FIRS goes tough amid tax reforms

In 2017, when the Federal Government signed the Executive Order to commence the Voluntary Assets and Income Declaration Scheme, many people doubted the political will of the administration of President Muhammadu Buhari to fully implement the tax amnesty programme.

The tax amnesty programme, which started on July 1, 2017, came to an end on June 30 last year and it offered a 12 -month window of opportunity for taxpayers to regularise their tax liabilities. In exchange for full and honest declaration, the government waived penalties that should have been levied and also waived the interest that should have been paid on overdue tax.

Also, those who declared their tax obligation honestly would not be subjected to any investigation or  tax audit. During the period of the implementation of the tax amnesty programmes, the Federal Inland Revenue Services under the leadership of the Executive Chairman, Mr Babatunde Fowler, also implemented reforms aimed at improving the level of voluntary compliance.

Before the commencement of the current administration, Nigeria’s tax system was unable to effectively achieve its objective of ensuring voluntary compliance due to lack of robust framework for the taxation of informal sector and high networth individuals, thus limiting the revenue base and creating inequality.

In a bid to address these challenges, the FIRS came up with various technology -driven initiatives aimed at increasing the number of taxpayers, and reducing taxpayers’ burden by making tax payment more convenient.

Some of these initiatives were the deployment of electronic payment channels for registration, filing, payment, receipt  and tax clearance certificate to facilitate easy remittance of taxes by taxpayers. The service also came up with information exchange for third party databases which was implemented in collaboration with government agencies such as the Nigeria Customs Service, and the Corporate Affairs Commission, among others.

Since the implementation of these reform, investigations by our correspondent showed that the number of registered taxpayers had increased from 10 million in 2015 to about 19 million in 2018. Figures obtained from the FIRS showed that within a three-year period covering January 2016 and December 2018, the country earned a total of N12.65tn in tax revenue.

An analysis of the tax revenue figures obtained by our correspondent from the FIRS showed that the amount was generated from two major sources of taxes which were oil tax and non-oil tax. The oil tax is made up of Petroleum Profit Tax while the non-oil taxes are Company Income Tax, Gas Income, Capital Gains Tax, Stamp Duty, Value Added Tax, Education Tax, Tax Amnesty and Nigerian Information Technology Development Fund. Under PPT, analysis of the tax revenue figures from the FIRS revealed that the sum of N5.14tn was generated between 2015 and 2018, while the balance of N7.51tn was earned from non-oil tax collection during the three- year period.

A breakdown of the N12.65tn revenue collection figure showed that the sum of N3.3tn was generated in 2016. In 2017, the amount rose to N4.02tn before the service recorded its highest revenue collection figure  of N5.32tn in its entire history in 2018.

Further breakdown of the PPT of N5.14tn revealed that N1.15tn was collected in 2016, while the tax figure rose in the 2017 and 2018 fiscal years to N1.52tn and N2.47tn respectively.

Source: Punch