The taxman and the recession

These indeed are not the best of moments for the Nigerian economy. Not only has oil revenue dropped, but tax revenue has dropped as well due to the economic recession. Thousands of companies are posting losses and thousands of others are closing shop or laying-off staff. These have impacted negatively on the tax revenue position of the federal and state government.

Data released recently by the Federal Inland Revenue Service (FIRS) shows that N3.30 trillion was collected in taxes in 2016, representing a drop of N44 billion from the N3.74 trillion it collected in 2015. FIRS’ Executive Chairman Mr Tunde Fowler has none the less taken steps to improve the tax revenue position of the federal government going forward in spite of the state of the economy. Some of these initiatives include the deployment of relevant technologies to boost tax collection in 2017. Other efforts include the ongoing nationwide registration of new taxpayers to expand the tax net in the country.

Mrs Nneka Ifekwuna, Deputy Director of Communications and Servicom at FIRS recently said the initiative has led to the registration of 814,000 additional taxpayers by December 2016 and 3.4 million taxpayers by State Internal Revenue Services (SIRSs). By December last year, Nigeria had a national tax roll of 14 million. Also the tax payment process is being simplified as tax returns at FIRS offices nearest to them had increased the compliance level. FIRS has also partnered with the Office of Accountant General of the Federation and this has forced all ministries, departments and agencies to be remitting Withholding Tax (WHT), Value Added Tax (VAT) and others.

Upon assumption of office as FIRS chairman, Fowler had said, “My vision and mission is to take FIRS as well as the nation’s tax system to an enviable height. This we cannot achieve all alone without a robust partnership and collaboration of all stakeholders within and outside the system. We must build a synergy for a healthy exchange of information between FIRS and SBIRs.” He added, “This synergy will produce the best form of revenue generation in the FIRS and the states in general as well as ensuring that over dependency on oil revenue becomes a thing of the past.”

FIRS is also engaging consultants to drive tax compliance base. At a meeting of the Joint Tax Board (JTB) in Abuja recently, Fowler said FIRS’ staff strength was not enough to execute tax administration and as such, consultants would be engaged but their duties would be exclusive of tax assessment and collection. “You can imagine a staff roster that can audit the books of well over 400,000 corporate organisations.

It won’t work. Therefore to increase the level of transparency and accountability, we would engage consultants. But these consultants will only gather data. Consequently, they will collect data; they are to assist our staff. We will do the assessment and issue the Demand Notice for the tax to be paid”.

FIRS is also upping the compliance level by tax payers as just over 30 per cent of companies and other businesses pay tax in the country.

FIRS says there are about 450,000 corporate organizations with only one out of every three paying tax but it is targeting 99.9 percentage success level of compliance. Fowler also recently warned that organizations that evade taxes would be made to face the law in a civil suit in order to collect outstanding arrears and Chief Executive Officers of such organizations could face criminal charges.

Already, FIRS is sealing office premises of tax defaulters, making them to pay their tax liabilities. Also some corporate organizations have been wooed by FIRS to pay their taxes through tax renegotiation window and that too has worked as many organizations are taking advantage of the window.