowly coming out of recession and the new minimum wage regime about to take off.

    You don’t increase minimum wage with the left hand only to take it back, from the poor and most vulnerable, with the right, through VAT.  That is why any call for VAT increase right now is nothing but a foul call.