By Ismaila Gwandu
Nigeria has achieved a lot as per tax administration during the last four years. With the prices 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 clear 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 such that the new administration of President Muhammadu Buhari had run into the most inclement weather possible. Public expectations were sky-high. But governments at all levels were almost hamstrung owing to a severe economic recession brought about by crash oil price.
For example, at the state level, governments, with the exception of a handful, were unable to pay salaries and pensions, let alone fund infrastructural projects and human development initiatives.
To up its internal revenue, especially from previously neglected sources, President Buhari appointed a new board for the Federal Inland Revenue Service (FIRS) headed by Mr Tunde Fowler who had consistently been vocal against the country’s heavy reliance on oil revenue.
The revenue growth in the last four years, in spite of the country’s economic challenges, have been attributed to a variety of reform initiatives conceived by FIRS new leadership to expand the tax net, block leakages and make tax collection methods more efficient. It has also been helped by 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 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, eReceipt, e-TCC (Electronic Tax Certificate), e- Stamp Duty, AutoVATCollect, Integrated Tax Administration System (ITAS) and Government Information Financial Management Information System (GIFMIS).
Among steps taken to expand the tax, the 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 N17billion 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 the collection grow from N2.149 trillion in 2016, N2.5 trillion in 2017, 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 N1trillion. In the preceding year, VAT yielded N972 billion and in 2016 collection was N828 billion.
The rise in VAT revenue has largely been occasioned by the automation of the process, which allows for the automatic collection. The new auto collection scheme resulted in 31 per cent VAT increase over the N25billion 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 with 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 N1billion, but was 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 instalments. 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 organisations that were not in the tax net.
The various initiatives have been implemented alongside continuous tax education/ enlightenment programmes, which have seen the agency interacting robustly with taxpayers to sensitize them to their obligations.
Usually, whenever you see a typical civil servant complaining bitterly, it almost always is because somebody is blocking the loopholes that they have been using to make illegal money. It is always good to take indecorous complaints however reasonable they sound, with a pinch of salt. It is on record that the FIRS under Babatunde Fowler in the last four years of the Buhari administration has increased the tax collection to an enviable level and has made some changes that have been blocking the loopholes.
The complaining crowd against the administration should tell Nigerians how much FIR was raking in as taxes before Fowler was appointed and how much they are generating now. Truth is that apart from corrupt politicians, another unpatriotic group are the greedy civil servants.
To enhance the tax revenue base, FIRS is working hard to capture about 45 million Nigerians before December 2019 through the Tax Identification Number (TIN) registration exercise and consolidated National Taxpayers’ Database. The new TIN Registration System would improve on the efficiency and output of the entire tax administration process. It is also meant to provide enhanced convenience to the taxpayers as well as the tax administrators while guaranteeing that each taxpayer’s details are readily available to them at their fingertips at all times and anywhere.
Internally Generated Revenue collection at the sub-national level grew exponentially by 46.11 percent from N800.02 billion in 2016 to N1.16 trillion in 2018. FIRS tax collections grew by 53.9 percent from N3.3 trillion in 2016 to N5.32 trillion, being the highest collection ever in history. N2.85 trillion was collected as Non- Oil Revenue which accounted for 54 percent of total revenue collection. The federal government itself has paid a total of N135.8 billion as outstanding PAYE tax liabilities owed by Federal MDAs to states from 2002 to 2016.
Looking back, it can be seen that the management has lived up to its promise of 2015, which is to be more customer-friendly, more convenient, more transparent in its operations, and deploying technology has been achieved. There are now systems where all tax activities can be done online. From registering a company with the Corporate Affairs Commission, to downloading tax identity, or making any payment online. If FIRS is given the taxpayer’s email address or telephone number, any time a payment is made with that tax identity, the taxpayer gets an alert. He can download his or her payment details. He or she can also confirm his or her receipt online. With technology, the FIRS has uploaded its system with the details of tax transactions from 2012 to date. So, if anyone had any transaction in the last six years, the history of those transactions are now in the FIRS database for anyone to access. The taxpayer can also download receipts for those payments from back periods and up to date. That has brought about more accountability and transparency.
Under the Joint Tax Board, the FIRS has, for the first time in Nigeria, produced a unified database. This means a database that has all kinds of details about corporate and individual accounts. At the touch of a button, one can access anyone’s tax history or tax compliance level without leaving your office. However, since tax information is very sensitive, this information is made available only to all State Chairmen of FIRS and some people in government. If one has a contractor is bidding for a contract, and they want to check for his tax compliance level, once the tax identification number is given, the person’s tax history will automatically pop up from the system. There is no issue of whether one is bringing a fake tax clearance certificate, or the photocopy of the certificate is not clear enough. They can now confirm all that online. This information will also be made available to ministries, departments and agencies of government.
FIRS found out that a lot of companies were not registered for tax.
FIRS consequently came out with new VAT certificates. Businesses were asked to display these in their places of business. That will show that the company is registered for tax. Once the company is registered for tax, it means it is enabled to collect VAT. What FIRS also found out was that there were a lot of companies that were not registered for tax, but were collecting a lot of money in VAT and not remitting it. They are numerous. FIRS has gone about sensitizing Nigerians on why they must ask anyone they want to do business with if they have registered for tax.
* Ismaila Gwandu wrote from Abuja.