“The nationwide audit would ensure increased tax revenue collection, improve service delivery to taxpayers and enhance voluntary compliance.”
Omodele Adigun
With N12.66 billion in the kitty of the Federal Inland Revenue Service (FIRS) as tax receipts in less than a month after it commenced its substitution programme, its Executive Chairman, Mr Babatunde Fowler, has pledged to fashion out innovative ways of tax collection in the country.
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According to him, ‘FIRS will continue to implement initiatives that will drive compliance and generate revenue by continuous taxpayer enlightenment, implementation of the auto VAT collection in other sectors of the economy, simplification of the tax processes especially for small taxpayers, strengthening collaborations with other agencies such as Corporate Affairs Commission (CAC), states boards of Internal Revenue, Ministry of Trade and Investment, Nigeria Customs Service”.
At two different fora, while hosting the new Minister of Finance, Hajia Zainab Ahmed, in Abuja, and at a stakeholder meeting in Lagos, he gave the outlook of the tax authority and what he would do to move tax collection to the next level.
Excerpts:
Scorecard
About a month ago, the FIRS commenced substitution of the bank accounts of high networth billionaire tax defaulters. FIRS wrote to all commercial banks in May 2018, requesting for a list of companies, partnerships, and enterprises with a banking turnover of N1 billion and above. This activity is aimed at ascertaining those companies that are compliant with the Tax Laws and those that are not compliant. So far, non-compliant organisations have paid about N12.66 billion
The FIRS will continue to implement initiatives that will drive compliance and generate revenue by continuous taxpayer enlightenment, implementation of the auto VAT collection in other sectors of the economy, simplification of the tax processes especially for small taxpayers, strengthening collaborations with other agencies such as CAC, states boards of Internal Revenue, Ministry of Trade and Investment, Nigeria Customs Service. So far in 2018, the FIRS has collected N773.49 billion in eight months. The above collected this year has already surpassed that of 2015 (N767.33 billion), and is set to surpass 2016 (N828.19 billion), and 2017 (N972.30 billion) with four more months left in the year.
The e-stamp duties collection is also on a steady increase. So far in 2018, the FIRS have collected N10.10 billion in eight months. The above collected this year has already surpassed that of 2017 (N 10.9 billion), 2016 (N5.6 billion), and 2015 (N7.1 billion).
At the Lagos event, he stated:
Substitution
What we have done is what we call substitution, which also is in our laws, which empowers us to appoint the banks as collection agents for tax. So, all these ones with Tax Identification Number (TIN) and no pay, and no TIN and no pay, amounting to the total of 6772 will have their accounts frozen or put under substitution, pending when they come forward. First, they refused to come forward in 2016, they refused to come forward under VAT and are still operating here. So, we are putting them under notice that it is their civic responsibility to pay tax and to file returns on these accounts. We looked into all businesses, partnerships, corporate accounts that have a minimum turnover of N1 billion per annum for the past three years. First of all, the law states clearly that before you open a corporate account, part of the opening documentation is the tax I.D. From the 23 banks that we have analysed so far, we have 31,395 records, out of which, effectively minus duplications, we had 18,602.
We broke them into three categories: Those that have TIN tax I.D, those that don’t have TIN and, of course, no TIN no pay, and those that have TIN and have not even paid anything.
So, on a minimum, every company or business included here over the last three years have had a banking turnover of N3 billion and above. Some of them have had banking turnover of over N5 billion and have not paid one kobo in taxes. Now, the total number of TIN and no pay is 6,772.
So, if someone is good in mathematics and you take the minimum level of N3 billion multiplied by 409, and they are operating within our society and economy and do not remit or make any tax payment.
Wasted generation
I plead with the banks to support us. And in supporting us, you are supporting Nigeria. In supporting Nigeria, you are supporting all Nigerians and those who have chosen Nigeria as home. And most of all, you are supporting a future that we can leave behind for the upcoming youth of Nigeria. I remember this when we were growing up a statement made by Wole Soyinka that our generation is a wasted generation. That (the statement) has remained in my mind for many years. Wole Soyinka is still alive. His generation is a generation of 80s and above. Let us not look back and say also our generation has not left any value behind. I think it is time for us to change.
Audit
We have started a comprehensive Audit exercise that involves both national and regional Audit because we got to a position where we found out that majority of the major organizations that were allowed to do self-assessment, do not truthfully declare or pay the taxes that were due. There are more than six thousand businesses in Nigeria without records. The current efforts to recover taxes are not based on any new laws, but on existing laws.
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The nationwide audit would ensure increased tax revenue collection, improve service delivery to taxpayers and enhance voluntary compliance. I urge you all to support efforts to reposition tax administration system in the country.
To date we have raised assessment of over N805 billion from 1324 national audit, out of which 499 (taxpayers) have N219 billion. That N219 billion can do a lot of things. It can provide certainly a lot more infrastructure, healthcare and educational facilities. These monies that are supposed to go into the Federation Account are shared between federal, local and state governments. So, every state can get an additional N1 billion from such monies, hopefully if you vote right, that governor would deploy it to the right place.
Gone are the days we ask what has government done for me. We should ask what are we doing for ourselves and the nation. First, we should obey the law, pay our taxes, empower our governments at various levels. Then sit back and see the end results. If we see the amount of the budget that has gone into capital under this present government, but not only gone into the government but being expensed, it is at least three times more when the revenues were even higher.
Tax receipt
The greatest challenge for any tax administration is achieving and maintaining a high degree of self-assessment and voluntary compliance by taxpayers. The major determinant of tax compliance included changes in law, taxpayers attitudes to payment of right taxes and tax consultants offering the right advice to tax paying public. Studies, however, show that the extent to which an economy is able to grow sustainably and develop depends to a large extent on its ability to generate tax revenue to finance its expenditure and the efficiency of its tax system.
The questions that arise from these simple statements include how to identify areas of non-compliance; how to measure the level of non-compliance; and how to address the non-compliance. FIRS has put in place various strategies and initiatives to cushion this effect and ensure that we are able to improve tax revenue collection on a sustainable basis. Well-designed taxpayer services, education programs, and creative measures can facilitate self-assessment and compliance.
If you look at 2018 revenue to date, between January and August, we have done N3.5 trillion, which is N1 trillion over 2017. But the main point I want to make
is that majority of taxpayers that accounted for this revenue have not changed. The laws have not changed. And to a great extent, the consultants to these companies have not changed. If you look at 2017, there is an increase of close to N800 billion over the 2016 collection.
The increase in 2018 so far showed 1 trillion. If the same consultants advised or reviewed the accounts of the majority of the taxpayers, one would wonder why such large increases occurred.
It is either the taxpayers did not disclose fully their financials to the consultants or the consultants are not involved in tax planning. Either way, it is not to the wellbeing of our nation, Nigeria. We have found out that a number of businesses, collect VAT and do not remit to the government. So we are going back old school way and I would just like to publicly display this: This is the new VAT certificate which would be given to all taxpayers and we expect them to display it in their places of business because we also found out that a number of businesses were not even registered taxpayers and were collecting VAT. Without having a tax I.D as an agent or a collector of VAT, there is no way you can remit that VAT to government. So, in short, they were collecting and adding it to their income and spending it.
Online payment
Prior to now, at times your tax office can be an hour away from your office, taxpayers can now choose where their files reside You can pay anywhere in the world: London, Dubai, New York, pay your taxes online and download your receipt immediately. The Joint Tax Board (JTB) is determined to improve service to taxpayers at all levels and a consolidated Taxpayer Identification Number (TIN) database is already in place under the JTB.
Turnover
First of all, banking turnover does not mean that is the turnover of your business. It simply means the money that has gone in and out of your account. But what the tax law says is that if you do not file your returns and you are in constant default, we use turnover as a basis of estimating your tax liability’. For example, if your turnover is N100 million we assume that 20 per cent of that is profit and we tax that at30 per cent.
Some of them (corporate organisation which have property, but are now being assessed on the value of their property’s turnover) claim not to own property, those of them that claim not to own the property and of course were sent to government, Presidency to decide what would happen to those properties that have no owners. To those that have owners and have not paid they would be prosecuted. We are also in the process of going to court to get the approval of the court orders to sell those properties. We are not only doing that in Abuja. We’ve concluded in Lagos. We are currently doing it in Osun, Oyo, Kaduna and eventually we would cover the whole federation.
The idea here is simple if you have had the opportunity to make your wealth in this economy, in this society, the least you can do is pay your tax. We have not included any group who by law are not meant to pay tax in this group.
