The Federal Inland Revenue Services (FIRS) tax initiatives aimed at broadening Nigeria’s tax base and increasing collection are yielding some results.
The core functions of FIRS is to assess, collect, account and enforce payment of taxes as may be due to the government or any of its agencies.
Tax collection has become critical because Nigeria faces a huge infrastructure deficit as documented in the recently launched Nigeria Economic Recovery and Growth Plan (ERGP).
According to the ERGP (2017 – 2020), Nigeria needs to invest $3 trillion in infrastructure over the next 30 years. An efficient tax system is pivotal in making this happen.
Some of the tax initiatives designed to improve efficiency in the tax system include: innovation, convenience and transparency (ICT); amnesty: waiver of penalty and interest; intensive registration of taxpayers and extensive nationwide tax audit exercise.
Others include: review and revision of national tax policy, tax laws and regulations; bringing tax offices closer to taxpayers; Voluntary Assets and Income Declaration Scheme (VAIDS); tax awareness initiative: Thursday declared as a Tax Thursday and multilateral/bilateral taxation agreements.
Tunde Fowler, Executive Chairman, Federal Inland Revenue Services’ (FIRS), said at the 2018 edition of Nigeria Economic Outlook, organised by Deloitte that FIRS’ adoption of e-Services as a medium to achieve Innovation, Convenience and Transparency of its operations has ensured that every effort is made to improve its efficiency in collections and tax administrations.
The adoption of these e-Services has not only reduced the taxpayers’ burden but also improved FIRS efficiency in collections and tax administrations. The e-Services include: e-Registration, online registration of taxpayers in order to do business with FIRS.
Others are: e-Stamp Duty, Automation of stamp duty levied transactions from the comfort of your home or office; e-Tax Payment, electronic payment of taxes through any of FIRS preferred payment channels. Nigerian Inter-Bank Settlement Services (NIBSS), Remita, Quickteller (Interswitch), Etranzact Payment Gateway; e-Receipt, an electronic notification will be automatically sent to the taxpayer’s email and/or phone within 24 hours after payment and its verification; e-Filing, automation of FIRS core tax processes.
The tax amnesty programme has yielded some fruits as well. As part of efforts by the Service to promote voluntary compliance and shield taxpayers from the burden of carrying forward tax liabilities arising from penalty and interest, the Service granted a waiver of penalty and interest for three years (2013-2015).
All defaulting taxpayers are considered, provided that such taxpayers come forward to declare their indebtedness, pay at least 25 perecent of the outstanding amount and present a payment plan on the outstanding tax liability that is acceptable to the Service.
This window was opened from 5th October to 24th November, 2016. A total of 2,400 companies took advantage of the window, from which FIRS realised about N27.086 billion, down payment.
The intensive registration of taxpayers has recorded some success. FIRS in collaboration with other relevant government agencies (such as Corporate Affairs Commission, Central Bank of Nigeria, Nigeria Customs Services) undertook a massive nationwide registration exercise of new taxpayers in 2016. The impact is that over 814,000 new corporate taxpayers registered by end of 2016. Over N120 billion accrued from the exercise, according to Fowler.
Extensive nationwide tax audit exercise has advanced both the broadening of tax base and increase in revenue collection. FIRS has conducted audit in collaboration with experienced tax audit firms on a sector-by-sector basis.
The tax audit firms facilitated and gathered data from taxpayers’ records while FIRS carried out relevant reviews, assessment and collection of the revenue due from the tax liabilities that arose.
This led to increased compliance across all tax types and all taxpayer categories. Over 15,000 non-compliance stickers were pasted on identifiable business premises and recalcitrant taxpayers were enforced upon and over N35.65 billion recovered.
Voluntary Assets and Income Declaration Scheme (VAIDS), VAIDS is an initiative designed to encourage voluntary disclosure of previously undisclosed assets and income for the purpose of payment of all outstanding tax liabilities.
It is being implemented by the Federal Inland Revenue Service in collaboration with the 36 States and FCT Internal Revenue Service.
It offers a grace period from July 1, 2017 to March 31, 2018, for defaulting taxpayers to voluntarily declare their true tax status and pay to government what they owe over an agreed period of time.
The scheme is expected to help expand Nigeria’s tax base and improve the low tax to Gross Domestic Product (GDP) ratio from the current 6% to between 12 percent to 15 percent in the first instance, and so far N17 billion has been result of this initiative from federal taxes.
STEPHEN ONYEKWELU
