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Tag: tax revenue

  • Nigeria adopts tax dispute resolution to boost revenue

    Nigeria adopts tax dispute resolution to boost revenue

    The federal government has stated that Nigeria’s evolving tax system is being designed to address the challenges faced by taxpayers while enhancing domestic revenue generation, particularly in light of the country’s ongoing economic reforms and diversification efforts.

    Minister of State for Finance, Dr. Doris Uzoka-Anite, made this known in Abuja at the TaxADR Roundtable themed “Unlocking Revenue and Strengthening Dispute Resolution: A Roadmap to Tax ADR in Nigeria.” She was represented by Mrs. Ndidi Chineyolum, a director in the Ministry of Finance.

    She noted that the country is building a more responsive tax administration framework that not only ensures efficient revenue mobilisation but also prioritises fairness, taxpayer engagement, and efficient resolution of disputes.

    According to Uzoka-Anite, “We live in a time when economic reform, inclusive growth and sustainable public finances demand innovative approaches. Resolving tax disputes collaboratively reflects the core principles needed for a modern tax system, including mutual trust, fairness in enforcement and efficiency in resolving issues.”

    She said the theme of the roundtable encouraged a shift from adversarial tax enforcement to fostering consensus-driven approaches. “We must reduce adversarial interactions and create a system where disputes are resolved through timely dialogue, not prolonged confrontation,” she said.

    As Nigeria seeks to broaden its non-oil revenue base, the minister noted that tax compliance has become increasingly important but remains a challenge. She added that global shifts away from commodity dependence require Nigeria to strengthen domestic revenue capacity for national development.

    “The rise in complex tax disputes, in terms of volume and diversity, is driven by new business models and regulatory frameworks,” Uzoka-Anite explained. “Traditional litigation is not only costly and time-consuming, but it also delays revenue collection and creates an atmosphere of uncertainty between taxpayers and authorities.”

    She warned that prolonged disputes could erode investor confidence and hinder the predictability required for stable fiscal planning.

    Also speaking at the event, the Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi (represented by Oloyede Hussein, Special Adviser to the President on Arbitration, Drafting and Resolution), said the government must expand its revenue base through taxation without resorting to coercive measures.

    He maintained that Alternative Dispute Resolution (ADR) offers a practical pathway for building public trust and improving compliance. “ADR has long been recognised globally for preserving relationships, reducing costs and resolving issues efficiently. These are the values we must incorporate into Nigeria’s tax system,” he said.

    Fagbemi called on taxpayers to embrace dialogue when disputes arise and stressed the importance of building a tax culture grounded in accountability and fairness.

    Founder and Convener of the TaxADR Roundtable, Mr Lateef Yusuff, said the forum was convened to explore how ADR mechanisms can be better integrated into Nigeria’s tax environment.

    He noted that the roundtable was particularly relevant in light of recent legal and policy milestones, including reforms to Nigeria’s tax laws, the enactment of the Arbitration and Mediation Act, and the adoption of a National ADR Policy.

    “These developments provide a strong framework for embedding ADR in Nigeria’s tax system,” Yusuff said.

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    In her keynote address, Anita Erinne, Coordinating Secretary of the Tax Appeal Tribunal, affirmed the tribunal’s commitment to improving access to justice in tax disputes. She said the tribunal’s mission is aligned with the broader national objective of ensuring that tax administration contributes to legal certainty, economic stability, and national growth.

    “Tax disputes affect government revenue, business fortunes, and citizens’ livelihoods. A collaborative approach to tax administration can make a significant impact on the rule of law and investor confidence,” she stated.

    Erinne also commended the Federal Inland Revenue Service (FIRS) under the leadership of Executive Chairman Dr Zacch Adedeji for backing reforms that support ADR implementation in tax processes.

    She acknowledged the role of digital transformation in Nigeria’s tax administration, adding that the country’s current tax-to-GDP ratio stands at approximately 13 per cent. “A modern tax system combines effective enforcement with collaborative governance and public accountability,” she concluded.

  • FIRS: Tax revenue as Nigeria’s new ‘crude oil’

    FIRS: Tax revenue as Nigeria’s new ‘crude oil’

    Why President Tinubu deserves commendation

    By Dare Adekanmbi

    Prior to Nigeria‘s Independence in 1960, agriculture was the mainstay of its economy, even as reflected in the economic activities of the regions there were in the country at that time. Famous stories of the First Republic chronicled how the defunct regions were reliant on revenues from the groundnut pyramids in the North, the cocoa export receipts from the defunct West and the rubber as well as palm oil proceeds from the East.

    With the discovery of crude oil in commercial quantities, beginning from Oloibiri in the present-day Bayelsa State in 1956, agriculture, over time, became supplanted by black gold in terms of contributions to national revenue pool. And not only did crude oil receipts ride the wave as far as the total collectable revenue was concerned, the Nigerian National Petroleum Corporation (NNPC), became the cornerstone entity for the three tiers of government to look up to for salvation in terms of their fiscal projections.

    However, those days when the federal, states and local government councils wait zealously for revenue figures from NNPC have not only receded into the past but appear to have gone for good. At the monthly meeting of the Federation Account Allocation Committee (FAAC), focus has shifted to the Federal Inland Revenue Service (FIRS), the goose that is laying the golden egg for the fiscal stability and wellbeing of the Federation.

    For those who may not know, the ‘cake’ shared monthly by the Federation is baked by four major entities: NNPC, FIRS, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), formerly known as Department of Petroleum Resources (DPR) and the Nigeria Custom Service (NCS).

    Of the body of ‘bakers,’ FIRS under Zacch Adedeji has emerged the cream of the crop, singlehandedly and aggregately accounting for close to 70 percent of the total revenues collected and shared by the three tiers of government at FAAC meetings in 2024.

    Out of N2.068trillion that accrued to the Federation Accounts in January 2024, tax collected by FIRS accounted for more than 50 percent with the agency’s contribution totalling N1.275trilion. The other three revenue-remitting bodies jointly raked in the balance. While oil receipts from NNPC brought N115billion, NUPRC grossed N469.8billion, just as the Nigeria Custom Service remitted N207 billion.

    The contribution of FIRS to the pool grew in February by N300billion from what it brought to the account in January. From the N2.3trillion that accumulated into the account, takings by FIRS amounted to N1.491 trillion, a collection figure that was more than 50 percent of the total revenue for the month. In fact, NNPC’s contribution to the pool was just N92billion. NUPRC and NCS contributed N487billion and N254billion, respectively.

    In March, FIRS contributed N1.061trillion out of N1.867 trillion in the pool and in April, the Federation Account got N1.187 trillion from FIRS out of the N2.192trillion revenue accrual. For May, out of the N2.324trillion shared by the three tiers of government, FIRS alone contributed N1.571trillion.

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    The last month in the first half of 2024 finished on a strong note for the Federation in terms of the size of the ‘cake’ available for sharing among the three tiers of government. Of the N3.5trillion accrual in the Federation Account for the month, FIRS accounted for N2.841trillion. Contributions from NNPC for the month was N8.3billion with NUPRC and NCS remitting N402.5billion N264 billion, respectively.

    The upward trajectory of FIRS contribution to the Federation Account continued at the beginning of the second half of the year. It accounted for N2.295trillion out of N3.508trillion remitted into the Federation Account for July, representing 65.4 percent of the total haul. For August, FIRS figure for FAAC was N1.87trillion out of the N2.7trillion in the pool. In September, October, November, and December the agency’s contributions were N1.45trillion (out of N2.4trilion), N1.74trillion (out of N2.9) and N1.56trillion (out of N2.8trillion) and N1.41trillion (out of NN2.2trillion) respectively.

    The significance of FIRS contributions displacing oil receipts and turning tax revenue into the country’s new ‘crude oil’ has been well situated by the Accountant General of the Federation, Dr (Mrs) Oluwatoyin Madein. At an event in Abuja, she declared: “Tax revenue, as of today, is the highest source of revenue accruing to the Federation. Therefore, at FAAC meetings, we eagerly await the numbers coming from FIRS because the performance of the agency keeps on increasing and this brings succour to all tiers of government.”

    Putting FIRS contribution to FAAC revenue pool in 2024 in context, we will see how it has helped the three tiers of government to plan, project and experience fiscal stability. There is nothing like fiscal discipline except you have accurate revenue prediction. If you say you want to spend N10, that means you must be assured that the N10 will come from somewhere. This commendable collection performance is in tandem with Adedeji’s vision of making taxation the pivot of national development.

    What did FIRS do differently?

    The impressive revenue collection posted by FIRS is not a product of happenstance. It is the outcome of a well-thought-out strategy and process re-engineering that formed the bedrock of a cocktail of administrative and process reforms embarked upon by the agency under Adedeji. One of his key refrains is that if FIRS is going to succeed in its critical national mandate of domestic revenue mobilisation, taxpayers must be at the centre of all policies and initiatives of the agency.

    The FIRS chairman summarised the restructuring and re-orientation that powered the huge revenue collection and turned it to a customer-centric agency thus: “We restructured our operations at FIRS in such a way that we are now effectively carrying out our duty of assessing, collecting and accounting for taxes. We used to have functional types of taxes, but we have since identified that the only customers we have are the taxpayers. We have, therefore, improved the way we relate with our customers by rearranging our operations based on our customers, using their turnover as the basis to categorise them into large, medium, and emerging tax groups.

    “We did this to develop expertise in what we do. Secondly, to provide them with a one-stop shop for their activities. If you are in a large tax group, you only need to go to one office to pay all forms of taxes, including conducting audits and other activities. You do not need to move from one office to another again.

    “We are here to serve the taxpayers. The taxpayers are not armed robbers or criminals that we will be chasing about. FIRS is also not a law enforcement organisation. We are partners in progress. The taxpayers are the trees in our vineyard. The only thing we can do is to ensure they are well watered and well pruned so they can bear good fruits for us to have a big harvest.”

    Because of the streamlining of tax processes, the removal of hurdles in the way of tax payment as well placing a high premium on transparency and accountability, a total number of 182, 724 new taxpayers, representing 25.3% increase, voluntarily enrolled on the agency’s tax administration platform called Tax Pro-Max in 2024. It is the single biggest leap in the number of firms in the tax net in recent history of the tax agency. This not only underscores the level of trust reposed in the new processes emplaced at the agency. It also lends credence to Adedeji’s sharp vision of making the agency one of the world’s most efficient and trusted revenue authorities.

    The president, Lagos Chamber of Commerce and Industry (LCCI), Mr Gabriel Idahosa, testified to the unusual transformation witnessed at FIRS. Idahosa commended the agency for conducting reforms that align with the needs of businesses, particularly singling out the increasing use of technology in tax administration as well as the shift in mental geography of tax officers from being mere tax collectors to “actively providing services that enhance business operations.”

    One key import of the unprecedented growth in tax revenue for the Federation is that the non-oil sector accounts for about 75% of the total haul. This clearly signposts the commitment of the President Bola Tinubu-led administration to truly diversify the economy from its mono-product, crude oil. According to Adedeji, all accolades for the impressive tax collection by FIRS should go to President Tinubu. Of a truth, two key policies by the President, namely the removal of fuel subsidy and unification of the exchange rate, gave fillip to the record tax revenue collection by FIRS. The negative consequences of not setting these economic fundamentals at the time President Tinubu did would have been unbearable for an economy that was already in ICU before President Tinubu assumed office.

    Despite the laudable achievements of the agency since assumption of office in September 2023, Adedeji is not resting on his oars. He believes the success recorded so far is just a beginning with his key fiscal focus being on growing Nigeria’s tax-to-GDP ratio to 18% in the next three years. This, he believes, is achievable without putting additional burden on the taxpayers but by making the pie bigger to collect more revenue for the government at all levels to be able to meet their obligations to the citizenry.

    For him, there is an irreducible minimum if the upward tax revenue trajectory must continue. “We can play with everything, but what we cannot afford to play with, if we are going to succeed, are data and merit,” he once said.

    It needs to be said that prior to Adedeji’s leadership, the agency’s contribution to FAAC had been growing. However, the coming of Adedeji has moved the quantum significantly higher through a potpourri of internal administrative and process reforms he introduced, leading to simplifying of tax payment.

    For 2025, FIRS is targeting to collect N25.2 trillion in tax revenue and this means more money for the three tiers of government to meet their needs. This is another reason why there should be no opposition to the tax reform bills currently before the National Assembly. If FIRS could post these huge records in a short time, breaking its own records and setting higher targets and goals, a tax system that is modernised and fit for purpose can only add impetus to the task of domestic revenue mobilisation given to FIRS.

    For those asking the question: where does tax revenue by FIRS go? The answer is this: every month that the federal, states and local government councils gather in Abuja for FAAC meetings and money shared accordingly, about 70% of that money comes from the tax revenue FIRS collects from taxpayers.

    For perceptive observers, President Tinubu deserves to be hailed for the huge jump in shareable FAAC allocations which continue the upward swing since his assumption of office. All the states now collect almost three times of what they used to get as FAAC allocation prior to the coming of the Tinubu administration. Every month, managers of the three tiers smile to the banks, thanks to the President’s courageous leadership.

    • Adekanmbi is the Special Adviser on Media to the executive chairman, Federal Inland Revenue Service (FIRS).

  • NASS considering bill to give 90 percent tax revenue to States, councils

    NASS considering bill to give 90 percent tax revenue to States, councils

    The National Assembly is considering a bill that will provide a uniform procedure for the efficient and effective administration of the nation’s tax laws, giving 90 percent of such tax revenue to the States and local government. 

    When passed and assented by the President, the law will grant the Federal Government only 10 percent of all tax revenues, provided that 60 percent of the amount standing to the credit of States and Local Governments shall be distributed among them on the basis of derivation.

    The executive bill, which is one of the four tax reform bills submitted to the National Assembly by President Bola Ahmed Tinubu recently provides, among others, a six year jail term or a fine of N10 million for anyone who fails to disclose information of foreign exchange transaction at his disposal to the Nigerian Financial Intelligence Unit within seven days of the transaction or becoming aware of the transaction.

    The bill is titled: “An act to provide for the assessment, collection of and accounting for revenue accruing to the federation, federal, states and local government, proscribe the powers and functions of tax authorities and for related matters.”

    The bill provides a sharing formula for all tax revenue among the three tiers of government with the federal government taking only 10 percent of such revenue, while the state and local government are expected to take 55 and 35 percent of the tax collections respectively. 

    The objective of the law is to provide uniform procedures for a consistent and efficient administration of tax laws in order to facilitate tax compliance by taxpayers. It is to optimise tax revenue and will apply to any person required to comply with any provision of the tax laws, whether personally or on behalf of another person.

    The law will empower the Nigeria Revenue Service which is expected to replace the Federal Inland Revenue Service Act to administer taxes on companies, on persons employed in the Nigerian Army, the Nigerian Navy, the Nigerian Air Force, the Nigeria Police Force, other than in a civilian capacity, on officers of the Nigerian Foreign Service, on non-resident persons who derive profit or income from Nigeria or any income derived from employment in Nigeria by a person, not being a resident of any State in Nigeria.

    It also collects petrol profit tax royalties from crude oil and solid minerals exploration  banks, insurance and other financial institutions among others. 

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    It also confers similar powers on the state internal revenue services and is expected to administer all forms of taxes contained in the Nigeria Tax Act, while exercising such other powers and functions conferred on it under any tax law enacted by the National Assembly.

    The proposed law states that a tax authority, with the approval of the relevant government, may authorise another tax authority to administer taxes within its jurisdiction on its behalf, on such terms as they may agree.

    When passed, the new tax law would require all taxable persons, institutions and organisations, including non-resident persons that supplies taxable goods or services to any person in Nigeria, or derives income from Nigeria to register for tax purposes and obtain a Tax ID, provided that a non-resident person who derives only passive income from investment in Nigeria may not be required to register for tax but shall provide relevant information as may be prescribed by the Service.

    The bill also states: “A person engaged in banking, insurance, stock-broking, or other financial services in Nigeria shall make the provision of a Tax ID, a precondition for opening a new account or operating an existing account”, while also requiring that any taxable person shall, within 30 days of the occurrence of a change in its particulars, notify the relevant tax authority of the change.”

    It also requires every company registered and operating in Nigeria to file an annual self assessment return with the service, including a company granted exemption from incorporation, irrespective of whether or not it is liable to pay tax under the Nigeria Tax Act or any other tax law.

    Companies and other organisations are also expected to submit annually the audited financial statements, tax and capital allowances computation for the year of assessment in respect of the profit from each and every source computed, provided that the return of a small company may contain a statement of accounts attested to by the taxpayer in place of audited financial statements; evidence of payment of the tax due; computation of the effective tax rate and additional tax payable, where applicable; and an attestation of the information contained in the tax returns signed by a Principal Officer of the company.

    In addition, an employer shall file a return with the relevant tax authority for all emoluments paid to its employees, not later than 31 January of each year in respect of all employees in its employment in the preceding year, disclosing each employee’s gross emoluments, including allowances and benefits in kind, total deductions, net emoluments and tax deducted, while the employee will also be required to file an annual return of income from all sources, including employment income.

    Clause 21 of the bill states that “a non-resident person engaged in the operation of transport by sea or air, into Nigeria, shall file monthly returns with evidence of payment of monthly return of minerals royalty the tax as specified under section 18 of the Nigeria Tax Act to the Service in respect of the carriage of passengers, mail, livestock or goods shipped or loaded into an aircraft in Nigeria”.

    The proposed law also requires every bank, insurance company, stock-broking firm, or any other financial institution to prepare, with or without demand by the relevant tax authority, quarterly returns to the relevant tax authority specifying the names and addresses of new customers; and existing customers with a transaction volume of about N25 million or more for an individual and N100 million or more for a corporate entitle.

    In terms of tax assessment and payment, the proposed law provides that notwithstanding the provisions of any other law, tax may be assessed in the currency of transaction, adding that “tax, including royalty, assessed in a currency other than the Nigerian Naira may be paid in that currency, or the Nigerian Naira at the prevailing exchange rate in the official foreign exchange market”.

    Clause 52 of the bill prevents the distribution of assets of a company that is being liquidated, unless provision has been made for the payment in full of any tax which may be found payable by the company, including any tax deductions made by the company under any law in force in any part of Nigeria, while adding that “where tax is not paid in accordance with the provision of this section or any other law, the liquidator shall be personally liable”.

    The bill also states that, “Where a company which is or was engaged in petroleum operations transfers a substantial part of its assets to any person without having paid any tax, assessed or chargeable upon the company, for any accounting period ending prior to such transfer and in the opinion of the service one reason for such transfer by the company was to avoid payment of such tax then that tax as charged upon the company may be sued for and recovered from that person in a manner similar to a suit for any other tax under section 66 of this Act”.

    It also provides for the revocation of the operating licence or lease agreement of any company engaged in petroleum or mining operations that failed to pay its petroleum or mineral royalty or tax due and payable by any company after a demand notice has been issued to the company.

    It also states in clause 63.-(1) that “notwithstanding the provision of any other law, the tax authority shall have the power to investigate or cause investigation to be conducted to ascertain any violation of any tax law, whether or not such violation has been reported to the relevant tax authority”.

    It empowers the President to exempt from income tax, any company or class of companies; or any profits of any company or class of companies from any source, on any ground which appears to be sufficient, provided that the order is published in the Official Gazette stating the grounds upon which the exemption is granted to the company or the class of companies, adding that the President may, by order amend, add to or repeal any exemption.

    It also empowers the Accountant General deduct all un-remitted revenue due from any Ministry, Department, Agency or Government from its budgetary allocation or such other money accruing to it, and immediately, remit such deductions to the relevant tax authority after receiving a warrant signed by the Chief Executive Officer of the relevant tax authority and a Judicial Officer within 30 days of such default.

    The bill provides several penalties for individuals and corporate bodies saying that a taxable person who fails or refuses to register for tax shall be liable to pay an administrative penalty of N50,000.00 in the first month in which the failure occurs; and N25,000.00 for each subsequent month in which the failure continues, while a statutory body or company who awards a contract to an unregistered person, shall be liable to pay an administrative penalty of N5,000,000.00.

    Other penalties in the bill include N100,000 in the first month and N50,000 in subsequent months for anybody who fails or refuses to file returns or knowingly files incomplete or inaccurate returns to the relevant tax authority. 

    It imposes a N10,000 and N50,000 fine on persons or companies that fail to keep accounts, books and records of business transactions and income, to allow for the correct ascertainment of tax and filing of returns to the relevant tax authority; or upon request by the relevant tax authority, fails to provide any record or book prescribed in this Act shall be liable to pay an administrative penalty of failure to register.

    In addition, it states that a person who refuses to grant access to the relevant tax authority to deploy technology after 30 days of receipt of the notice under this Act is liable to an administrative penalty of N1,000,000.00 for the first day of default and N10,000.00 for each subsequent day of default.

    According to the Law, a taxable person that fails to process a taxable supply through the fiscalisation system is liable to an administrative penalty of N200,000.00 plus 100 percent of the tax due and an interest of 2 percent above the Central Bank of Nigeria Monetary Policy rate per annum.

    It also provides punishment for those saddled with the responsibility of collecting, deducting or withholding tax under the relevant tax laws who fail to collect, deduct or withhold the tax due who will not be liable to an administrative penalty of 40% of the amount not deducted.

    In terms of tax remittance, the law provides stiff penalties aimed at preventing agencies collecting tax on behalf of the government failing to remit such taxes as such officers will be liable to pay the amount involved, a 10 percent penalty as well as interest at the prevailing Central Bank of Nigeria monetary policy rate plus 2 percent per annum.

    It also states that “a person who fails or refuses to supply information, documents, or records as demanded or requested for by an authorised officer relating to any tax issue under this Act or any other tax law within the time provided under this Act or any other tax law, is liable to an administrative penalty of N200,000.00 in the first day of default and N10,000.00 for each subsequent day where the refusal continues”.

    In addition, “a person who fails or refuses to comply with obligations to submit information relating to a legal arrangement or other obligations as may be prescribed by notice, rules, regulations, guidelines, or circulars issued by the Service or any other relevant tax authority, is liable to an administrative penalty of N1,000,000.00 for the first day of default, in addition to N10,000.00 for each subsequent day in which the failure continues, or any other administrative penalty as may be specified in such notice, rules, regulations, guidelines, or circulars”.

    The bill also states that a person that fails to stamp dutiable instruments in accordance with the relevant provisions of the Nigeria Tax Act is liable to pay, in the case of the fixed duty, 10 percent of the unpaid duty and interest at 2 percent above the Central Bank of Nigeria Monetary Policy Rate; and in the case of ad valorem duty, 10 percent of the duty and interest at 2 above the Central Bank of Nigeria Monetary Policy Rate.

    Also, a taxable person who fails to notify the relevant tax authority of any change of address within 30 days of such change; gives a wrong address or fails to comply with the requirement for notification of permanent cessation of trade or business under the relevant tax laws shall be liable to administrative penalty of N100,000.00 for the first month in which the failure occurs; and N5,000.00 for each subsequent month the failure continues.

    It provides further that “a company which fails to file any of the estimated or actual returns under this Act on the due date is liable to pay for late filing for each of the return not filed, a penalty of N10 million on the first day the failure occurs and N2,000,000.00 for each subsequent day in which the failure continues or any other sum as may be prescribed by the Minister by order published in the Official Gazette among others.

    “In addition to the provisions of subsection (1) of this section, the licensee or lessee shall be liable to (a) N10 million or US Dollar equivalent on the first day of the failure to pay the tax, royalty or remittance; and (b) N2,000,000.00 or US Dollar equivalent for each day in which the failure continues.

    “Notwithstanding the provisions of subsections (1) and (2) of this section, the Service may, with the assistance of the Commission or Authority- (a) distrain the licensee or lessee of its oil well, crude oil, condensates, natural gas or natural gas liquid, petroleum products, engines, machinery, tools, implements or other effects; or (b) cancel, revoke, seize, distrain or dispose the licences or rights of the holder.

    “There are other penalties which include a N10 million fine for failure to (a) comply with the requirements of a notice served pursuant to chapter two of this Act; (b) appear in response to a notice or summons served pursuant to chapter two of this Act, without sufficient cause or having appeared, fails to answer any lawful question; or (c) submit any return required to be submitted under the relevant provisions of this Act;”

    There is also a N20 million fine for a person who is found guilty of an offence under the law or as prescribed by the Minister, as well as a N15 million administrative fine for false or misleading information leading to the loss of revenue in the oil sector.

    Neglect to pay tax or royalty in the petroleum sector is regarded as an offence under the law which attracts a fine of N15 million and 1 percent of the amount of tax for which the person assessable is liable under this Act, whichever is higher, for the accounting period in respect of or during which the offence was committed, or to imprisonment for six months or to both the fine and imprisonment and is also liable for the appropriate tax which would have been assessed and charged.

    It also provides specific penalties for failure to comply with provisions made for the administration of excise duty under this Act or the Nigeria Tax Act which attracts an administrative penalty of N5,000,000.00 or such other amount as may be specified by any regulations made for the administration of excise duties on services.

    In addition, it provides a N10 million fine or six months jail term for any person who fails to disclose information of foreign exchange transaction at his disposal to the Nigerian Financial Intelligence Unit within seven days of the transaction or becoming aware of the transaction.

  • Land Use Charge: Tax revenue crucial for development

    The controversy over the reviewed Land Use Charge in Lagos State seems to have subsided. But what remains unchanged is that Lagos needs revenue to continue to deliver service to the people sustainably. Tax revenue is not only essential, but would enable the state to depend less on borrowed funds and bond issuances in realising its infrastructure, economic empowerment and security goals, writes COLLINS NWEZE.

    Tax is a legal instrument used in every society to achieve service delivery. It is a civic responsibility, and incumbent on every taxable individual and organisation to contribute to building the commonwealth.

    The recently-reviewed Land Use Charge Law in Lagos State has pitted the government against a section of the people, mostly the organised private sector, with some suggesting that the administration may have lost its goodwill with the citizenry.

    Yet, if one must be dispassionate, there is no doubt that the government needs to boost its revenue to continue to deliver service on a sustainable basis.

    A Lagos-based tax expert, Seun Olamilekan, said the Lagos State government had mainly relied on borrowed funds and bond issuance to transform the city, which is not sustainable in the long term, because the facilities are interest bearing and must be paid back.

    For instance, the recent debt figure released by the Debt Management Office (DMO) showed that Lagos has a domestic debt overhang of N533.6 billion. With federal allocation declining, it is clear that the government must be efficient in its tax revenue drive. For efficiency, effectiveness, and relevance it became expedient to reform the tax system, which the state government is doing.

    According to the government, rather than short-term thinking of political gains, it is determined to leave a legacy of prosperity for all and a functional Lagos, one that every resident will be proud of. So, it is ready to do what is right, even at the expense of its political health.

    It is unfortunate though that Lagosians have yet to fully appreciate the necessity of tax reforms and the engendering of a progressive tax system. In a show of good faith, however, and in consideration of the economic situation, several reliefs were built into the Land Use Charge law and the state government promised to continue to dialogue with all segments of society to find an agreeable rate. Following extensive dialogue and true to its promise, a further set of reductions to the Land Use Charge were introduced to the tune of 50 per cent for commercial properties.

    The Land Use Charge controversy may yet be a long road to travel, but the government’s single-mindedness and integrity may gradually be registering on Lagosians. Only recently, the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State chapter, which had earlier opposed the law, pledged support for the revised Land Use Charge law.

    While Lagosians gradually come to terms with the new Land Use Charge law, they can hardly deny that the Ambode government has done well and would need to be supported through the exercise of their civic responsibility of tax payment if the Lagos of everybody’s dream must be achieved now and not tomorrow, because, really, tomorrow never comes.

    Governor Akinwunmi Ambode was faced with fixing the inefficient tax system in the state, which could be wrongly interpreted by the populace, thereby jeopardising his political future or consolidating his political goodwill by pretending all was well with the clearly obsolete and inefficient tax system. The governor chose the harder and rougher road towards consolidating his legacy.

    Olamilekan said the state government has over the past three years managed to build an unusual rapport with the people.

    “Unusual because what has, unfortunately, become the norm rather than being the exception is that there is often a wide chasm separating the governed from the government. As a result, many governments, whether federal, state or local, struggle to gain the sympathy and trust of citizens, which makes policy implementation and other government initiatives sometimes difficult to achieve or appreciate,” he said.

    According to him, the Ambode-led government, it would seem, has managed to bridge that invisible but ever present disconnect between the ruled and the ruler in the country. Such trust is no doubt built on noticeable and people-friendly policies and initiatives, which is not in short supply in the Ambode administration. Coupled with the mass-oriented developmental agenda of the administration is a commendable predisposition to empathise with and listen to the people and draw insights with which to further develop the state and make it livable for residents.

    The administration had stated it planned to focus attention on infrastructure, economic empowerment, and security. And so far, it has covered much ground in the delivery of value in these areas.

    Analysts said housing remains a huge challenge in Lagos; the housing deficit is put at 2.5 million units. To address this, the government embarked on massive construction of affordable housing estates. More than 27 low- to mid-income housing estates are under construction/redevelopment or completed and assigned across the state in Mushin, Oko-Oba, Igbogbo, Ojo/Igando, Lekki, Sangotedo, Ikota, Ojokoro, Ogba, etc. Often, such housing schemes are hijacked and acquired by speculators and real estate investors, which effectively defeats their purpose.

    As part of its economic empowerment commitments, the government budgets N6.25 billion yearly to its N25 billion Lagos State Employment Trust Fund, targeted at supporting about 100,000 micro, small and medium enterprises and creating at least 300,000 direct and 600,000 indirect jobs by 2019. So far, more than 5,893 businesses have been given about N5 billion. This year, over N700 million has been approved for 1,753 beneficiaries.

    Perhaps the most noticeable and appreciated intervention of the Ambode administration has been its road infrastructure projects because that affect all strata of society. Commuting in Lagos in the past was very challenging. Commuters spent an average of four hours in traffic daily on most routes due to bad roads, poor road networks/management, and inadequate alternate routes, among others. That had serious implications for productivity and the well-being of Lagosians. But through road expansions and maintenance, opening up of alternate routes, construction of lay-bys, bus stops, interchanges, and pedestrian bridges, commuting within the metropolis has improved tremendously.

    In demonstration of strategic thinking, usually associated with the private sector, the Ambode administration, determined to boost food production in the state, collaborated with the Kebbi State government to produce and market food items such as rice, sorghum, wheat, groundnut, and livestock at subsidised rates, starting with rice.

    Expectedly, people have warmed to the administration and it has enjoyed tremendous goodwill among the residents and even outsiders. Last year, the Federal House of Representatives Committee on Basic Education and other Services, led by its Chairman, Zakari Muhammed, on tour of projects executed under the State Universal Basic Education Projects (SUBEB) across the country, lauded the government for “embarking on schools infrastructure projects that are impacting positively on the delivery of quality education in the state,” and expressed satisfaction with the “quality of materials used in most of the schools visited.”

  • Experts fault modalities on $1b tax revenue

    Experts fault modalities on $1b tax revenue

    The Federal Government’s plan to raise at least $1 billion from a scheme that will give tax evaders a chance to make payments retrospectively has come under scrutiny by experts.

    Some of them, who spoke on the issue, condemned the modalities and planned strategies to finance the deficit in the budget, arguing that good governance is about the welfare of the people and not punitive policies such as the proposed tax scheme.

    The Federal Government, in search of how to source the N2.36 billion deficit in the 2017 budget, said its fiscal authorities hoped to raise at least $1 billion from a scheme that would give tax evaders a chance to make payments retrospectively.

    The government said  it would  create a ‘window’ to allow tax defaulters to pay to avoid sanctions  as the  2017 budget has a record expenditure outlay of N7.44 trillion.

    But the move has not gone down well with some experts. For instance, the Director- General, Lagos Chamber of Commerce & Industry (LCCI), Mr. Muda Yusuf, advised government to ensure the principle of equity.

    He also said government should be mindful of acting only within the confines of the law in her bid to increase revenue and shore up expendable capital.

    The LCCI chief lamented that the proposed ‘window’ may occasion multiple taxation from all strata of government on businesses and persons in the name of shoring up revenue to the detriment of the citizenry.

    He said: “I will advise government to introduce policies that will bring down inflation rather than churning out measures that will hasten the collapse of businesses as they may not be able to survive the onslaught of the resultant heavy burden taxation.”

    Yusuf argued that it is better to encourage businesses to remain in business as a going concern rather than running them out of town.

    A Public Analyst, Mr. Charles Odion, also criticised the emphasis on taxation by the government where revenue is dependent on expected income, resulting in what he referred to as over taxation rather than building competitive infrastructure that will help businesses to grow.

    He regretted that government was not working on growing the value chain on agricultural products, but prefers to work in the spirit of the latest excitement on export trade. He said by so doing, government was inadvertently exporting the value chain of agricultural products.

    Odion laid emphasis on the much publicised export of yams to Europe and America, noting that it would have made a lot of sense if it was not exported as tubers, but chips and flour where values would have been added to it to create more wealth to not only the farmers but the economy in general.

    He encouraged government to look inwards and make Nigerians happy with robust policies that will grow wealth especially for the low to middle income class.

    According to him, when Nigerians are happy and prosperous as a result of robust engagement by government  in delivering the dividends of good governance and strategic citizen engagement, they will gladly pay their taxes rather than being coerced  into programmes and policies that are fashioned to exploit the already over burdened citizens.

  • FIRS raises N3.3tr in tax revenue

    FIRS raises N3.3tr in tax revenue

    The Federal Inland Revenue Service (FIRS) realised N3.3 trillion in- tax revenue in 2016, the Executive Chairman, Tunde Fowler, has said.

    The FIRS chief, who spoke in Abuja yesterday at a training for journalists on tax reporting, praised the efforts of the Service for raising the amount at a most trying period in the country’s economic history.

    He praised the FIRS performed for attaining the feat at a time when oil prices dropped to less than $50 a barrel for over nine months, and when the value of stocks on the Nigerian Stock Exchange (NSE) slid and purchasing power was slim.

    In achieving the goal, he  said the FIRS implemented “waiver of Interest and penalty as part of efforts to promote voluntary compliance and shield taxpayers from the burden of carrying forward tax liabilities that arose from penalty and interest.”

    FIRS “successfully implemented a waiver of interest and penalty for three years (2013 to 2015),” he said, adding that the Service by engaging this entirely new idea, “has so far realized N27 billion.”

    Fowler said by expanding the tax net with a massive nationwide registration exercise of new tax payers, has  resulted in the registration of  814,000 additional taxpayers by December 2016, and 3.4 million taxpayers by State Internal Revenue Services (SIRSs).

    “By Decemeber last year, Nigeria has a National Tax Roll of 14 million,” he said.

    The  FIRS chief attributed last year’s tax revenue figure  to the ease of tax payment.

    He said the FIRS asked taxpayers to file their tax returns at the FIRS offices nearest to them. This novel idea has increased compliance as it eased the burden of taxpayers, who hitherto, had to travel from far places to pay their taxes.

    Another reason for the performance Fowler said, was the “improved collaboration with the office of the Accountant-General of the Federation to ensure that MDAs remit taxes such as Withholding Tax (WHT) Value Added Tax (VAT) promptly through the Government Integrated Financial Management Information System (GIFMIS).”

    Other factors that aided the FIRS in raising the impressive N3.3 trillion tax revenue Fowler said, included collaboration with the Joint Tax Board (JTB) and SIRSs on several fronts, such as Taxpayer Enlightenment, Tax Enforcement and registration of new taxpayers and Tax Education, among several others.

    Fowler said Integrated Stamp Duties Services (ISDS) portal for ease of tax payment, “was introduced by the Service for a purpose-built Stamp Duty portal that facilitates the online assessment and payment of Stamp Duties by Nigerian taxpayers.

    The FIRS “is convinced that with progressive application of technology, persuasion and enforcement on recalcitrant taxpayers, and partnership with key stakeholders like the press, we will collect enough revenue for the nation in 2017,” Fowler said.

  • PwC urges transparent use of tax revenue

    PwC urges transparent use of tax revenue

    Director, Tax and Regulatory Services, PricewaterhouseCoopers (PwC), Kenneth Erikume, has advised the Federal Government to ensure more transparency in the use and administration of oil and gas tax revenues.
    Speaking with The Nation on telephone, Erikume urged the Nigeria Extractive Industries Transparency Initiative (NEITI) to take the driver’s seat in driving this, adding that the agency is supposed to ensure transparency in the industry.
    He said: “They need to take the front seat and establish good and clear data and communicate back the data to the public.
    “It is our country, it is our resources; so everyone should have interest in it. If you make it public, people will be more comfortable with it and also have trust in the system.
    “I think there would be more trust if NEITI can take the initiative and make some of these things public.”
    He called on the government to put in place a website where people could get information about the royalty collected from the oil and gas industry, petroleum profit tax, and income tax.
    With this, he said one could trace how funds were generated, and utilised, adding that a country like Nigeria should be able to have this in place.
    He acknowledged there were many initiatives being embarked upon by the government, adding that the government needed to speed them up and make them more transparent.
    According to him, people could make claims when they do not have enough information, arguing that one of the things lacking in the system was sufficient information, particularly in the extractive industry.
    “If these information is available, I think people would be able to make decisions by themselves in terms of paying the right amount of taxes or not,”he said.
    Erikume said based on the contribution of oil and gas industry to the country, Nigeria should not be struggling with infrastructures such as hospitals, roads, electricity, water and schools.
    “So, there are two aspects of paying bills for oil and gas companies. There is concern whether they are paying the right taxes that audit can be carried on periodically,” he added.

  • How Nigeria can raise tax revenue to $103.3b

    How Nigeria can raise tax revenue to $103.3b

    Lagos State Governor Akinwunmi Ambode spoke in London at the third annual London School of Economics (LSE) Africa Summit on April 23. Excerpts from his speech: 

    Africa’s biggest economies have enjoyed improved social and economic performance for more than a decade, but are now facing significant headwinds following the adverse shock in commodity prices. Growth has slowed, coming in at 3.5% in 2015, down from 4.6% in 2014, the weakest pace since 2009.

    But I want to step back from the short-term difficulties and focus on Africa’s long term potential. But let me start in China. In 1983, China had not a single private sector car. Its economy was miniscule and did not register on the international landscape. It made great progress inthe 1990s, but even in the early 2000s when Goldman Sachs said it would become the world’s biggest economy by 2048, the idea was ridiculed. And it was right to be criticised – Goldman Sachs was grossly mistaken. China will be the world’s largest economy by 2018 – basically now – Goldman Sachs was off by 30 years.

    I tell this story, because we are on the cusp of a similar transformation in Africa. And Europe and the world desperately need – as much as Africa itself – for this transformation to succeed. Why? Well, today’s mega trends give cause for this optimism. These include:

    • Transformational urban swell – by 2050, two in three Africans will be urban,
    • Large, younger and more affluent population – by 2050 Africa would account for almost 24% of the World’s population, and
    • Africa’s dormant resources potential – Africa’s share of the world’s total of uncultivated land is 60%.

    This transformation and growth in Africa will mean a more equal partner and more intense and deeper trade and commerce with the rest of the world. A prosperous Africa would end the great press of migrants trying to enter Europe.

    For there to be real transformation, Nations and States mustdesign their own path, with clear plans for growth and development, directed at achieving the Sustainable Development Goals (SDG’s). Chances of these being achieved are further enhanced when states/cities such as Lagos play their part. I would therefore seize this opportunity to spice this presentation with some of the Lagos experience.

     

    Strength in size

    In the 1960s, there were roughly 300 million Africans, and 400 million Europeans, and the world was not that well connected. By 2050, there will 2.4 billion Africans, and only 700 million Europeans.

    Now, I am not sure about you … but if I was next door to 2.4 billion people, I would want them to be prosperous, peaceful, and socially stable. So, all of Europe has a great interest in Africa’s success.

    Nigeria is of course already Africa’s most populous nation. By 2050, Nigeria’s population will be 400 million, making it the world’s 3rd most populous nation, more than the US. This is a momentous change, and I do not think it is too much to say that Africa cannot succeed unless Nigeria succeeds.

     

    Urban migration

    If we look at this picture which charts the population size of a selection of world cities with more than one million people, Lagos; the smallest state in Nigeria with a population of over 22million people, has the highest number recorded of urban growth with over 85 people moving to the city per hour as compared with cities in Europe such as London with only 9people and America with only 10 moving to New York.

    The strength of our demographics offers investors hope in this gloomy era. With Nigeria’s growing population, and a burgeoning middle class, consumer spending (already estimated at 70% of GDP) is expected to increase even further.  This coupled with a boom in mobile telecommunications and a rise in broadband penetration makes the retail and ICT sectors very attractive. Seeing as the services sector is projected to be a key driver of the Nigerian economy, contributing 53% to total GDP in 2015, measures will need be undertaken in order to develop the relevant skills and encourage innovation.

    Efforts currently ongoing to promote Nigeria’s knowledge economy include the establishment of development hubs, technology parks, as well as a gradual increase in the budgetary allocation to education from 7% in 2015 to 20% over the next four years.  The Lagos State government, in its pursuance of creating an enabling environment for young entrepreneurs, has established an Employment Trust Fund in which an equivalent of $250 million will be contributed by the state over four years in order to empower youths to create wealth, as well as encourage companies to invest in the technical and vocational skills required to boost income.

     

    Responding to

    the fall in oil prices

    The massive fall in oil prices has sharply reduced Nigeria’s growth rate, export earnings, foreign direct investment, and government revenues. But if we are honest with ourselves, this provides us with an opportunity to now deliver real growth. The high price of oil created a distorted economic structure, where it was more valuable to capture value from the oil stream than create value. The returns to oil went to a few, with a tiny trickle down system to keep the social peace, but the reality is we squandered the oil wealth and arrived to 2015 with poor infrastructure, a poor education system, and poor level of social development.

    The drop in oil prices has revealed that the one dimensional model of our political economy has outlived its shelf life. We are forced by the slump to change the architecture of our political economy. That is the challenge before us.

    So, although Nigeria faces some tough time and tough choices with this new reality, I see the low oil prices as a tipping point for positive change. This downturn is an avenue for us, the leaders and citizens of the country, to address the sources of vulnerability in order to achieve inclusive growth and sustainable development. The tone of enhance governance with focus on transparency and accountability has been established under the leadership of President Muhammadu Buhari.

    We still have the financial band-width to immediately respond to the situation we find ourselves in. We actually are starting from a very good fiscal position. Our exceptionally low Debt-GDP ratio at 13% gives us latitude to be fiscally expansionary for productive expenditure that will stimulate the economy and create jobs.

    At the same time, our tax collection is very poor – with tax-to-GDP estimated at 8%, the second lowest in Africa and the fourth lowest in the world. In fact, excluding government revenue from oil & gas, our tax receipts were only 3%. Even in Lagos where we have consistently achieved success in IGR collection, there is still significant scope for growth.

     

    IGR gaps

    If properly implemented to Sub-Saharan African economies’ average of 18%, Nigeria could potentially raise its tax revenue to $103.3 billion, the equivalent of Morocco’s GDP in 2014.

    A higher tax revenue would reduce government borrowing and generate more funds to devote to areas where government spending is more productive than the marginal rate of private sector spending encourage financial institutions to offer funds at lower interest rates, thereby boosting the real economy.

    But of course, if we ask for tax revenue, we in the government will have to deliver something. We need to imbibe fiscal discipline in delivering the public services that our citizens so rightly deserve. This calls for a greater autonomy of state and local governments, which in turn promotes accountability. If we look at Canada for example, its decentralism has played a great part in its growth and success, allowing for maximum provincial authority in the fields of healthcare, education, taxation and social benefits. In terms of specific sectors, the first step lies in harnessing Nigeria’s potential in the non-oil sectors, focusing particularly on Agriculture, Manufacturing, Solid Minerals, and Service sectors which in aggregate represent 90% of GDP.

    We have a superb climate and abundant water and Nigeria’s global agriculture exports should take off at a rate similar to Brazil’s, with a potential $60 billion in export revenues by 2030. Given that agriculture is still largely at subsistence levels, we need to re-invigorate inter-state collaboration so as to establish commodity value chains. Already, Lagos state has partnered with Kebbi State in developing a commodity value chain that will see the local production of 70% of Nigeria’s rice needs.

    I firmly believe that forward integration with agro-processing as well as backward integration with input supply sectors would improve farm incomes, create jobs and contribute towards domestic self-sufficiency. In addition, it will solve our FX challenges, as a significant amount of our Foreign Exchange goes to importing food in a country that should be a world food super-power.

     

    Infrastructure

    development as avenue

    for stimulating the economy

    Despite the ongoing interventions, structural challenges still persist. The rapid urbanisation rate puts pressure on Nigeria to provide quality infrastructure so as to improve its global competitiveness and create a thriving business environment.

    The value of Nigeria’s core infrastructure is currently estimated at 39% of GDP, which is significantly below the benchmark average of 68 percent. Nigeria’s road density is 14% that of India and power generation capacity is just 20% that of India. Lagos, one of the world’s fastest growing cities with a population of over 22 million expects economic growth of 7% this year, twice the pace of Nigeria as a whole. There is no other state that faces pressure on its infrastructure as Lagos does. It will require more housing, offices and retail outlets- meaning that there is still a great window of opportunity for private investment in the construction sector.

    The Federal Government has strategically increased capital spending to 30% of expenditure, aimed at improving transportation networks and power delivery which would facilitate market linkages, market development, as well as encourage domestic and intra-regional trade. As a state, Lagos has increased its efforts by targeting infrastructure spending towards improving the condition of inner roads- almost 150 due to be completed within one year of my assuming office. We are now in discussions with private and institutional investors who have shown interest in game changing projects such as the Badagry deep sea port, the 4th Mainland bridge, development of new cities around the Lekki Free Trade Zone, where Dangote Refinery is located and scheduled to come on stream in 2018.

    Also recognising that power and security challenges enhance business success. We have invested significantly in security, funding and equipping the police with the Securities Trust Fund initiative. Our ‘Light Up Lagos’ initiative has also seen us connecting 67 communities of the state to the national grid and major roads fully lit. Whilst we are steady heading in the right direction we clearly still have huge infrastructural gap.

     

    Lagos – City

    of opportunities

    The Lagos delivery model is based on strategic imperatives built on four pillars: Infrastructure Development, Economic Development, Social Development and Sustainable Development. These pillars are underlined by enhanced Governance structures.

    However, despite Lagos’ challenges, let’s be clear on one thing: Lagos is now the commercial centre of Africa. Despite not being an oil producing state, we are one of the few states that are self-sustaining with our Internally Generated Revenue growing by 84% to $1.4 billion in 2014 compared to 2010.

    Our strength lies in our demographics. The population is nearing 22 million of which a large proportion fall within the ages of 18-40- a ready labour force! We pride ourselves as the 5th largest economy in Africa with our GDP estimated at $131 billion in 2014 compared to Johannesburg’s GDP of $83 billion. This makes a strong case for Lagos not just as a promising market, but as an emerging global centre, with Africa’s lead in financial services, ICT, hospitality, and other high value-added sectors. We are committed to the vision of making Lagos state Africa’s Model Megalopolis and Global Economic and Financial Hub that is safe, secure, functional and productive. This is evident in the recent establishment of Lagos Global a one-stop shop for investors.

    At a broader level, Nigeria has a large regional footprint with the possibility to be the hub of West Africa. It is a nation brimming with potential that can achieve economic success in the future, if steered in the right direction. I see an era in which we can utilize the resources of the people to build a future that includes the people.

     

    Closing thoughts

    So where will all this end up? A recent PwC report has projected that in 2050, Nigeria would be the world’s 9th largest economy, ahead of UK, France, and Germany. That is, if it makes the type of reforms we have been discussing and takes advantage of its immense human capital and natural resources. Everyone in this room has a role to play in this journey and I am counting on your support to help us make it a reality.

    Since May 2015 when the new APC Leadership assumed office, there has been a massive influx of foreign governments and private sector potential partners who recognize the potential of the Country and respective States. We in Lagos have had more than a fair share of these future investors. We recognize that we have to provide the right climate to make the partnership work, and improving the ease of doing business.

    Another exciting journey for Africa has started and as I said at the outset, whether you are in Africa or in Europe, you have a strong incentive to make Africa succeed.

  • Fowler: Challenges of increasing tax revenue

    Fowler: Challenges of increasing tax revenue

    Barely one month ago when his appointment as acting Executive Chairman of the Federal Inland Revenue Service (FIRS) was announced, not a few Nigerians who should know applauded the appointment. He had a rich background and antecedents in government revenue matters to flaunt. Mr. Babatunde Fowler, the legendary chairman of Lagos Inland Revenue Service (LIRS), thus assumed leadership of the FIRS almost immediately, pledging to work with state revenue agencies and relevant stakeholders to shore up tax revenue and improve on the country’s tax administration.

    While taking over the mantle of office from his predecessor,  Sunday Ogungbesan, on August 21,  Fowler told the staff of the service that the FIRS should be able to take the lead in tax revenue collection as well as share information and ideas with the states’ Boards of Internal Revenue to improve tax administration in the country. True to his character, he did not mince words when he assured of a new era at FIRS which would be predicated on the resolve of the presidency to ensure maximum increase in tax revenue to end the country’s absolute dependency on oil proceeds.

    Hear him: “My vision and mission is neither to alter the existing management organogram structure in FIRS nor lay off management staff from their duty posts, but to take FIRS as well as the nation’s tax system to an enviable height. This we cannot achieve all alone without a robust partnership and collaboration of all stakeholders within and outside the system. We must build a synergy for a healthy exchange of information between FIRS and SBIR.

    “This synergy will produce the best form of revenue generation in the FIRS and the states in general as well as ensuring that over dependency on oil revenue becomes a thing of the past.”

    Use of consultants for tax collection

    Against the backdrop of unending insinuations that the acting chairman would introduce consultants to help him in tax assessment and collection in the FIRS, Fowler debunked it all. The use of tax consultants to collect taxes, a practice that is prevalent among state governments, has been criticised as illegal and open to corruption between the consultants and state governors.

    At a meeting of the Joint Tax Board (JTB) in Abuja recently, Fowler said that the staff strength of the FIRS was not enough to undertake all that would be required in tax administration and as such, consultants would be engaged but their duties would be exclusive of tax assessment and collection.

    His words: “You can imagine a staff roster that can audit the books of well over 400, 000 corporate organisations.  It won’t work. Therefore to increase the level of transparency and accountability, we would engage consultants.  But these consultants will only gather data.  The law does not allow them to undertake assessment. The law does not allow them to collect revenue on behalf of government.

    “Consequently, they will collect data; they are to assist our staff.  We will do the assessment and issue the Demand Notice for the tax to be paid”.

    Compliance level

    On his view of the level of tax payers compliance, the chairman regrets that slightly over 30 per cent companies and other businesses pay tax in the country.  A situation, he said; must change.

    According to him, “there are about 450, 000 corporate organisations with only one out of every three paying tax. Based on our objectives, we want to have at least 99.9 percentage success level of compliance. Meaning that every individual at the state level and every corporate organisation at the federal level is in the tax net and pays the appropriate type of tax.

    “We have exchanged information with all states’ Internal Revenue Boards. We have all the information on the database.  We have given them out already and in case they need further information that they currently don’t have on their database, we will always collaborate with them.  With this development, we should have a growth in tax payers both at the state and federal levels within one week.”

    Fowler warned that organisations that evade taxes would be made to face the law in a civil suit in order to collect outstanding arrears and Chief Executive Officers of such organisations could face criminal charges.

    The meeting, according to Fowler, was to enable the JTB fashion out a roadmap to provide a workable tool for both the FIRS and the Internal Revenue Boards of the states with a view to raising the level of tax revenue in the country.

    Experts in the sector have been quick to align with the acting chairman on this note, positing that there are many stones left unturned as far as the country’s current tax administration processes are concerned.

    For example, they argue that it is common knowledge that the administration of the Value Added Tax (VAT) is greatly hindered by many factors, ranging from inadequate coverage of ‘VATable’ persons to non-remittances of VAT deductions. Tax revenue loss in this aspect can only be imagined.

    Fowler has so far been quick to respond to this obvious gap in revenue generation when he stated at a forum recently too, saying: “I have also identified the fact that there is deficiency on our part as tax administrators in terms of collaboration and cooperation in the areas of exchange of information for tax purposes.”

    He said that the FIRS and the state boards would have to work with greater synergy in the areas of conducting joint audit exercises by FIRS and SBIRs; carrying out joint tax enlightenment and enforcement exercises; sharing and exchanging of information concerning unremitted taxes identified by either side; embarking on joint training programmes and workshop; reviewing and amending tax laws and legislations from time to time.

    FIRS-Kogi State collaboration

    The acting FIRS chairman has no doubt sold his vision across the board for urgent implementation. Days ago, he caused a representative to spread the message of his war against tax evasion to Kogi State.

    At that event, the FIRS called for a unique collaboration with the state’s Inland Revenue Service against current and potential tax evaders. Disclosing that a new technology designed to checkmate such tax dodgers as being currently employed in the avaition and power sectors would be deployed to other sectors very soon, the FIRS under Fowler gave the five areas of envisaged collaboration with the states as follow:

    • Joint tax auditing
    • Information gathering and sharing
    • Joint training
    • Education and sensitisation and
    • Tax law review.

    Who’s Fowler?

    He was the Chief Executive Officer/Executive Chairman of the Lagos State Board of Internal Revenue from 2005 to 2014.

    He had his higher education in the United States where he obtained a Bachelor’s degree in Economics from the University of Wisconsin and a Masters of Business Administration degree from the California State University.

    Before joining the service of the Lagos State Government, Dr. Fowler worked in the banking sector for about 20 years with long stints at Credit Lyonnais Nigeria Limited and Chartered Bank.

    Under his leadership, the Lagos State Board of Internal Revenue reportedly achieved a sharp increase in internally generated revenue from an average of N3.6. billion per month in January 2006, to an average of about N20.5 billion per month in 2013.

    Fowler, who holds an Honorary Doctorate Degree of the Irish International University, is a Fellow of the Chartered Institute of Taxation of Nigeria and the Business Management Association of the United Kingdom.

    With his coming to the FIRS, expectations are high that Fowler, who got the tax revenue generation right in Lagos, would in no time replicate his success in his current beat. Opinions too suggest that the Senate would in all wisdom confirm his appointment to enable him deliver with every authority of his office. Of note is the fact that the FIRS has not had a substantive chairman since the departure of Ifueko Omogui-Okauru in 2012.

     

    • Adegoke is an Abuja-based media consultant