Tobi Aminu – Page 56 – Sunmola David & CO

Anglican bishop advises FG against increasing VAT

The Bishop of Ife Diocese, Anglican Communion, Ile-Ife, Osun State, Rt. Rev. Olubunmi Akinlade, has urged the Federal Government to drop the idea of increasing the rate of Value Added Tax by 50 per cent. The bishop said increasing the VAT from its current five per cent to 7.5 per cent would have multiplier economic effects on goods, services and livelihood. Akinlade, in a statement on Friday, observed that implementing the increase would not be ideal in the light of the current economic situation in the country and the hardship most Nigerians were grappling with. The cleric stated that government at all levels needed to carry out economic and social projects that would impact the life of the citizens. He advised the government to focus on policies that would reduce unemployment and increase economic fortunes of Nigerians. Akinlade said, “I will appeal to government to suspend any increase in VAT as the economic hardship is biting hard. Policies that promote job creation and reduce unemployment should be rigorously pursued. People are hungry, so polices that favour massive food production and distribution at affordable rate must be pursued.” The reverend said when government made job creation a priority, “it will automatically reduce the vices we see in the society,” noting that emphasis should be shifted from white collar jobs to skilled labour. He added, “No matter what happens, skilled manpower is needed. Such a person is an entrepreneur and he or she can also be an employer of labour thereby helping to further reduce unemployment.” Source: Punch

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FIRS And Millionaire Tax Dodgers

Tax news / Tobi Aminu

The executive chairman of the Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler has set for the agency a target of N750 billion to be recovered from 55,000 defaulting taxpayers. The money is what millionaire tax debtors are owing and the effort to recover it is coming at a time the government is unveiling plans to woo owners of undeclared foreign assets with amnesty and permanent waiver of criminal prosecution through the Voluntary Offshore Assets Regularization Scheme (VOARS). Fowler said this while addressing the House of Representatives joint committee on Finance, Appropriations, Aids, Loans and Debt Management, Legislative Budget and Research and National Planning and Economic Development on the 2019/2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). The FIRS chairman told members of the committees that the recent substitution exercise carried out by the service led to the recovery of N23.25 billion. He further told the lawmakers that from the bank accounts substitution exercise, the FIRS used banking information to bring non-compliant taxpayers with N1 billion and above turnover to comply. He explained that the exercise has also been extended to cover those with a turnover of N100 million and above and that currently, about 500 of the millionaire debtors have come forward to pay their taxes in the region of about N24billion. This newspaper is gratified that VOARS will complement the Voluntary Asset Income Declaration Scheme (VAIDS). VOARS is a scheme that gives taxpayers, who have defaulted in the payment of their taxes, a platform to voluntarily declare all offshore assets and foreign- sourced income relating to the preceding 30 years of assessment in exchange for a one-time levy of 35 per cent on all offshore assets in lieu of payment of default taxes amongst other benefits. The scheme is scheduled to run for a 12-month period commencing on October 8, 2018. Similar to the recently concluded VAIDS, this Scheme provides some form of clemency to taxpayers who would take the opportunity to regularize their tax affairs. It is sad that in Nigeria today, the low income earners tend to pay more tax than the high income earners. Many millionaires in the country pay little or no tax at all. The government must continue to make efforts to bring them into the nation’s tax net so as to boost its internally generated revenue. Taxation is an issue that concerns everyone. Widening the tax net would help in improving the process. Nigeria, with an estimated population of about 189 million people, almost half of whom are aged 15 to 64, according to World Bank data, still has one of the world’s lowest tax ratios to Gross Domestic Product (GDP) of six per cent, the lowest among the sub-Saharan countries the International Monetary Fund (IMF), an arm of World Bank, has measured. South Africa has 24.7 per cent. This narrative must change. In contrast, the wealthy are being heavily subjected to taxation in Europe, the United States and Australia. Revenue, Ireland’s tax body, offers a sterling illustration. Periodically, these countries publish a list of defaulters. It is our considered opinion that every Nigerian must pay tax. The FIRS and state revenue agencies must continue to act creatively and firmly in bringing in more people into the tax net. It is unacceptable that millionaires who earn much pay unusually meager tax. Government should intensify policies on progressive taxation, in which case, the richer you get, the more you pay, as is the practice in Europe. We also believe that the move to expand the tax base should be accompanied by liberalizing initiatives to stimulate the economy through private sector-led investment, attracting foreign investment and privatizing state-endowed commercial assets. The current effort to widen the tax net for increased revenue generation must go together with improving the ease of doing business. While paying tax is a necessity, the government must intensify effort to address the genuine concerns of Nigerians who complain that they do not see the impact of the tax they pay on the provision of social infrastructure such as good roads, efficient healthcare system, stable electricity supply and others. Government, at all levels, should let the people see what they are doing with the tax revenue. That will make the expansion of the tax base worthwhile. Looting public funds by government officials, including tax proceeds, make compliance a difficult habit to cultivate by most Nigerians. As part of the move to bring more people into the tax net, the authorities must ensure that cases of tax diversion by public officers are eliminated entirely. Source: Leadership

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Nigeria Could Generate $13bn In Additional Tax Revenue With Digital ID Programmes –McKinsey

Tax news / Tobi Aminu

Nigeria is seen generating $13 billion in additional tax revenue if she could digitalise her identification programmes. This is according to a new McKinsey Global Institute report, which claims that high adoption of digital ID with the right principles can help unlock 3 percent economic value equivalent of GDP in advanced economies and as much as 6 percent in emerging economies on average. The report, which offers a framework to understand the potential economic impact of “good” use of digital ID, analyzed nearly 100 ways in which digital ID can be used, with deep dives into seven diverse economies: Nigeria, Ethiopia, Brazil, China, India, the United Kingdom, and the United States. “We estimate that Nigeria could use digital ID to expand the tax base to include informal income and reduce fraud and errors in tax filing to generate more than $13 billion in additional tax revenue. Nigerians could save 1.8 billion hours annually from efficient services that reduce the need for travel to and from government offices and filing of physical paperwork,” said Fiyinfolu Oladiran, a McKinsey partner. Eyitope Kola-Oyeneyin, Nigerian-based Partner at McKinsey equally said the Digital ID potential for Nigeria is significant and that based on MGI estimates, Nigeria could capture economic value equivalent to 5 to 7 percent of GDP by 2030 from greater formalization, fraud reduction, increased tax revenue, and financial inclusion. “Scaling Digital ID in Nigeria has to be a top priority for enabling inclusive growth,” he said. Around the world, governments and businesses are implementing digital identification programmes with mixed results and adoption levels. Yet when carefully designed, “good” use of digital ID programs can help people participate more fully in their economy and society, which can create enormous economic value and inclusive growth, the report said. “We find that three-quarters of the potential economic value of digital ID could accrue to individuals in Nigeria, making it a powerful key to inclusive growth, while the rest flows to private-sector and government institutions,” said Rogerio Mascarenhas, managing partner of McKinsey’s Nigeria office. He added that the largely informal and self-employed workforce skews the overall benefits of digital ID toward individuals, who could receive 74 percent of the total overall value. He started that Nigeria’s unmet financial needs are significant. 60 percent of the adult population, or about 64.5 million individuals, do not have a bank account and therefore may be cut off from access to credit or the ability to deposit income. “The World Bank found that 18 percent of the unbanked population in Nigeria cited a lack of identification documentation as the primary reason for not opening an account. We estimate that increased lending to individuals and businesses resulting from an expanded deposit base could generate up to $21 billion in additional investment by 2030,” says Amuche Okeke-Agba, a McKinsey partner. Source: Independent

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Luxury Vehicle Tax Ill-Conceived– Mahama

Tax news / Tobi Aminu

Presidential candidate of the opposition National Democratic Congress (NDC), John Mahama has said his administration will scrap the luxury vehicle tax if it comes to power; if the Akufo-Addo government fails to do so. Describing the levy as an ill-conceived one, he said its introduction has overburdened the ordinary commercial driver whose vehicle possesses the white number plate. He argued that the amount of revenue raised so far is not even enough for the tax to be sustained. Speaking to some drivers during his road safety tour in Accra, Mr. Mahama urged them to exercise restraint as the NDC will not hesitate to abolish the policy. “Not too long ago, the government introduced the luxury vehicle tax. This tax was not well thought through before it was rolled out. They should have exempted all commercial vehicles. There are commercial vehicles without the yellow plates, but rather white plates yet they carry commercial goods. Once they exceed three litres, they are charged this luxury tax. This has brought untold hardship on some of the drivers especially those who work for the companies and others. ” “Just recently, I heard that government has only been able to raise GHC 25million from the luxury tax if that is the case, then they should abolish it. If they don’t, we the NDC government will abolish it when we come into power,” he added. The government has collected some GH¢21.3 million in taxes from the use of vehicles with engine capacities of 2.9 litres and above between August and December last year, provisional fiscal data on public finances for last year has shown. The amount is GH¢82.7 million or 79.52 per cent below the GH¢104million that was projected to be collected within the period. The projections were contained in the 2018 mid-year budget review. The government expects to rake in at least 300 million cedis from the tax on luxury vehicles by the end of 2019. The tax, which forms part of the new policy measures introduced in the midyear budget review, is to help bridge the gap in revenue for the first half of the year [2018]. The figure was disclosed when Parliament passed the four bills approving the taxes introduced by the government. Source: Afroinsider

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EFCC begins funds recovery from FIRS officials

Tax news / Tobi Aminu

The Economic and Financial Crimes Commission (EFCC) has begun the recovery of funds from some staff of the Federal Inland Revenue Service (FIRS), who have agreed to return illicit Duty Tour Allowances (DTA) paid into their accounts by the management of the FIRS. Daily Trust learnt yesterday from sources familiar with the investigation that EFCC agents are recovering large sums of money from both the junior and middle-level staff involved in the scam. It was learnt the EFCC initially discovered that over N2.1 billion was paid as DTA in the salary accounts of forty staff. A source said, “However, proper scrutiny was carried out, after normal salaries and normal DTA was deducted and what was paid to them was N1,060 billion.” It was said a substantial amount is already being recovered from the forty staff in this batch after their arrest and interrogation. About twenty of them were detained but all are now on administrative bail. A source said the EFCC seized all their passports, after committing them to pay back what they illegally received within a timeframe. It was learnt yesterday that the Director of Finance, Mohammed Auta was detained and grilled over the payments. Daily Trust gathered yesterday that the anti-graft agency may arrest the Director FIRS support services group Peter Hena who approved and authorized the payments and the main beneficiary of the scam. Sources said Hena, who was supposed to have returned to Abuja on 6 April, sent in his resignation letter, has also claimed to be sick and in need of medical attention abroad. As Coordinating Director, he has supervisory oversight over the Human Capital Management and Development, Finance and Accounts, Revenue Accounting, Facility, Security and Safety Management and Procurement Departments. It was learnt he authorized the payments despite being on N2 million approval limit. It was alleged that Hena authorizes several N1.9 million payments to a particular account in one day, which makes up the huge figures received by some staff. It was learnt some of the staff received varying amounts as DTA within the period being investigated from 2017 to date and did not travel. A source said amounts ranging from N50 million, N40 million, N101 million and N55 million were found to have been paid into the accounts of the staff. It was also learnt the that EFCC may look into the award of contracts and adherence to procurement processes in the FIRS. Source: Daily trust

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Tribunal fixes definite hearing in suit of double taxation against FIRS

Tax news, Uncategorized / Tobi Aminu

The Tax Appeal Tribunal sitting in Abuja, on Wednesday, fixed May 14 for definite hearing in a suit filed by a company, “M FIFTEEN” Consultants against the Federal Inland Revenue Service (FIRS). The company also dragged the FIRS, before the Tax Appeal Tribunal sitting in Abuja over alleged double taxation. Also joined in the suit are the Independent Electoral Commission (INEC) and the Nigeria Police. The company, said it was dissatisfied with the FIRS assessments of it’s Tax Liability. The tribunal presided over by Mrs Alice Iriogbe, adjourned after the appellant counsel, Mr Chike Adaka informed the tribunal that his witness took ill and could not be in court. The counsel to FIRS Mr Ade Ogunmola told the tribunal that while the respondent sympathizes with the appellant ‘s witness but objected to what he called ‘sheer display of un seriousness of the appellant Ogunmola, the counsel ought to have notified both the court and the respondent and there was no medical report against that before the tribunal. He further told the tribunal that in view of that he would ask for a cost of N50, 000 which the tribunal rejected saying that it does not award costs for now. NAN reports that the company specifically said that it was dissatisfied with an intent letter by the FIRS imposing a tax liability of N14. 662 million on it without due consideration of all the material and available facts. The company further stated that the N7. 9 million captured as part of the tax liability have already been deducted at source by the FIRS and the police from the contract sum of the appellant. The company argued that it would amount to double taxation if FIRS expected the appellant to pay same again. It therefore sought the order of the tribunal to declare as null and void, the intent letter by FIRS dated April 7, 2014 . The company also sought an order of the tribunal directing INEC and the Police to show evidence of remittances to FIRS of the sums deducted from the payments made by the appellant in respect of contract executed. The appellant also asked the tribunal to direct that, credit should be given to the appellant in respect of the tax deductions made on payments due to it from the INEC and the Police totaling N7. 9million. The Company further sought an order directing FIRS to issue it a tax clearance certificate which was withheld for the 2006 to 2011 year of assessment. The company further stated that the N7. 9 million captured as part of the tax liability have already been deducted at source by the FIRS and the police from the contract sum of the appellant. The company argued that it would amount to double taxation if FIRS expected the appellant to pay same again. It therefore sought the order of the tribunal to declare as null and void, the intent letter by FIRS dated April 7, 2014. The company also sought an order of the tribunal directing INEC and the Police to show evidence of remittances to FIRS of the sums deducted from the payments made by the appellant in respect of contract executed. The appellant also asked the tribunal to direct that, credit should be given to the appellant in respect of the tax deductions made on payments due to it from the INEC and the Police totaling N7. 9 million. The company further sought an order directing FIRS to issue it a tax clearance certificate which was withheld for the 2006 to 2011 year of assessment. Source: Nigeria Observer

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Professionals call for due process, fault ‘piecemeal’ tax reforms

Tax news / Tobi Aminu

The controversies dogging the nation’s tax reforms, now with Value Added Tax (VAT) regime, may not achieve anything positive unless a holistic approach is taken and urgently, tax professionals have said. The top tax administrators, at the sensitization seminar on proposed VAT increase and the non-assented housing fund bill, organized by the Chartered Institute of Taxation of Nigeria (CITN), at its headquarters building in Lagos, said tax is a serious issue and must be seen as such. The President of CITN, Chief Cyril Ede, who was represented by the Vice President, Olajumoke Surplice, admitted that time has come for comprehensive reforms of VAT regime, particularly as it relates to small business and imported items. Noting that such reforms will bring about balance with respect to disposable income of customers and stability of businesses, he also commended the government for refusing assent to National Housing Fund bill. Former Director of Tax Policy at FIRS, Chief Mark Dike, said the current discordant tunes trailing VAT rate are not new but have only shown lack of due process. According to him, the enactment of VAT in 1993 was a struggle and the process of the only recorded hike to 10 per cent and subsequent reversal in a short period was a display of shoddy arrangement. He said that discussions about tax must be inclusive, with professionals and other stakeholders consulted to smoothen the rough edges that must be followed strictly when agreed. “We must get back to the drawing and the same is true of the housing fund bill. The way we are currently going about these issues, we may not make any headway,” he said. Prof. Abiola Sanni, during a panel discussion, described the recent report on planned VAT increase as a moot, as there was no bill to that effect at the National Assembly, which must precede any discussion. For him, there has been inconsistency overtime in both actions and speech by some government officials but warned that any increase in VAT now would be in bad faith. “The best option is to widen the tax net, not increasing the burden now. Granted, there are opportunities in VAT segment, but it is not right at this point,” he said. The panel moderator, Prof Teju Somorin, said her study of over 15 countries, including Ghana, at the point of VAT increment, shows that there is always public outcry, with some of these countries raising their VAT to 30 per cent. But she appealed to government to follow due process and focus mainly on luxury items, while holding a standard rate of five per cent for non-luxury items, as well as broaden the tax base. Another tax administrator, Azeez Olatoye, said he wants a general review of tax processes to identify the challenges against VAT and other taxes, with a view to balancing the interest of all stakeholders. For him, the government must build trust, as it is not presently adding up, citing budget inconsistencies. He said that the country’s debt profile and the huge service bill is discouraging to taxpayers, who already know that the tax proceeds would not end up in development pursuits. He said that downward adjustment of tax rate would encourage more to voluntarily Source: Guardian

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Tax Dispute Resolution In Nigeria: Challenges And Practical Steps

TAX SERVICES / Tobi Aminu

Introduction In August 2018, taxpayers were awakened to sudden freezing of their bank accounts for alleged non-payment of taxes and this marked the beginning of an “account- freezing” operation by the Federal Inland Revenue Service (FIRS). Many taxpayers who contemplated challenging the powers of the tax authority to direct the freezing of their bank accounts were faced with the dilemma of whether to approach the tax authorities to resolve the matter or to go directly to the court for an interim order to reopen their account. Generally, tax disputes put taxpayers in precarious situations as they are faced with a commercial dilemma of making prompt business decisions in the face of uncertain tax positions. Thus, speedy resolution of tax disputes is critical to any business. As the Nigerian tax authorities increase their budgetary target on a yearly basis, they continually intensify their tax collection efforts. This tends to result in frequent disputes between taxpayers and tax authorities. The tax issues arising from this range from disputes on a taxpayer’s actual tax liabilities to whether the tax authorities had followed due process in notifying a taxpayer of alleged liabilities amongst other issues. Thus, it is important that taxpayers are abreast of the dispute resolution process in Nigeria and the options that are available to them. This Newsletter explores tax dispute resolution in Nigeria, its challenges and practical steps that taxpayers can adopt in resolving such tax disputes. Reasons for Tax Disputes Interpretation of Tax Laws – The recurring need for interpretation of tax legislations has become a major cause of dispute in tax administration. In instances where the tax authorities’ interpretation of the tax laws differ from that of the taxpayers, disputes are almost inevitable. For example, the Lagos State Internal Revenue Service (LIRS), in recent times, issued a series of public notices stating their position on some tax issues, relying on the provisions of the tax laws. This resulted in a number of tax disputes as some taxpayers had different views from the reading of the same provisions. One of such notices is the LIRS’ circular on Taxation of Employee Loan issued in 2017. In that circular, the LIRS relying on Section 3(1)(b) of the Personal Income Tax (PIT) Act mandates employers to remit Pay As You Earn (PAYE) Tax on Benefits-In-Kind (BIK) relating to employee loans. According to the LIRS, the BIK is to be calculated as the difference between the interest rate on the loan and an adjusted Monetary Policy Rate and PAYE Tax should be applied thereon. A number of taxpayers have disagreed with the position of the LIRS as the law contains no provisions with respect to determining BIK on employee loans. Consequently, this has resulted in varying disputes with the LIRS. While the tax authorities typically tilt towards interpretations that favour revenue drive, the taxpayers tilt towards interpretations that favour tax efficiency. This conflict in the motive of interpretations could result in disputes between the taxpayers and tax authorities. Inconsistency in Tax Authorities’ Position – Where the tax authorities adopt an inconsistent approach in dealing with tax issues, taxpayers are put at risk and this could result in tax disputes. In the case between Federal Board of Inland Revenue (FBIR) v Halliburton West Africa Limited (2014), the FIRS reneged from its earlier published circular on the tax treatment of recharges by non-resident companies and this resulted in a major tax dispute. Although the Court of Appeal resolved the issue in the favour of the FIRS, stating that the FIRS’ earlier position could not supersede the law, taxpayers still rely largely on the decisions and positions of the tax authorities to make certain business decisions. Where the tax authority is not consistent in its position, there is bound to be dispute. Inconsistency in the provisions of the law – Contradictions in the tax laws have frequently resultedin tax disputes. An example of this is Section 19 of the Companies Income Tax Act (CITA) on excess dividend tax, which has led to a number of tax litigations. This is because the literal interpretation of Section 19 contradicts other provisions of the tax laws by allowing for the taxation of income that has previously been taxed or exempt from tax under the law. For example, Section 19 appears to contradict Section 80(3) of the CITA that restricts further taxation of franked investment income and Section 60 of the Petroleum Profits Tax Act that exempts dividends distributed from petroleum profits from further tax. Inability of Taxpayers to keep records – Although the Companies and Allied Matters Act (CAMA) requires companies to retain their accounting records for a period of six years from the date they were made, many companies do not adhere to this rule. Similarly, our tax laws stipulate varying penalties for failure to keep books of account. Failure to keep proper tax and accounting records could pose difficulties to a taxpayer in defending its tax position with the Relevant Tax Authority (RTA). It could also lead to inability to reconcile a taxpayer’s record with the tax authorities’ and this is a trigger point for tax disputes. Audits/Tax Investigations – There are a number of dispute triggers which may attract the attention of the tax authorities during a tax audit or investigation. These triggers include situations where there is an inconsistency in a taxpayer’s filings or where a taxpayer engages in aggressive tax planning. Other triggers include significant unutilized capital allowance, inconsistency in filing of tax returns, frequency of acquisition and disposal of qualifying capital expenditure, related party arrangements, significant Value Added Tax and Withholding Tax (WHT) receivables, high operating expenses ratio to revenue amongst others. Procedure for Exercise of Statutory Powers – The Nigerian tax laws vest certain powers on the tax authorities which could be exercised when taxpayers fail to fulfill their tax obligations. These include the power to issue “best of judgment” assessments, impose penalties, detrain taxpayers’ properties and so on. However, these powers should not be exercised arbitrarily. Unfortunately, the tax authorities sometimes

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Tax payment: Anambra tasks proprietors of private schools on transparency

TAX SERVICES / Tobi Aminu

Proprietors of Private Schools in Anambra State have been charged to run a transparent, accountable, value based and quality education system in the state. The Commissioner for Basic Education, Professor Kate Omenuga made the remarks in Awka during an interactive meeting on what is expected of the proprietors to do in terms of tax payment. Professor Omenugha while commending them for giving Anambra children education that is globally competitive in line with the vision of Governor Obiano said that they need to add their quota in the development of the state by paying their taxes as and when due. The Managing Director and Chief Executive Officer, Anambra State Internal Revenue Service, Dr. David Nzekwu said they have the mandate to work with any organization in moving the state forward, stating that they recognize the importance of education and see schools as a critical area of disseminating information on revenue to future generations. Dr. Nzekwu said they should render annual returns to the Board and enlightened them on personal income and withholding tax, advising the proprietors to always deduct payee from the salaries of their staff and remit to the Board. He explained that every business set up, should within six months register with the Board to open account, conduct tax audit and investigate the operations of the business. In his reaction, the President, Proprietors of Private Schools, Mr. Uzochukwu Nwanonyuo, appealed to the Board to differentiate schools from other businesses. Contributing, a member of the proprietors association, Sir. Sunny Anekwe, maintained that synergy between them and the Board is cordial and called for more sensitization and enlightenment on what they are expected to do. In a remark, the Board of Trustee Chairman of Private Schools Proprietors, Lady Pat Okeke, pledged their support and loyalty to the government assuring that they will continue to work with the Ministry of Education so as to produce intelligent and brilliant children. Source: Apex news

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Testing the Waters for Possible VAT Hike

Tax news / Tobi Aminu

As federal government continues to contemplate ways to cover its increasing recurrent expenditure, the effect of tax burden on the citizens must be considered, writes Obinna Chima. The federal government recently gauged the willingness of citizens to accept an increase in Value Added Tax (VAT) in its quest to shore up its revenue. Even though it appeared that the government has since backtracked following strong opposition to the move, proponents of the initiative insists that with the country’s swelling debt service and its low revenue generating profile, a VAT hike should be implemented. Minister of Finance, Mrs. Zainab Ahmed, had early this year, and said the government was considering tough measures to achieve higher revenue. Ahmed, who revealed that the government was planning to introduce higher VAT and excise duties, only for carbonated drinks produced in Nigeria, for which the producers were not paying excise duties, stressed that the government needed to do more to achieve higher revenue. “Peer comparison on our ability to convert Gross Domestic Product (GDP) to revenue for capital and social investment key drivers of sustainable economic growth -show that we have a lot to do to catch up. “Nigeria must mobilize significant resources to invest in human capital development and critical infrastructure. “Indeed, some reforms will be tough, but it must be done if we will look at the facts and be frank to ourselves. Given the low revenue to GDP ratio (currently at about seven per cent), we must pursue optimal revenue generation,” she had explained. But it was Minister for Budget and National Planning, Udoma Udo Udoma and the Executive Chairman of the FIRS, Babatunde Fowler, who during an interactive session with the National Assembly, disclosed the intention of the federal government to raise the VAT rate up, to enable government fund the new minimum wage of N30,000. However, the FIRS subsequently clarified that the intention was to increase compliance rate and not tax rates, even though the agency advised Nigerians to be ready for a VAT rate increase by the end of this year. Afterwards, the pronouncement by the government officials attract debate. While some believe that in order to boost government’s revenue, there is need for a comprehensive reform of Nigeria’s tax system, which should include a hike in the VAT, some argue that expanding the tax net is the way to go. According to those who were against the move, a hike in VAT would worsen the poverty situation in the country. Potentially, an increase of about 50 per cent would raise the current standard VAT rate of five per cent to 7.5 per cent. The average VAT collection in the past six years is about N900 billion. The revenue is shared 15 per cent to the federal government, 50 per cent to states and 35 per cent local governments net of four per cent cost of collection to FIRS. The federal government had in January this year unveiled a Strategic Revenue Growth Initiative (SRGI) for sustainable revenue generation in various sectors of the economy, part of which was to increase the VAT. Ahmed, had said the implementation of the initiative would significantly boost the federal government revenue outlook in the months and years ahead. According to the minister, Nigeria’s low revenue generation capabilities had been an enduring challenge to past and present governments. Source: This Day Live

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