Strengthening IRS Risk Management

infractions will minimize such institutional risks considerably. Digitalizing these processes and the constitution of proper authorization protocols can be an excellent way to start. To a considerable extent, these steps also curb intentional and unintentional mistakes. Above all, consistent workforce capacity building, robust employee engagement and alignment must receive priority attention.

The structured monitoring and evaluation of risk mitigation activities hardly exist in 90% of the IRS in Nigeria. However, this is understandable as many IRS does not have a clearly defined risk management plan for tax administration. But monitoring and evaluation efforts remain critical in determining the extent of reduction in the current and potential risks and their impacts. What mainly obtains among Nigerian tax administrations is responding to potential revenue mobilization threats, ad hoc and highly uncoordinated. Some such threats receive consideration as part of general initiatives to improve the size of the collectable yield. One would also expect that some of the tax policy recommendations from tax administrations are part of their response to identified risks or laws that may expose the system to such.

In general, tax administration, like every other endeavour, faces numerous risks. The prevalence and intensity of these risks determine how they effectively deliver on citizens’ and government expectations. Successful tax administrations provide fiscal power for good governance. They accomplish this through their revenue mobilization effectiveness. Indirectly they support good governance with excellent reputation building, enhanced trust and effective policymaking. However, risks – compliance and process – stand in the way of these desirables. Therefore, forwardlooking tax administrations consciously put suitable risk management structures and strategies. Unfortunately, more than 80% of subnational governments’ tax administrations fail woefully in this regard. Worse still, the human capacity to drive such is also not in place.