The Nation Newspaper

Tag: Tax

  • Tax as tool for domestic resource mobilisation

    With our core revenue base (oil) dwindling, it is obvious that government at all levels need to fashion out innovative ways to mobilise domestic resources for sustainable development, averred experts at the 24th annual Nigerian Economic Summit, reports Jill Okeke

    In the last couple of years, Nigeria’s revenue has been on the decline especially with the mid 2014 fall in the price of oil which affected its income which was largely dependent on oil. Consequently, the economy went into a recession in 2016 after experiencing negative growth in successive quarters. But with the price of oil picking up once more by early 2017, the country was able to exit recession.

    In spite of high price of oil, governments’ revenue has once again been on a downward trajectory occasioned by low oil production.

    With this kind of scenario, the country is in a fix to marry the two exigencies of dwindling resources and an ever increasing need to meet its obligations to Nigerians in terms of developing the economy.

    It is essential to note that there cannot be economic development without development of infrastructure. With the government embarking on a borrowing spree in order to address the country’s infrastructure gap, it has become critical that domestic resource mobilisation is the only way out.

    It has become obvious that the government needs to do more if it is to meet its ever increasing obligations.

    Unfortunately, many developing countries, including Nigeria, have been unable to meet their obligations to their citizenry due to increasing inequality, falling international support dwindling foreign aids and grants, amongst others.

    As former Deputy Governor, CBN, Sarah Slade, did observe in her opening remarks at one of the breakout sessions in the recently held Nigerian Economic Summit, with the theme ‘Leveraging domestic resource mobilisation for sustainable development’, “the inability of many developing countries to meet up with the achievement of the Millennium Development Goals (MDGs) was largely due to lack of finance to execute projects in most cases.

    “It is in this context that mobilising domestic resources must be intensified in the country for rapid development.”

     

    The tax question

    In the past three years, noted Professor of Taxation, Teju Somorin, “the present administration set about increasing its financial base. This came in the form of Voluntary Assets Declaration Scheme (VAIDS); increase in excise duty for alcohol and tobacco and some others which increased the number of taxes paid by Nigerians from 30 a few years back to about 69 different kind of taxes presently, thus further increasing the burden of tax on Nigerians.”

    Regrettably, stated the professor, Nigeria cannot get much from increasing its tax revenues without first addressing other factors. According to her, issues surrounding transparency and efficient use of tax revenues; funding of tax administration system; granting autonomy to tax authorities; and streamlining of the various taxes should be looked into.

    “From the study we carried out, we discovered that tax officials as well as tax payers do not have an understanding of the tax laws. Tax payers pay tax but do not see the money at work, they cannot see their money working for them. Added to this is the burden of multiplicity of taxes which is too much for a Nigerian company,” she said.

    A Director at the Nigerian Economic Summit Group, Dr. Adedoyin Salami, noted that lack of data is a major drawback to domestic resource mobilisation. He explained that without data to drive revenue generation, planning becomes difficult.

    In his presentation, Senior Resident Representative of IMF in Nigeria, Mr. Amine Mati, stressed the need to tap into the potential of excise duties to boost the country’s tax revenues. According to the IMF chief, Nigeria can no longer rely on oil revenues due to its volatility.

    According to him, “One interesting thing about excise duties for quick revenue generating measure, in changing the rate, you do not need to go through parliament and the whole process; this is an executive decision that can be made. In Nigeria, excise duties only bring 0.1 per cent of GDP. This is one of the easiest sources of revenue to get. 0.1 per cent of GDP compared to three per cent of GDP for ECOWAS and most other countries.”

    Narrowing down on specific excises, he said, “such as excise in fuel products, excise on luxury goods, including on airtime fees. We just need some small simulation on that. That would give you 0.8 per cent of GDP within a year; that is money you can spend on import and development spending.”

     

    Experts’ view

    In order to leverage domestic resource mobilisation for sustainable development, Dr. Neil Mcculoch opined that it was time Nigeria began to minimise exemptions that it grants companies.

    He added that to mobilise domestic resources, the government must be willing to tax rich people; utilise more of property tax; invest more in tax administration; address the issue of trust in the tax system; and reduce tax expenditures.

    “Subsidy alone in Nigeria is about two third of all corporation income tax…..The government should state clearly in the budget what it intends to use the money for,” he added.

    The crux of the matter, Salami observed, is the issue of fiscal governance.  According to him, the Nigeria’s fiscal arrangement needs to improve if “we are going to take care of the people we are supposed to look after.”

    He averred that without a meaningful budget circle it will be almost impossible to put every other thing in place. “Currently, with 2019 ahead, we are coming to the end of the year and it is pretty clear that what we did last year is what we will do again this year. How do we plan, how do we hope to get an economy going in the absence of an established reliable budget circle?”

    For Kaduna State Governor, Mallam Nasir el-rufai, who was represented by Special Adviser on Economic Matters, Dr. Salamatu Isah, “for there to be an effective mobilisation of domestic resources, revenue generation must be diversified.”

    Using her state as an example, she explained that “the government of Kaduna State pursued a policy of diversifying its revenue sources which involved ease of doing business and payment, in terms of efficiency of payment and collection.”

    As Somorin did note, not much can come out of increasing a tax base when other factors are not addressed.

    With overseas assistance reducing and the amount spent on debt servicing on the increase, it is expedient that the government begin to vigorously articulate ways of mobilising domestic resource.

    But whether the advice of these experts will be heeded to drive the process of mobilising domestic resources for Nigeria’s sustainable development, only time will tell.

     

     

  • Tax as tool for domestic resource mobilisation

    With our core revenue base (oil) dwindling, it is obvious that government at all levels need to fashion out innovative ways to mobilise domestic resources for sustainable development, averred experts at the 24th annual Nigerian Economic Summit, reports Jill Okeke

    In the last couple of years, Nigeria’s revenue has been on the decline especially with the mid 2014 fall in the price of oil which affected its income which was largely dependent on oil. Consequently, the economy went into a recession in 2016 after experiencing negative growth in successive quarters. But with the price of oil picking up once more by early 2017, the country was able to exit recession.

    In spite of high price of oil, governments’ revenue has once again been on a downward trajectory occasioned by low oil production.

    With this kind of scenario, the country is in a fix to marry the two exigencies of dwindling resources and an ever increasing need to meet its obligations to Nigerians in terms of developing the economy.

    It is essential to note that there cannot be economic development without development of infrastructure. With the government embarking on a borrowing spree in order to address the country’s infrastructure gap, it has become critical that domestic resource mobilisation is the only way out.

    It has become obvious that the government needs to do more if it is to meet its ever increasing obligations.

    Unfortunately, many developing countries, including Nigeria, have been unable to meet their obligations to their citizenry due to increasing inequality, falling international support dwindling foreign aids and grants, amongst others.

    As former Deputy Governor, CBN, Sarah Slade, did observe in her opening remarks at one of the breakout sessions in the recently held Nigerian Economic Summit, with the theme ‘Leveraging domestic resource mobilisation for sustainable development’, “the inability of many developing countries to meet up with the achievement of the Millennium Development Goals (MDGs) was largely due to lack of finance to execute projects in most cases.

    “It is in this context that mobilising domestic resources must be intensified in the country for rapid development.”

     

    The tax question

    In the past three years, noted Professor of Taxation, Teju Somorin, “the present administration set about increasing its financial base. This came in the form of Voluntary Assets Declaration Scheme (VAIDS); increase in excise duty for alcohol and tobacco and some others which increased the number of taxes paid by Nigerians from 30 a few years back to about 69 different kind of taxes presently, thus further increasing the burden of tax on Nigerians.”

    Regrettably, stated the professor, Nigeria cannot get much from increasing its tax revenues without first addressing other factors. According to her, issues surrounding transparency and efficient use of tax revenues; funding of tax administration system; granting autonomy to tax authorities; and streamlining of the various taxes should be looked into.

    “From the study we carried out, we discovered that tax officials as well as tax payers do not have an understanding of the tax laws. Tax payers pay tax but do not see the money at work, they cannot see their money working for them. Added to this is the burden of multiplicity of taxes which is too much for a Nigerian company,” she said.

    A Director at the Nigerian Economic Summit Group, Dr. Adedoyin Salami, noted that lack of data is a major drawback to domestic resource mobilisation. He explained that without data to drive revenue generation, planning becomes difficult.

    In his presentation, Senior Resident Representative of IMF in Nigeria, Mr. Amine Mati, stressed the need to tap into the potential of excise duties to boost the country’s tax revenues. According to the IMF chief, Nigeria can no longer rely on oil revenues due to its volatility.

    According to him, “One interesting thing about excise duties for quick revenue generating measure, in changing the rate, you do not need to go through parliament and the whole process; this is an executive decision that can be made. In Nigeria, excise duties only bring 0.1 per cent of GDP. This is one of the easiest sources of revenue to get. 0.1 per cent of GDP compared to three per cent of GDP for ECOWAS and most other countries.”

    Narrowing down on specific excises, he said, “such as excise in fuel products, excise on luxury goods, including on airtime fees. We just need some small simulation on that. That would give you 0.8 per cent of GDP within a year; that is money you can spend on import and development spending.”

     

    Experts’ view

    In order to leverage domestic resource mobilisation for sustainable development, Dr. Neil Mcculoch opined that it was time Nigeria began to minimise exemptions that it grants companies.

    He added that to mobilise domestic resources, the government must be willing to tax rich people; utilise more of property tax; invest more in tax administration; address the issue of trust in the tax system; and reduce tax expenditures.

    “Subsidy alone in Nigeria is about two third of all corporation income tax…..The government should state clearly in the budget what it intends to use the money for,” he added.

    The crux of the matter, Salami observed, is the issue of fiscal governance.  According to him, the Nigeria’s fiscal arrangement needs to improve if “we are going to take care of the people we are supposed to look after.”

    He averred that without a meaningful budget circle it will be almost impossible to put every other thing in place. “Currently, with 2019 ahead, we are coming to the end of the year and it is pretty clear that what we did last year is what we will do again this year. How do we plan, how do we hope to get an economy going in the absence of an established reliable budget circle?”

    For Kaduna State Governor, Mallam Nasir el-rufai, who was represented by Special Adviser on Economic Matters, Dr. Salamatu Isah, “for there to be an effective mobilisation of domestic resources, revenue generation must be diversified.”

    Using her state as an example, she explained that “the government of Kaduna State pursued a policy of diversifying its revenue sources which involved ease of doing business and payment, in terms of efficiency of payment and collection.”

    As Somorin did note, not much can come out of increasing a tax base when other factors are not addressed.

    With overseas assistance reducing and the amount spent on debt servicing on the increase, it is expedient that the government begin to vigorously articulate ways of mobilising domestic resource.

    But whether the advice of these experts will be heeded to drive the process of mobilising domestic resources for Nigeria’s sustainable development, only time will tell.

  • Nigeria’s tax system as “weak” – US

    The United States (U.S.) Ambassador to Nigeria, Mr Stuart Symington has attributed poor social infrastructure development in Nigeria to the weak system of tax collection in the Country.

    Symington made this known on Tuesday, while speaking at the 10th anniversary colloquium of the Nigerian Development Finance Forum, organised by Financial Nigeria Magazine in Abuja.

    He blamed the Federal Government’s inability to discontinue subsidy and allow market forces determine electricity tariffs for Nigeria poor social service delivery system.

    The U.S. ambassador said that the inability of government to eliminate subsidy on petroleum products and failure to hands off the fixing of electricity tariffs was hampering the provision of critical social infrastructure in the country.

    He also attributed the low investment in the social services sector by government at all levels on low revenue from taxes and inefficient tax system.

    According to him, the decision of the country to continue to transfer public funds to keep petrol pump price at lower levels, as well as electricity rates below cost-recovery levels, means that less funds were available to fund education, healthcare and other social sector services.

    “One proximate cause of poor health, education and nutrition standards is low public expenditures. This in turn is related to very low public revenues due in fact to low tax rates and weak systems for tax collections.

    “Low social spending is also as a result of transfers from government to petroleum and power sectors because fuel and electricity tariffs are below cost recovery levels.

    “Fiscal, trade and other micro-economic policies tend to act as breaks on private sector initiatives on economic growth. Weak governance due to inadequate capacities or lacks of checks and balances also slows social and economic development.” He said

    Symington was represented by Country Mission Director of the US Agency for International Development, USAID, Mr Stephen Haykin.

    In his remarks, the former Minister of State for Health, Dr Muhammed Pate, berated Nigeria’s political class for failing to make decisions that would attract the much-needed investments in critical sectors of the economy.

    According to him, the country’s leaders have consistently made choices that were not in the interest of the country but themselves.

    He added that these choices had denied the country investments in the education and growth of its children.

    Pate noted that Nigeria had wasted financial resources on frivolous expenditures adding that much had not been done to change the situation.

    He said: “After extracting almost a trillion dollars’ worth of oil since our national independence, we have a situation where poverty is going on.

    “We have effectively squandered an opportunity to utilise the natural resources that we obtain purely by chance, not by hard work.

    “Instead of investing to uplift our people’s lives, our political elites by commission or omission chose the path of short-term comfort and purchase of loyalty through economically unwise or corruption riddled national expenditure at the expense of economically sound investments in both human and physical aspects to transform our nations.”

    He further stated that a country seeking to realise its demographic dividends, must first undergo demographic transition, meaning a shift from high fertility and high child mortality to relatively lower fertility and child mortality.

    “Nigeria’s demographic transition is slow, variable and achieving the dividend from the population is not guaranteed. Childhood development is going in the wrong direction particularly in northern Nigeria.

    “Some areas in the security challenged north east, stunting is more than 60 per cent among children under-five while over more than 40 per cent of Nigeria’s children under-five are stunted,” Pate added. (NAN)

  • Africa loses $100bn annually from illicit financial flow

    Africa loses around $100 billion annually, or around four per cent of the continent’s GDP as a result of illicit financial flows.
    The latest estimates from Economic Community of Africa (ECA) put Africa’s net financial losses through trade mis-invoicing alone at an average of US$73 billion over the period 2000 to 2015; at the same time, Global Financial Integrity estimates annual losses of around $27 billion through other channels.
    A recent report of the Africa Tax Administration Forum (ATAF) and ECA at the just concluded 51st Session of the ECA and the Conference of Ministers of Finance noted that “these estimates leave out a number of channels through which illicit financial flows can leave the continent; as such, the total figure could be even higher.”
    At the conference, “ATAF expressed the need to address trade mis-invoicing and abusive transfer pricing by some multi-national corporations through technical assistance and country cooperation at a continental level.”
    A call was also made by Akingbolahan Adeniran, Rule of Law Advisor to the Vice President Yemi Osinbajo of Nigeria, to “amplify advocacy” for the return of illicit financial assets from developed countries to source countries on the African continent.
    It was agreed at the conference that tackling illicit financial flows will be an important part of mobilizing additional domestic financial resources for development in the continent.
    The report noted that “when the report of the High Level Panel on illicit financial flows was released, the African Union Heads of State and Government adopted its recommendations in full. Since then, a number of African countries have taken steps to tackle such flows, including through introducing the open contracting data standard, taking steps towards introducing beneficial ownership registers and making use of the exchange of tax information to increase tax revenues.”
    However the report lamented that many of the panel’s recommendations have not been implemented by most African countries. In addition, the Panel highlighted that tackling illicit financial flows in Africa was a problem that required a global solution, not only actions by African countries themselves.
    With efforts on international tax cooperation being led by the OECD, current international efforts to tackle illicit financial flows are not always adapted to addressing the priorities for African countries.
    As a result of this development, the role of ATAF, is increasingly becoming important in the development and shaping of tax policy in the continent.
    ATAF, as an African voice on tax issues to inform and influence the global dialogue, has recently achieved revised legislation on transfer pricing in many countries where these legislations have come into law.
    Also, “ATAF has played an important role in revenue mobilisation through technical assistance programmes that have identified revenue gaps and have returned money to countries to the tune of over $150 million” the report said.
    The continent’s leading tax administration ATAF, has ramped up efforts in ensuring African priorities are recognised at a global level in achieving the following: recognizing its work at global standard-setting bodies during the revision on pricing of commodities, intra-group services and many other issues; cementing its role as promotor and implementer of exchange of information (EOI); and establishing a standard in collecting tax indicators and data for 32 African countries which assist tax revenue planning and forecasting and hence policy formulation.
    Mr Olav Lundestol (Norad) set out  the challenges for policy makers to establish a domestic environment that encourage domestic and foreign direct investment.
    Prof. Annet Oguttu (UNISA) spoke to the issues of base erosion and profit shifting (BEPS) in Africa and the value of ATAF tools in addressing BEPS. She said, “all boils down to political will, and many African countries have been dragging their feet.”
    Going forward, ATAF has called for “the establishment of a continental Tax Body under the auspices of the Africa Union Commission (AUC) where African tax related standards in policy, legislation and administration can be discussed and activities reported to and adopted and formally to acknowledge ATAF as the African Union’s Specialized Agency to institutionalise inter-country and regional tax cooperation and develop African Tax Standards that protect our tax base, maximise domestic resource mobilisation on the continent while promoting foreign direct investment.”

  • Federal govt eyes more revenue from tax

  • Fed Govt eyes more revenues from tax

    Finance Minister, Mrs. Kemi Adeosun, yesterday said the Federal Government would mobilise more revenues to drive its growth plan for the economy.

    A statement endorsed by the Special Adviser on Media and Communications to the minister, Oluyinka Akintunde, explained that Mrs Adeosun spoke in Abuja during a meeting with a World Bank Mission of 10 Executive Directors led by Mr. Patrizio Pagano.

    She said the government would accelerate  growth level and improve the ‘Ease of Doing Business’ in the country.

    “The Nigerian Government is working towards accelerating the country’s growth level. The growth will be underpinned by stimulating the ‘Ease of Doing Business’ in Nigeria and improving our capital expenditure which we have done in the last two years.

    “Nigerians should trust the government to deliver on its promises of improving the economy and providing sustainable infrastructure development. We are very optimistic but we will remain vigilant,” Adeosun said.

     

     

  • Ondo Govt tasks residents on tax payment

    Ondo Government on Friday enjoined residents to pay their taxes regularly so that the government can embark on projects to make life more comfortable for them.

    Chief Timehin Adelegbe, the Commissioner for Commerce, Industry and Cooperative Services, gave the advice at a meeting he held with tax collectors in his ministry in Akure.

    According to Adelegbe, Business Premises Inspectors will soon start moving round the 18 local government areas in the state to serve assessment notice of payment to affected individuals for the year 2018.

    He, therefore, called for cooperation from the residents in the state.

    He reiterated the commitment of the current administration to the yearnings of the people of the state, saying government could only meet their needs when there was cooperation.

    Adelegbe advised that the payment should not be made to individuals, but paid directly into government’s account.

    He urged those with complaints to visit the ministry for clarification or call phone numbers on the forms given to them.

    Adelegbe warned that only the accredited officers of the ministry that were permitted to serve the form.

    The commissioner solicited for the cooperation of the residents to be patient with the officials on assignment and urged the tax officials to be serious with their work.

    He commended the business owners in the state for their understanding and prompt payment of their business premises levies in 2017 in spite of the harsh economic situation in the country.

    NAN

  • Tax: EFCC recovers N28b for FIRS

    The Economic and Financial Crimes Commission (EFCC) has recovered N28billion from tax defaulters for the Federal Inland Revenue Service (FIRS).

    Executive Chairman of the FIRS Babatunde Fowler stated this when he led a delegation to the Acting Chairman of EFCC, Mr. Ibrahim Magu.

    A statement by the Head of Media and Publicity of EFCC, Mr. Wilson Uwujaren said Fowler lauded the anti-graft agency for its “role particularly in the recovery of N28billion from various tax defaulters across the country.”

    He said: “Through the intervention of the EFCC, the agency has been experiencing high level of tax compliance and it’s yielding positive results”, he said.

    ”When tax defaulters are reported and invited to your office (EFCC), we see results, we don’t know how you do it, but we are seeing results and people are complying”.

    “The FIRS alone cannot curtail the activities of tax evaders without the collaboration of other national and international agencies such as the EFCC.

    The FIRS boss emphasized the need to strengthen the existing collaboration and synergy between the two agencies.

    He assured that his organization would explore every other means backed by law to ensure that taxes are paid and not diverted.

    He added: “If taxes are paid, funds would be available for government to provide the infrastructure needed for the socio-economic well-being of the citizenry.”

    Magu said: “The EFCC is ever ready to partner any agency, organization or individual in fighting corruption for the purpose of moving the nation forward.

    Both agencies have agreed to go after tax defaulters following the expiration of the Voluntary Assets and Income Declaration.

    A statement from the FIRS quoted  Fowler to have said recently, two banks came forward to comply on their own. I think that they must have heard words. We want joint assistance with the EFCC, especially now that VAIDS is over, to make sure that all tax defaulters get the lawful treatment.”

    Fowler said the government would deploy all powers within its disposal warning that “every taxable person in Nigeria now knows that we are ready to deploy all powers within our disposal to ensure that every tax defaulter is punished according to the law.”

     

  • Lafarge Africa loses N34.6b after tax

    Lafarge Africa (WAPCO.LG) yesterday reported a bigger loss for 2017 due partly to a one-off impairment of around N33 billion ($105 million) for delays to a project in Nigeria and losses in its South Africa business.

    The African division of Franco-Swiss group Lafarge Holcim (LHN.S) reported a pretax loss of N34.03 billion and N34.6 billion after tax for fourth quarter (Q4) 2017 from a loss of N22.82 billion the previous year.

    Its Chief Financial Officer, Bruno Bayet, said the impairments accounted for the bulk of the loss, without which the cement maker would have turned a profit.

    “The operations in Nigeria are still very robust and we have maintained strong performance. The reason for this performance is that we have recognised impairments in Nigeria and South Africa,” Reuters quoted Bayet as saying.

    Bayet said the company took an impairment of N12.5 billion for a road project leading to its cement plant in the Southeastern Nigerian city of Calabar which had taken too much time to construct. It also took an impairment for its loss-making South African assets and changed its management team.

    “The board of directors is proposing a gross dividend of N1.50kobo (2016: N1.05kobo) on every ordinary share in issue amounting to N13, 010, 143, 705.00 (2016: N5,754,771,087.45).

    “The total dividend proposed if approved by shareholders is payable from the pioneer profits and not subject to deduction of withholding tax. The dividend is subject to approval by the shareholders at the annual general meeting on 16th May 2018,”the annual report read.

    Lafarge Africa’s shares, listed on the Lagos bourse, fell 9.73 per cent to a one-year low on the news. They later recovered some ground but were still down more than seven per cent.

    Bayet said core profit for Lafarge Africa doubled to N58 billion in 2017 from the previous year, with sales rising 36 per cent

  • ‘Only 943 individuals pay over N10m tax yearly’

    Globally, government revenue is derived from taxes. However, it is a herculean task collecting taxes, making penalty for default punitive in most countries. The Federal Government’s introduction of the Voluntary Asset and Income Declaration Scheme (VAIDS), therefore, is a welcome development by tax collectors, not only because it will save them the rigours of pursuing defaulters, but to increase revenue. The Federal Inland Revenue Service Executive Chairman, Mr. Tunde Fowler, says out of N305 billion VAIDS’ target, only N20 billion has been generated. Fowler, in an interview with Group Business Editor, SIMEON EBULU, speaks on the issue and other tax matters.

    The grace period for tax defaulters is end of this month. What follows the deadline?

    What follows the deadline is that we shall follow the laws that deal with tax administration and for those that are not complaint. We shall investigate them and if need be we prosecute them. We shall take all actions in line with the law, which includes the stoppage of their business activities and if need be, the sale of assets.

    Will you be prosecuting high net worth individuals and big corporate tax defaulters? Also, is there a possibility of extending the deadline?

    The issue of extension does not depend on me. It was a decision and approval by all the tiers of government, meaning that the presidency was aware of it and approved it. The governors approved it. It was taken to the Federal Executive Council (FEC), the Senate approved it, the House of Representatives approved it. So, I don’t have the capacity to change that approval. I think the only person who can, for whatever reason, decide to give an extension would be the President or the Vice President, who oversees the economy, through the Minister of Finance. Every tax defaulters would be prosecuted. People say we should use the 80-20 principle- meaning that we focus on people that give you 80 per cent of your tax revenue. You can say you are a big tax payer and that you have paid N1 billion and because you have paid N1 billion, we should forget the N500 million you are owing.

    Meanwhile, somebody who paid N100, 000, paid 100 per cent of his tax liabilities, meaning he was 100 per cent compliant. The organisation that paid N1 billion and still had N500 million left, was only 50 per cent compliant. So, you can’t compare both. Tax is based on profit and income. So, what we look at as tax administrators is the level of compliance. That is, we should use same law for those who are paying N100,000 and those who are paying N1 billion.

    What was the target amount for VAIDS and how much have you realised so far?

    The target amount we are looking at is $1 billion, which is equivalent of N305 billion; this include both corporate and individuals. Now, what has come in so far from the corporate angle is about N20 billion; you might think it is small, but from our own experience and the experience of those who have had similar programmes, like Turkey, India or South Africa, is that everybody waits till the last moment. So, we have received a lot of enquiries. We have received a lot of proposals, but in terms of payment, they have not paid yet. So, we believe by mid-March, there would be a better appreciation of the value we are looking at. But for us, N305 billion is doable.

    It is believed that some people, who have political connections, cannot be punished by the FIRS. What is your take on this assumption?

    I am a nominee of the President and I was approved by the Senate, under the supervision of the Vice President and the Minister of Finance. All of them have assured the FIRS of 100 per cent support and none of them have said we should take political considerations into account. None of them has said we should take the status of persons or corporate organisations into account. So, that tells me that we would do our job the way it was supposed to be done. So, there are no sacred cows.

    Can you shed more light on the information that the FIRS has compiled a list of Nigerians with property abroad?

    We did that even before VAIDS started. We looked at the number of tax payers that were paying under direct assessment, those who pay N10 million as tax per year and those figures were made public. We found out that in the whole of Nigeria, only 943 individuals paid over N10 million tax. And out of those 943, 941 were from Lagos and two from Ogun State. That tells me that in all the other states of the federation, including the Federal Capital Territory, there is no billionaire or multi-millionaire.

    But, when you look at the assets and the vehicles that are on our roads, then you will know that something is wrong. If you look at the average house at Ikoyi or the average house in the high net worth neighbourhoods in Kaduna, Rivers, Onitsha, and other cities, you find houses that are worth over N500 million. So, if an individual has a house worth over N500 million and he did not pay N10 million in tax, where did he get his money from? Now, we are carrying out an exercise on corporate Nigeria and we are doing it nationwide. We started in Abuja, looking at all corporate organisations that own property. We got a valuation of those assets. We found out that over 2,000 properties are owned by corporate organisations that do not pay tax. Now, what the law says is that if you don’t file your returns, we can use an estimated turnover and based on that turnover, we assume you make a profit of 30 per cent and we charge you at 30 per cent.

    For example, if your turnover is N100 million, we assume that you make N20 million profit and we charge that N20 million at 30 per cent, then you pay about N6.6 million in tax. We found out that we had properties more than N2 trillion in Abuja alone, under corporate names that did not pay tax. We have sent out assessment and we are in court to get a judgment that would let us seize those houses and sell them. We have concluded Lagos and we are nearly completing Kaduna. I believe without doubt that by the time we complete other states,  you will find out that corporate Nigerians with property of such would be in multiple of trillion. The same goes for individuals. The whole idea is that all of us must come together and put our little contribution to make Nigeria work. I was in the United Nations recently and the experts came up with a formula and said if any country’s tax to Gross Domestic Product (GDP) ratio is below 15 per cent, it is highly unlikely that they can expect economic or social development in that country.

    In 2016, we were about six per cent. In 2017, through the support of the media, the FIRS was able to cross N4 trillion. Nigeria Customs Service, for the first time in their history crossed N1 trillion. We are looking at the collection of all the states revenue agencies. From the information we have got so far, they equally have crossed N1 trillion. That tells us that in 2017, the Internally Generated Revenue (IGR) from tax would be in excess of N6 trillion. But we believe that for government at all tiers to be able to provide services, we must hit at least, 20 per cent, so that we can start feeling the impact of government.

    What kind of support and corporation do you have from the 36 states?

    We have a very good support. Under the Joint Tax Board (JTB), in 2016, we signed a memorandum of understanding (MoU) with all the states’ Internal Revenue Services, to exchange tax information. This meant that all tax companies that were registered by the state were given to us. We equally gave to them the names of all our own tax payers. Some states were able to add close to 100,000 new corporate accounts that were paying tax to the FIRS, but were not paying to them. Likewise, we got over 200,000 companies that were paying to various states but were not paying to us.

    So, we were able to expand our tax net just by that single move. We also agreed that we would do what is called joint audit. For example, for a big corporate organisation that has representative in almost all the states of the federation, we said instead of every state chairman coming to audit these companies for tax, why don’t we do a national audit and then we tell every state how much they are owed by the company. A lot of them have not taken up that offer and to our mind, not taking that offer means they want to deal with it individually with each revenue agency. It shows me that a lot of them are not willing to declare freely. To us, that will save them money and it will be more efficient.

    Beyond the shores of Nigeria, how do you share data? Are there organisations you collaborate with?

    There are quite many countries and we have also signed certain agreements with the OECD to exchange information. That means that they can ask us for information about individuals or corporate entities that transact with us, likewise we can also ask for information. A number of countries have offered to give us information of corporate organisations and individuals who own properties also.

    How do you plan to trace those who don’t keep their monies in the bank and use fictitious names in buying assets?

    There was a law passed in Britain called the Unexplained Wealth Order. For now, they are dealing with property. It means that if you are a British or a foreigner, you have a house and you can’t show evidence of tax payment based on the income you used in buying that house or you cannot substantiate the source of your income that property would be taken away.

    So, some countries have taken this a step further than Nigeria. But a lot of Nigerians have now seen that even if they have property or investments in other countries, those countries are not going to allow them to continue to invest without doing the right thing. I will give you an example, I was speaking at an anti-corruption forum that took place after Evans, the alleged kidnapper was captured. He (Evans) had bought property in one of the wealthiest neighbourhoods in Ghana. He took money there and the Ghanaian authorities did not investigate who he was. They didn’t ask for evidence of his tax. But he was living among the high and mighty. He might have even gone there to open a new branch of his business and they wouldn’t have known. So, countries can say they welcome foreign investors, but they need to probe where the funds are coming from, the line of business such persons do and that they pay their tax.

    When will the Common Reporting Standards take off?

    It has taken off. But what we should talk about is what it means. It means that you should disclose all your transactions, so that if anyone is looking at your financial statements and reads the note, he or she will understand fully where your money came from, how you made the money and where the money is going.

    Now, let me take a step further to the area we call Transfer Pricing. A lot of companies used to just lump large expenditure together and that would reduce profit in one country and they would charge the income to another country where there is a lower tax rate. So, the issue is that countries found out that it was not in their interest. I will give a typical example. In Ireland, Apple had over a billion dollars in tax that ought to be paid to the country and maybe based on investment, the government wanted to give them some benefits, but the EU said no, that they can’t attract further investments at the expense of others by the company not paying the required tax. I think that is what the US President is now saying, that for countries that are taking businesses from America by giving them certain breaks when it comes to tax, that he would bring them back by reducing the tax rate in America. So, every government is promoting its own business and its own business men. That is why this issue of information sharing is very critical.

    A category of Nigerians believe VAIDS is not about them and that VAIDS is exclusively for the high net worth individuals and firms. What is your take on that?

    Before I go to the direct answer, if your state governor gets additional N10 billion, whether he is good governor, a bad governor or an average governor, he must spend that N10 billion. Assuming he spends half of it on unproductive ventures, the other half is spent on productive ventures. Whether it is by buying medicine, constructing a road, making a park, will it not affect the young people? So, VAIDS may not call for the young people to pay money because the young people don’t have investments, but the result of VAIDS will affect them. So, VAIDS affects all of us – old and young.

    There are some individuals based in Nigeria, but work for multinationals and are paid from abroad, how are they expected to pay their tax?

    You pay tax where you reside regardless of your nationality. Foreigners, who are posted here for example, are paid. If they earn an allowance for even coming into Nigeria, they are supposed to declare that income and they are expected to pay their taxes here.

    How will you deal with issues of corporate organisations that are underpaying their taxes even after deducting same from their workers?

    We are addressing it. That is why part of the MoU we signed with the states internal revenue agencies. After they pay the corporate tax and they pay their workers salary, every individual worker must have a tax clearance. And what we are doing on the JTB is that we are consolidating the tax data base. That means that if I am in Lagos, I can hit a button and it will give me your name if you are in Sokoto and your tax profile. So, we are insisting that every worker should request for a tax clearance certificate from their employer. If the employer does not give them, we come in and take up that employer. Some organisations would deduct your tax from your salary, but they will not remit it, some organisations would charge VAT, but they will not remit it. So, in working with some consultants, we are designing VAT forms and certificates that we would display in every business premises, so that when a customer goes in, the VAT certificate would be displayed to show they are a registered tax payer. So, once they collect the VAT, they must remit it to government.

     What are those things FIRS is looking at beyond VAIDS?

    If you look at what are looking at getting from VAIDS, it is N305 billion. If you look at the increase in collections between 2016 and 2017, it was over N700 billion. So, if you look at a tax type that we are pursuing vigorously, it is VAT. VAT increased by over N200 billion in one year and it is continuous. What VAIDS will do is that it will bring individuals into the tax net and once they are in, they will continue to pay yearly thereafter. So, it is just one aspect that we are focusing on and we are giving it publicity and letting everybody know that it is an opportunity where we will not ask too many questions, we will not prosecute you. Just come in and do the right thing.

    After the deadline, for those you may wish to prosecute, are you foreseeing an avalanche of court cases?

    If that is what it takes? We increase the budget for legal fees in our 2018 budget.

    Why do you think Nigerians should pay tax when government is not adhering to the social contract because Nigerians provide their own water, security and in some cases, repair the roads that lead to their houses?

    If you look at it in terms of the social contract, I read in the newspaper that Governor Ambode just signed a contract for the construction of 284 roads in Lagos State. If people had been paying tax, you will not have to fix 284 roads at once. The roads would have been there before. Now, the roads that were not there before that he is trying to fix from taxpayers’ money, may not be the road in front of your house today, but tomorrow, when he does another 284, maybe it will get to your turn.

    But in a situation where for so many years, people were not paying taxes, how do you expect the government to fix the roads? I was in Lagos for 10 years. When we started, the average IGR was N3.6 billion a month. By the time we left, it was N23 billion a month. So, you can imagine all those period of time when government didn’t have money, they couldn’t provide services. In 1999, we had 200,000 individual tax payers in Lagos State. When we left, they were 4.5 million and they still have not captured everybody. So, for those 200,000 that used to pay, they can feel bad, but what can you do with 200,000 people paying tax? How many roads can you build?

    Post -VAIDS, how do you see taxation in Nigeria?

    You see, once everybody comes in and we build a credible tax database and the economy starts to boom, every individual and every corporate organisation will be paying their taxes. So, next time you want to go on holiday, you will not say you want to go to Dubai or South Africa; you will go to Ibadan where there will be good roads, trains, and other good things.