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The Executive Chairman, Federal Inland Revenue Service (FIRS) Mr. Tunde Folwer, has stated that revenues generated through taxation and borrowing would play a key role in supporting State Governments to finance their expenditure infrastructure and social services. Fowler, who disclosed this yesterday in Lagos at the Maiden Edition of the Nigeria Corporate Services with theme: ‘Building A Sustainable Economic Growth Through Quality Corporate Services Delivery,” noted that taxation is deemed preferable to borrowing as debt has to be repaid usually with interest and other debt servicing obligations which can sometimes create additional burden on government. He also stated that tax as a major enabler of generating revenue, adding that in an ideal environment, voluntary compliance by the tax payer would ensure that revenue is made available for improving on the provision of social amenities and services. Fowler, who delivered a paper titled: ‘Due Diligence, Best Practices in Revenue Generation’ explained that taxation as a social contract between government and taxpayers, stating that taxation enhances accountability on government, because taxpayers have a greater stake in governance. He added that when citizens play a significant role in raising revenue, government would similarly have a strong motivation to account for revenues collected and their utilization. Fowler, who was represented at the event by Mr. Abolade Kehinde, warned that it is important that in actualizing its mandate, revenue authorities must ensure that every effort is made to ensure that tax administration helps and does not hamper the valid interests of all stakeholders. In building relationship between corporate governance and public sector best practice, Fowler advised that government is expected to determine tax rates and tax laws, while being very careful about simply increasing tax rates and making it difficult for taxpayers to comply. According to him, “While it is true that higher tax rates trigger higher tax evasion behaviour, there is also evidence that stronger tax enforcement that reduces tax evasion can also result in greater shareholder value. This is because those companies that are more compliant are more transparent and therefore, more attractive for investment. “A country’s corporate governance system affects the degree to which tax changes affect the growth (or not) of tax revenue. So, when it is easy to divert income to avoid tax or when share ownership concentration is too unbalanced, an increase in the tax rate can reduce tax revenues.” “By contrast, in a good corporate governance environment, controlling shareholders will have too little incentive to divert income to avoid tax especially when they are accountable to other investors. This is because they take the personal risk of enforcement by tax authorities but benefits very little from it in terms of shareholder value. In another keynote address titled: “Ethics, the backbone of quality corporate services for economic growth,” the Director General, Lagos Chamber of Commerce and Industry (LCCI) Mr. Muda Yusuf, said services are increasingly important for their direct contribution to Gross Domestic Product (GDP), exports and employment, maintaining that with the change in the structure of the economy from a real sector dominated system to services led economy- “services sector has become the largest sector in the economy, with its share of GDP 52.62% in 2018, in addition to the sector also contributing the largest proportion of employment at 57.4%.” According to him, “Nigeria has made significant progress in its services sector, becoming one of the leading corporate service providers in the continent of Africa- our banks have registered their footprint in many Africa countries, we have a robust Business Process Outsourcing (BPO) and others, providing diverse services to businesses and governments. These are immense economic opportunities we must optimize and unleash for tangible sustainable economic deliverables.”   Source: This Days

With the price of oil tumbling drastically to $48.86 per barrel in October 2015, after which it slid further to $44.82 the following month and $37.80 in the last month of the year, the signs were bold that Nigeria was facing a major economic crisis. The implication of the slump in revenue derivable from oil, the major source of funding for country’s infrastructural and human development aspirations, was that the then new administration of President Muhammadu Buhari had flown into the most inclement weather possible. Public expectations of a national boom time were sky-high, but were almost immediately shattered, as government at all levels was hamstrung in the discharge of its responsibilities and obligations. At the state level, government, with the exception of a handful of states, for example, was unable to pay civil servants’ salaries and pensions to retirees let alone develop ideas for life-altering infrastructure projects and human development initiatives. Earlier in August that year, with the Federal Government left with no option than to look internally for revenue, especially from previously neglected sources, President Buhari appointed Mr. Tunde Fowler as chairman of the Federal Inland Revenue Service (FIRS). Fowler’s appointment was widely well received because he had been a consistently vocal voice against the country’s heavy reliance on oil revenue and, more crucially, on account of his headship of the Lagos State Internal Revenue Service (LIRS), during which the internally generated revenue (IGR) rose from a monthly average of N3.6 billion in 2006 to over N20 billion between 2006 and 2015. He met Lagos as a state unable to generate sufficient revenue from the vastness of its economic activities, and reformed revenue collection and administration processes to make Lagos the model of the genre. Yet, there was the question of whether or not he was capable of reprising what he did in Lagos State at the national level. That question, the figures show, has been answered with a resounding “Yes” in four years, a period during which the country slipped into recession. A little over a week ago, it was announced that the country’s taxable population figure was approaching a record 45 million. In 2015, the figure was 10 million, rose to 14 million in 2017, and 19 million in 2018. Last year, the FIRS collected N5.32 trillion, the highest ever in the history of the federal revenue agency. The preceding year, the agency collected N4.02 trillion and, in 2016, N3.3 trillion. The revenue growth, in spite of the country’s economic challenges, has been attributed to a variety of reform initiatives conceived to expand the tax net, block leakages and make tax collection methods more efficient. It has also been helped by enhanced collaboration with other stakeholders such as the Joint Tax Board (JTB) and other government agencies and a virile enforcement strategy, resulting in improved taxpayer compliance and collection of huge tax debts from defaulters, review of the National Tax Policy, amendment of tax laws and use of technology. The use of technology, which has resulted in the ease of tax payment and blocking of leakages, is evidenced by the introduction of e-Registration, e-Filing, e-Payment, e-Receipt, e-TCC (Electronic Tax Certificate), e-Stamp Duty, Auto VAT Collect, Integrated Tax Administration System (ITAS) and Government Information Financial Management Information System (GIFMIS). Among steps taken to expand the tax roll was the launch of the Voluntarily Assets and Income Declaration Scheme (VAIDS), which provided an opportunity for individuals and corporate entities with tax liabilities to regularize their tax affairs in exchange for freedom from prosecution, penalties and tax audits. Through VAIDS, a total of N17 billion was collected in unpaid taxes within the first six months of the scheme’s implementation. The use of various e-payment channels has ensured that taxpayers can pay their taxes from anywhere in the world, at any time, as well as making it possible for taxpayers to download their receipts. Taxpayers can also apply for and receive their tax clearance certificates online immediately. A major shift in focus to non-oil revenue has seen collection grow from N2.149 trillion in 2016 to N2.852 trillion in 2018. Oil tax revenue also increased from N1.15 trillion in 2016 to N1.52 trillion in 2017 and N2.52 trillion in 2018. Value Added Tax (VAT) collection in 2018 went above N1 trillion. In the preceding year, VAT yielded N972 billion and, in 2016, N828 billion collection. The rise in VAT revenue has largely been occasioned by the automation of the process, which allows for automatic collection. The new auto collection scheme resulted in 31 per cent VAT increase over the N25 billion collected in 2017. The FIRS was able to collect N13 billion as a result of the automated deductions at source and remittance of VAT and Withholding Tax from state governments. The automation scheme has also facilitated information exchange between the FIRS and third-party databases and other government agencies. Automation has equally impacted the Stamp Duty collection process, which in 2016 was N5.6 billion, N10.9 billion in 2017 and N15.66 billion in 2018. The FIRS has also upped the tempo of its enforcement by initiating audits through which under-remittances were discovered. These yielded N12 billion previously unpaid by taxpayers. As part of its diligence, the agency discovered 6,000 businesses with an annual banking turnover in excess of N1 billion but that were unregistered for tax and made no payments. Through enforcement of relevant tax legislations, the agency recovered N21.75 billion from such companies, which have continued paying the balance in installments. Similarly found were 45,361 businesses with banking turnovers of between N100 million and N999 million, many of which were found to be non-compliant with tax laws. Through another diligence initiative, the FIRS generated N1.33 billion in 2017 and N2.88 billion in 2018 from Lagos and Abuja-based property-owning corporate organizations that were not in the tax net. The various initiatives have been implemented alongside continuous tax education/enlightenment programmers’, which have seen the agency interacting robustly with taxpayers to sensitize them to their obligations.       Source: The Sun

The Federal High Court sitting in Lagos, on Tuesday, 21st May 2019, has for the umpteenth time held that only members of the CITN can practice taxation in Nigeria pursuant to the relevant provisions of the CITN Act.  This was the outcome of the suit instituted in 2018 by five members of ICAN by way of originating summons challenging the authority of FIRS to recognize the power of CITN to regulate the tax profession in Nigeria in all its ramifications. The Court further held that Regulation 5 of the Tax Administration (Self-Assessment) Regulations, 2011, which purports to allow members of ICAN, ANAN, and CITN to co-jointly file tax returns on behalf of taxpayers, where taxpayers opt to hire tax agents for reward, was in conflict with the extant provisions of the CITN Act. Consequently, the Court dismissed the suit of the plaintiffs and awarded cost of N200,000 in favor of the defendants. This decision is a re-affirmation of the decisions of the Lagos State High Court in 2007 and the Court of Appeal, Lagos Division, in 2013, re-stating that only CITN can regulate taxation, and only its members can practice taxation in Nigeria. FIRS, therefore, acted legally vide its letter to the CITN of 23rd April 2018, which stated that only  CITN stamp and seal will be recognized by FIRS, with effect from 2nd January 2019,  for the purpose of filing tax returns in FIRS. The Institute will issue further releases after its legal team obtains the certified true copy of the judgment. This decision has in no way encumbered the about 10,000 ICAN members in CITN from practicing taxation. Its only result is that those ICAN members, who are not members of the CITN, cannot practice taxation or file tax returns until they become chartered CITN members.   Source: Brand spur

Benue State Internal Revenue Service (BIRS) has fingered politicians, traditional rulers and local government officials in the state over collection of illegal taxes in the state. It also said that no fewer than 76 persons had so far been arrested by the board in connection with the setting up of illegal road blocks in the state. Terzungwe Atser, the BIRS chairman, who disclosed this during a press conference in Makurdi on Monday, also said the agency had been netting an average of N600 million monthly. He decried the activities of illegal tax operators, which he said, had been hindering the smooth running of business in the state. Atser observed that four major betting companies had left the state as a result of the activities of the illegal operators, while more organisations, among them Nigeria Brewery Limited (NBL), brewers of ‘MORE Lager Beer’ might pack up over illegal taxation. He fingered politicians, traditional rulers and local government officials, who he said, were in the racket of collecting illegal taxes, adding that the board was currently investigating the alleged involvement of such persons and would soon make public their names. The BIRS boss further observed that the high profile persons involved in the collection of illegal taxes had been a clog in the wheel by intervening whenever their boys were arrested.   Source: Independent

AS the first term of President Muhammadu Buhari winds up within the next nine days, it is understandable that Nigerians are looking back at the passing four years to see if (and where) the “change” the ruling All Progressives Congress, APC, promised showed up beyond mere propaganda. While the regime’s performance in the economic sector can at best be described as tepid, two federal institutions stood out by dint of their internal innovative initiatives beyond the general template of the regime’s economic agenda as contained in the Economic Recovery and Growth Plan, ERGP. These were the Central Bank of Nigeria, CBN, under its Governor, Mr. Godwin Emefiele and the Federal Inland Revenue Service, FIRS, under its Executive Chairman, Dr. William Babatunde Fowler. Emefiele, who has emerged as the first CBN Governor to be appointed for a second five-year term since the return of democracy in Nigeria in 1999, earned his place in the Buhari administration through the highly successful Anchor Borrowers Programme for agriculture (especially rice production). He also stabilised the Naira without compromising the steady growth of our external reserves. Fowler’s FIRS, on the other hand, has met the expectations of many Nigerians that he should take the “magic” he performed at the Lagos State Internal Revenue Service, LIRS, to Abuja. The FIRS has now become the Federal Government’s dependable organ for the steady accretion of non-oil, tax-based revenue to service the Federation Account. Fowler halted the instability that pervaded the FIRS since the tenure of Mrs. Ifueko Omoigui-Okauru ended in 2012. Former President Goodluck Jonathan had replaced her with Alhaji Kabir Mashi. But in March 2015, Mashi was replaced by Mr. Samuel Odugbesan who remained in acting capacity until he was replaced by Fowler. Whereas under Fowler, the LIRS increased from N600 million in 1999 to N20 billion per month in 2015, the FIRS moved from below N2 trillion per annum in 2015 to initial N3 trillion in 2016, N4 trillion in 2017 and N5.3 trillion in 2018, which is more than half of the 2019 Federal budget. In addition, through the Tax Identification Number, TIN, initiative, 45 million taxpayers have now been brought into the federal tax net. With the steady implementation of the ongoing innovations, the future of taxation assuming the lion’s share of federal revenue in place of oil is bright indeed. The Buhari regime has done a great job towards putting taxation in its proper place in our national economy. Indeed, Nigerian taxpayers can now genuinely look forward to priding themselves as the primary providers of government revenue for good governance and development. This will eventually augur well for accountability, safeguard against corruption and promote zero-tolerance for government ineptitude. We hope efforts will be made to foster continuity and consolidation in this sector.   Source: Vanguard

The Federation Accounts Allocation Committee (FAAC) has queried revenue shortfall of about N26.7 billion cby the Federal Inland Revenue Service (FIRS). The amount is in variance to the balance in the Central Bank of Nigeria (CBN’s) coffers. The difference in the figure spread across revenue channels under the purview of FIRS. These include the Petroleum Profit Tax (PPT), Value Added Tax (VAT) and Company Income Tax (CIT). The difference in figure remitted to the federation account was traced between December 2018 and January 2019. Piqued by the difference in FIRS revenue record and the balance in the federation account with the Central Bank, FAAC mandated CBN and FIRS to meet and reconcile the figure . The development, New Telegraph learnt, was intensely discussed by FAAC members at the last meeting. A subcommittee was raised with a mandate to look at it and revert to FAAC with its findings. “The sub-committee observed that FIRS reported N199.16 billion as total PPT and VAT collections in January 2019 while CBN’s component statement indicated N199.07 billion, thus showing a shortfall of N90.88 million. “In the same disposition, FIRS reported N321.23 billion as total PPT and CIT collections for December 2018 federation account, while CBN component statement indicated N294.62 billion, revealing shortfall of N26.61 billion,” FAAC document noted. This was as FAAC confirmed payment and receipt of $40.7 million by Nigerian National Petroleum Corporation/Nigerian Petroleum Development Company (NNPC/NPDC) in January 2019, thus ending a protracted drag in respect of crude oil allocation. A presentation by FAAC sub-committee to the Forum noted that: “Members may recall that NNPC/NPDC made a commitment to use a combination of cash payments and direct monthly allocation of crude cargo to offset the outstanding of $1.74 billion SPDC goods and valuable consideration indebtedness to the federation account. “Department of Petroleum Resources (DPR) has confirmed the receipt of $40.7 million from January 2019 crude oil allocation of 670,000 barrels for that purpose. The said amount has already been credited to the designated account meant to settle NPDC indebtedness,” FAAC noted. It requested NNPC/NPDC to provide prevailing crude oil price in their subsequent report to it. However, to deal with other contending unresolved issues between FAAC and NNPC, including its subsidiary, NPDC, an ad hoc committee was set up. “The ad hoc committee comprises NNPC, DPR, FIRS and post-mortem consultant. The committee is expected to complete its assignment before sub-committee’s next meeting,” FAAC stated. FAAC, a forum for representatives of three tiers of government, meets monthly for consideration and allocation of revenue to the three tiers – Federal Government, states and 774 local government councils in line with approved revenue formula. Over time, remittances of revenue into federation purse had been characterised by arguments. The NNPC, unarguably a major source of revenue for federation account, had been allegedly accused on several occasions of revenue short-change by FAAC. The NNPC/FAAC’s perennial controversy got to head last year. In 2018 alone, FAAC suffered more than six abrupt cancellations at the height of stalemate over non-compliance to full revenue disclosure and remittances by the state-owned oil firm. FAAC was displeased with indiscriminate high deductions by NNPC to offset Joint Venture Cash Call (JVCC) obligations. It took the intervention by President Muhammadu Buhari who ordered a special committee to come up with a new and transparent template for remittance.   Source: New Telegraph

Stakeholders in the telecommunication industry are calling on the Federal Government to give an executive order that will stop state and local governments from imposing multiple and punitive levies on infrastructure. They said the issue of multiple taxes had defied all level of engagements held with the state governments, lingered for too long and limiting the ubiquitous deployment of broadband infrastructure across the country. They spoke at the maiden edition of the Nigerian Telecom Leadership Summit 2019 hosted by the Nigerian Communications Commission on Thursday. A former Minister of Communications and Technology, Dr Omobola Johnson, in her keynote address, noted that engagement with state governments on multiple taxation had lasted for too long. According to her, the best way to address the perennial challenge is to advocate for an executive order from the Federal Government. “I am so disappointed that I left the government in 2015 and in May 2019, we are still talking about multiple taxes, it doesn’t make any sense. Before I came into government, we talked about multiple taxes. To me, it shows that we haven’t understood the importance of getting these taxes out of the way. An executive order will do this thing. Just tell the state governors they can’t charge the infrastructure,” Johnson said. “I think what the NCC needs to start doing is to really begin to engage and be more forceful and unless we get these issues out of the way, we cannot build infrastructure for a digital economy.”   Source: Investors King 

Stakeholders have rejected plans by the Federal Inland Revenue Service (FIRS) to tax online transactions, saying it will amount to double taxation. Chairman of FIRS, Mr Babatunde Fowler, yesterday, while speaking in New York, told the News Agency of Nigeria (NAN) that the agency will soon begin collection of Value Added Tax (VAT) on online transactions. Fowler said: “Soon, we will ask banks to impose VAT on online transactions for purchases of goods and services. Not that it is something new; it actually should be in existence.  “We will certainly follow up to make sure that every VAT that is due to be collected is collected.” He explained that the move was part of measures by FIRS to meet its N8 trillion revenue target for 2019. Fowler said the agency had started taking action against companies and businesses that refused to embrace Federal Government’s tax amnesty programme. According to him, FIRS hopes to generate between N750 billion and N1 trillion from the clampdown, which includes closure of defaulters’ bank accounts. “We are going after everybody. I am sure you have heard that we have placed lien on some accounts of defaulters that have a billion naira turnover annually. “So, certainly, we are not leaving anyone out of the tax net,” he said. Officially known as the Voluntary Asset and Income Declaration Scheme, the tax amnesty programme was launched in 2017. It gave tax defaulters a one-year period of grace to declare and settle their unpaid taxes. There have been complaints by some taxpayers of being wrongly targeted by FIRS in the clampdown. Asked to comment on that, Fowler admitted, blaming it on “administrative error,” arising from the huge number of accounts involved. “Well, there is certainly one or two instances where we made administrative error, but when you are looking at over 50,000 accounts, there is a tendency that sometimes an error might be made. “For those that we made errors on, I wrote them personally apologising and of course, we lifted the lien on their accounts.” However, reacting to the development, head of Tax and Corporate Advisory Services at PwC Nigeria, Taiwo Oyedele, said the Federal Internal Revenue Service does not have the capacity to tax online transactions, which are not already being taxed in the country. Commenting on the statement by the head of the FIRS, that the service will commence imposition of Value Added Tax (VAT) on online transactions in the country, Oyedele, “I don’t know whether they needed to say it. “The reality is that if you go online to make transactions on Jumia or any of these platforms, there is already VAT.  If you book a hotel online in Nigeria, there is already VAT on it, so the online businesses and transactions that are owned by entities in Nigeria, already pay the VAT. The FIRS does not have to impose the VAT on them, it is already being paid. “To book a flight online, you pay VAT. Now, where the difficulty is, is when you do the online service by a provider outside Nigeria, for example if you go on Amazon and you order a product, because Amazon is not a Nigerian company, then there is no Nigerian VAT. “So, the way that is done is that you pay them the full amount and they ship to you in Nigeria, by the time it gets to customs, if the amount is below the threshold where you don’t have to pay, you don’t pay anything. So, the question is how the FIRS would be able to impose VAT. If you want to watch a movie on Netflix, you just go to Netflix to subscribe, you pay and then watch a movie. The ones where they can impose, VAT are already being imposed. The ones where VAT is not currently being charged, the FIRS has no mechanism to be able to do that so it will be interesting to know exactly what they have in mind. “It is not just about Nigeria, it is a global problem that is why we have the global committee on the digital economy and they are trying to fix it because it is not a problem that one country can solve. It is a problem that requires the whole world to come together.” Mr Razack Olaegbe, deputy managing director, eMaginations Limited, advised the FIRS to engage the e-commerce and online companies before carrying out any clampdown action, stating that many of the e-commerce firms are yet to break even. “Clamping down on the companies should not be the first step, FIRS needs to engage them to understand their business model, find out if they are making money. Jumia and Konga, are they profitable? E-commerce is yet to thrive in this country. We shouldn’t use threats of clampdowns arbitrarily as it scares away foreign investors,” he said.   Source: Leadership

The Federal Inland Revenue Service has said that it will soon begin the collection of Value Added Tax on online transactions. The Chairman of the agency, Mr Babatunde Fowler, made the disclosure in an interview with the News Agency of Nigeria in New York on Saturday. Fowler said, “Soon, we will ask banks to impose VAT on online transactions for purchases of goods and services. “Not that it is something new; it actually should be in existence. “We will certainly follow up to make sure that every VAT that is due to be collected is collected.” He explained that the move was part of measures by FIRS to meet its N8 trillion revenue target for 2019. Fowler said the agency had started taking action against companies and businesses that refused to embrace the Federal Government’s tax amnesty programme. According to him, FIRS hopes to generate between N750 billion and N1 trillion from the clampdown, which includes closure of defaulters’ bank accounts. “We are going after everybody. I am sure you have heard that we have placed lien on some accounts of defaulters that have a billion naira turnover annually. “So certainly, we are not leaving anyone out of the tax net,” he said. Officially known as the Voluntary Asset and Income Declaration Scheme, the tax amnesty programme was launched in 2017. It gave tax defaulters a one-year period of grace to declare and settle their unpaid taxes.   Source: Punch