June 17, 2019 – Sunmola David & CO

Don’t Reappoint Fowler As FIRS Chairman, Staff Tell Buhari

Some workers of the Federal Inland Revenue Service (FIRS), have called on President Muhammadu Buhari not to reappoint the Executive Chairman of the service, Mr Babatinde Fowler, for another term of office. The workers, under the aegis of Concerned Staff of FIRS, made this known in a letter to the President, a copy of which our correspondent got on Sunday. In the letter, the workers accused Fowler of being economical with the truth in some of the reports being doled out detailing the activities and achievements of the service. Also, they accused Fowler of setting the service in the reverse gear instead of positioning it for greater height like his predecessors. They alleged that prior to August 2015 when Fowler assumed office, the modernization efforts towards organizational process and structural reforms of FIRS with a view to enhancing effective and efficient tax administration had produced significant verifiable outcomes in many areas. They listed the areas to include developing a tax reform agenda, enactment/amendment of tax laws, National Tax Policy, articulating a clear direction for the Service and the JTB among others. Their grouse against Fowler included recruiting workers in manners shrouded in secrecy and not in conformity with laid down rules. According to them, Fowler’s claim of improved performance was fraught with irregularities. “With fixing of the fundamentals by building a foundational base that would readily enhance tax revenue collections through the implementation of the tax reform, we experienced a steady increase in tax revenues for the government except for the immaterial decrease in tax revenues which of course were attributed to 2007-2009 global credit crunch/financial meltdown, the performance before Mr. Fowler was growing year-on-year. “Contrary to Mr Fowler’s claim that “N5,320 trillion is the highest revenue ever generated by FIRS in history” is misleading and economical with the facts because: “(1). In 2012 the set revenue target was N3,635.5 trillion while N5,007.7 trillion was generated, with 137.74% of collection. But the set revenue target in 2018 is N6,747.0 trillion and actual revenue generated stood at N5,320.0 trillion with 78.85%. “(2). The amount of N5,007.7 trillion in Dollars in 2012 was $32,150 billion while the amount of N5,320.0 trillion in 2018 stood at $17,385.62 billion. This means FIRS under his watch did not meet the set target, its performance was also poor in Dollar terms in 2018. Below is the tax revenue collection performance from 2000-2018 for further clarification. “Our collection should continue to grow year-by-year as shown above and not decreasing as highlighted in red which represents FIRS performance under his watch as Executive Chairman. These clarifications are necessary to dispel the huge media propaganda stupendously sponsored with taxpayers’ money in many conventional (electronic and print) platforms all over the country to boost his personal ego”. “The open secret remains that FIRS has under-performed under his leadership and this could be attributed to its executive incompetence and arrogance in handling tax administration matters”. “It must also be emphasized that in 2010 when the general and transparent recruitment exercise was concluded, the ripple effect of the exercise and other initiatives embarked upon produced huge tax revenues as can be seen from the table above for 2010, 2011 and in 2012 when the tax revenues got to all-time high of N5.01trillion at an exchange rate of N155.76. So, it is no longer news that N5trillion revenue target is achievable provided a competent person is appointed as the Executive Chairman of FIRS. “Dear Mr. President, there are so many disturbing atrocities perpetrated by Mr. Fowler in FIRS which your attention must have been drawn to but we wish to also draw it to you again, sir. There are convincing evidences already presented to you for further action and others that may be presented to you for further investigations and for his possible prosecution. We strongly advise that these atrocities be made known to the VICE PRESIDENT because it is his name that is being used a shield against investigation and prosecution for abusing his office. “It must be emphasized that Mr. Fowler’s era in FIRS has unimaginably taken it back to the old dark period of inefficient and ineffective days. Source: GCFR

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VAT: FG’s Non-oil Revenue Rises by 28.7%

Tax news / Tobi Aminu

The federal government’s non-oil revenue increased by 28.7 per cent to N322.93 billion in April, higher than the N251.01 billion recorded the previous month. But at N322.93 billion or 40.6 per cent of total revenue, the non-oil revenue was below the provisional monthly budget estimate of N466.91 billion by 30.8 per cent. The Central Bank of Nigeria (CBN) disclosed this in its monthly economic report for April 2019, posted on its website. But it explained that the lower collection relative to the provisional monthly budget estimate was due to the shortfalls in corporate tax, VAT, Federal Government of Nigeria Independent Revenue and Education Tax. According to the report, at N795.31 billion, the estimated federally-collected revenue (gross) in April 2019, fell below the provisional monthly budget estimate of N1.107 trillion by 28.2 per cent. However, it exceeded the receipt of N767.90 billion in the preceding month by 3.6 per cent. The decrease, relative to the provisional monthly budget estimate, was attributed to a shortfall in both oil and non-oil revenue. Also, oil receipts, at N472.38 billion or 59.4 per cent of total revenue, was below both the provisional monthly budget estimate and the preceding month’s receipt of N516.88 by 26.2 per cent and 8.6 per cent, respectively. The fall in oil revenue relative to the provisional monthly budget estimate was attributed to the shut-ins and short-downs at some NNPC terminals due to technical issues, leakages and maintenance. “Of the total N616.21 billion retained revenue in the Federation Account, the sums of N88.49 billion, N67.82 billion and N24.72 billion were transferred to the VAT Pool Account, the federal government independent revenue and ‘Others’ respectively, leaving a balance of N435.18 billion for distribution to the three tiers of government,” the report said. Of this amount, the federal government received N208.39 billion, while the state and local governments got N105.70 billion and N81.49 billion, respectively. The balance of N39.59 billion was shared among the oil producing states as 13 per cent Derivation Fund. Similarly, from the N88.49 billion transferred to the VAT Pool Account, the federal government received N13.27 billion, while the state and local governments received N44.25 billion and N30.97 billion, respectively. “The external sector performance remained stable in the review month. The average price of crude oil rose from $68.11 per barrel in March 2019 to US$73.08 per barrel in April 2019 due to OPEC-led supply cuts, geopolitical tensions in Libya and Venezuela, and the US sanctions on Iran. “Notwithstanding, aggregate foreign exchange inflow into the CBN, at $5.25 billion, showed a decline of 32.4 per cent below the level in the preceding period of 2019, but contrasted with the growth of 23.8 per cent at the end of the corresponding period of 2018. The fall in aggregate foreign exchange inflow into the CBN, relative to the preceding month’s level, was attributed, largely, to the decrease in non- oil receipts. “Aggregate outflow of foreign exchange from the Bank fell by 6.7 per cent below the level at the end of the preceding month to $4.90 billion in April 2019. It, however, indicated 42.5 per cent increase over the level at the end of the corresponding period of 2018. The development, relative to end-April 2019, reflected, mainly, the 13.2 per cent decline in ‘Interbank Utilisation,” the report stated. Furthermore, the overall, foreign exchange flows through the Bank in the month of April 2019, resulted in a net inflow of $0.35 billion, compared with $2.51 billion and $0.80 billion in the preceding month and the corresponding period of 2018, respectively. According to the report, at N31.696 trillion, aggregate credit to the domestic economy, on month-on-month basis, grew by 3.9 per cent at the end of the review month, compared with the increase of 6.5 per cent and 0.7 per cent at the end of the preceding month and the corresponding period of 2018, respectively. The development reflected, mainly, the 11.4 per cent rise in net claims on the federal government. Over the level at end- December 2018, net domestic credit grew by 15 per cent at the end of the review period, compared with the growth of 10.7 per cent and 5.3 per cent at the end of the preceding month and the corresponding period of 2018, respectively. The development was due to the increase of 59.1 per cent and 5.5 per cent in net claims on the federal government and claims on the private sector, respectively. “Net claims on the federal government, on month-on-month basis, rose by 21.8 per cent to N7,741.3 billion at end-March 2019, compared with the increase of 11.4 per cent and 7.3 per cent at the end of February 2019 and March 2018, respectively. “The development was due to the increase of 74.0 per cent in the banking systems holding of government securities in the review month. Relative to the level at end- December 2018, net claims on the federal government grew by 59.1 per cent at the end of the review period, compared with the increase of 30.6 per cent and 35.5 per cent at end of February 2019 and March 2018, respectively,” it added. Source: This Day

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LCCI calls for concessionary tax rate for SMEs

Tax news / Tobi Aminu

The Lagos Chamber of Commerce and Industry has called for the concessionary tax rate for the Small and Medium Enterprise sector of the economy. Making the call in a communiqué issued at the end of its council meeting held over the weekend, the LCCI noted that small businesses were more vulnerable to the current challenges in the economy and suffered high mortality rate as a result. In the communiqué signed by the Director-General, LCCI, Mr Muda Yusuf, and made available to our correspondent on Sunday, the chamber also expressed concerns about the persistent delays in the issuance of the Pre-Arrival Assessment Report to importers by the Nigeria Customs Service. It said the situation contributed to cost escalation for many businesses, payment of avoidable demurrage and high interest cost on borrowed funds. “The protracted delays in the issuance of PAAR is a negation of the policy of the government on ease of doing business. The LCCI, therefore, calls on the Comptroller General of the NCS, to urgently intervene.” The investigating activities of anti-graft agencies and regulatory institutions regarding alleged infractions by corporate organisations also occupied the attention of the chamber. It admonished that such investigation, as much as possible, be conducted in a discreet manner devoid of any form of media hype. “This is necessary to avoid unwarranted reputational damage and erosion of investors’ confidence,” it said. The LCCI added, however, that, “This position does not diminish the significance of compliance by corporate organisations with extant laws and the imperative of proportional sanctions for proven cases of infringements of the law. “The LCCI is a leading advocate of sound corporate governance in the country. Meanwhile, it is also important that there should be proper coordination between regulatory institutions and anti-graft agencies in dealing with suspected regulatory infractions to avoid duplication of investigative actions.” Source: Punch

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G20 ministers vow to ‘redouble efforts’ on digital tax

Tax news / Tobi Aminu

G20 policymakers vowed Sunday to “redouble” their bid to reform by the end of next year the international tax system to take account of internet giants such as Facebook and Google. Speaking about international taxation, the G20 finance ministers and central bank governors said in a statement seen by AFP: “We will redouble our efforts for a consensus-based solution with a final report by 2020.” However, here again, the Fukuoka meeting exposed a difference of opinion over what form this reform should take. Frustrated by a lack of global action on the issue, some countries such as Britain and France have already introduced a so-called digital tax, but Mnuchin was blunt in his assessment of these policies. “I would say the US has significant concerns with the two current taxes that are being proposed by France and the UK but let me give them some good credit for proposing them in the sense (that) they have created an urgency to deal with this issue,” US Treasury Secretary Steven Mnuchin said at a public meeting before the formal G20 started. “Although I don’t like them, I do appreciate the impetus for these issues,” added the top US finance official. Appropriately for a meeting held in Japan — which is on track to become the world’s first “super-aged” society in which more than 28 percent of the population is over 65 — the G20 ministers discussed for the first time the “challenges and opportunities” posed by ageing. They suggested getting more women and elderly people into the workforce and “promoting elderly-friendly industries”, as well as reforming the fiscal and banking systems to take into account ageing populations. “You basically have a very large portion of mankind that is ageing and then the workforce is shrinking,” OECD Secretary-General Angel Gurria told AFP in an interview. Solving the issue will require wholesale changes to the way society is organised, added Gurria. Source: Punch

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