Authorities of Federal Inland Revenue Services (FIRS) and Nigerian National Petroleum Corporation (NNPC) are in crucial meeting to resolve the lingering issues bothering on huge unpaid taxes into the Federal Government’s accounts.
According to Babatunde Fowler, FIRS chairman, other defaulting companies being engaged by FIRS over outstanding tax issues include four airlines, oil and gas firms, and shipping companies, among others.
Fowler said discussion with Federal Ministry of Finance had reached advanced stage to ensure deduction from source of various taxes from major oil marketers involved in the oil subsidy and all the ministries, departments and agencies (MDAs) on contracts to be awarded.
Fowler said this at the investigative public hearing on the ‘Accounting procedure of FIRS’, by the Adhoc Committee chaired by Michael Enyong.
He said that the Service was funded by the 4 percent cost of collection on all non-oil taxes collected by it as appropriated by the National Assembly to meet its personnel, recurrent, capital and other expenditure.
According to Fowler, some of the reforms introduced in the finance and accounts in the bid to secure service delivery include: re-engineering leading to cash to accrual based accounting method of recording financial transactions; introduction of an electronic cash book system named Accounting Transaction Recording and Reporting System (ATRRS), and deployment of Acquarius software which is an improvement on ATRRS in that it integrates general ledger transactions with the cash book.
Similarly, FIRS in collaboration with two operational account holding commercial banks, deployed an electronic end-to-end payment system which enables the function to make instant payment directly to the beneficiaries account without submitting manual or soft copies of mandate to banks.
“These systems are called FastPay and GAPS for Stanbic IBTC and GTBank respectively. Subsequently, another end-to-end payment platform for capital transactions on CBN account was also introduced via REMITA platform provided by vendor named System Specs.
“Implementation of SAP-FICO, an integrated enterprise Resources planning application which combines procurement and finance processes and adopted to interface with the SAR-HR module. This system when fully implemented is envisaged to provide the ultimate solution for both budgeting, general ledger accounting, cash book and bank reconciliation and a seamless real time financial reports generation and analysis for management information for internal decision making and statutory compliance,” Fowler informed the Committee.
In his remarks, Enyong directed the FIRS chairman to submit detail reports of the companies evading taxes for further legislative action.
He explained the investigative hearing was sequel to the resolution passed on the motion brought before the House that the “2014 revenue from FIRS amounted to N4.69 trillion, while the National budget for that year was N4.669 trillion, we can infer from this that if revenue from tax is properly administered transparently, accountability, diligently, it will be sufficient to fund the national budget.”
According to him, the primary focus of this Ad-hoc committee was to scrutinise the accounting procedure and calculations of the 4% of the non-oil tax revenue which the service is empowered to retain as operational cost which in 2014 stood at N89.6 billion.
Earlier, Speaker Yakubu Dogara observed that improved method of collecting taxes in the country could generate the revenue necessary to finance the N6.060 trilion expenditure for the 2016 fiscal year.
Dogara, who reiterated the importance of a strong tax regime aided by an efficient and virile accounting system in the successful diversification of any economy, expressed concern over myriad of challenges facing the nation’s economy, owing to the global downturn in the oil market.
“So there’s no better time that we must diversify our revenue base and strengthen our revenue collection system than now.
“The negative consequences of our mono-product economy as visited on us have created the need for more revenue sources targeting alternatives going forward. Accordingly, unless urgent steps are taken to make our tax system both levy and collection more effective, there’s a great difficulty ahead of us.
“This exercise is therefore part of legislative effort aimed at complementing government plans toward boosting it’s revenue generation as the nation strives to check it’s over dependent on oil. I’m of the firm believe that a properly structured and efficient revenue service could generate and even surpass the N6.060 trillion required to fund the 2016 budget.
“This is not an over-ambitious expectation, bearing in mind that other countries that are less endowed than Nigeria are posting higher figures from internally generated revenue to finance their budgets.
“One of the major reasons is due to the fact that Nigeria as a country still lags behind other emerging markets in our evaluation of tax revenue as a percentage of our Gross Domestic Product.
“It’s important to note that while tax policies and tax laws create the framework for improved tax revenues, the actual level of taxes which flow into government revenue largely depends on the efficiency and effectiveness of the accounting procedures adopted by the revenue administration within the economy,” he said.
