Uche Usim, Abuja
When Mr Muhammad Nami assumed duty as the Executive Chairman, Federal Inland Revenue Service (FIRS) in December 2019, many did not envy his taking the plum job at a time the nation’s revenue sources were shrinking.
It coincided with two global events that jolted individuals, businesses and countries, including crude oil price crash and the shutdown of the global economic system by the COVID-19 pandemic.
With these twin challenges confronting FIRS, several economic pundits concluded that the agency would have a huge task meeting its target of N8.5 trillion in 2020.
But amidst the turbulence in the global economic system and other challenges, the FIRS recorded a 7 per cent increase in its collection target for the first quarter of 2020 (Q1 2020) compared to the same period in Q1, 2019.
To prove many wrong, Nami, had after his inauguration, rolled out a wide range of reforms to immediately revamp the Service by leveraging modern technology.
He had immediately blocked tax leaks and motivated members of staff at the FIRS by restoring a number of their statutory roles hitherto outsourced to private consultants back to them.
Other things he did included the introduction of Authority to Incur Expenditure (A.I.E) and the commencement of implementation of a new organisational structure, which opened up the opportunity for eligible staff to be promoted, leading to round pegs being put in round holes for efficient service delivery.
Just last Thursday, Nami disclosed that the FIRS set a new revenue collection record for the first quarter (Q1, 2020), regarded as the highest since its inception.
According to a statement released by the Service, the agency posted a new collection record of 15 per cent increase for the quarter under review compared to the Q1, 2019.
In the final computation of the Q1, 2020 results, a comparative analysis of the two periods shows that the Q1, 2020 collection of N1,203,310,372,900.34 was over N156 billion higher than its corresponding Q1, 2019 collection of N1,046,889,787,060.27.
The Executive Chairman of FIRS, Mr Muhammad Nami, attributed the feat to widespread policy reforms and institutional re-organisation he initiated on assumption of office in December, 2019.
According to him, Q1 collection results have traditionally been notoriously low as a result of limited economic activities within the period, which business analysts trace to the festive hangover of the New Year celebrations, delay in budget presentation which was a New Year ritual in the country for decades under the Military, limited clarity about government policy directions after the budget had been presented and consumer spending caution and limited liquidity following lavish festivities of preceding December month and January 1 New Year celebrations.
He added that the historic final performance results for Q1, 2020 were all the more remarkable as the period The Q1 result shows an astronomical increase in collection trends. Capital Gains Tax (CGT) recorded 568 per cent increase to N643,935,849.06, from N96,408,740.90.
Gas Income Tax rose by 420 per cent from N2,977,345,332.31 in Q1,2019 to N15,489,264,736.92 in Q1,2020. Even Petroleum Income Tax (PPT) increased by 9 per cent.
Other taxes such as Companies Income Tax (CIT) increased by 152 per cent – N102,610,369,777.73 in Q1, 2020 compared to N40,696,980,658.52 for the Q1, 2019; NITDEF rose by 522 per cent – Q1, 2020 N691,206,855.85 to N111,037,797.16 for the Q1, 2019; and Stamp Duty increased by 40 per cent from N3,386,648,663.85 in Q1, 2019 to N4,750,893,578.48 in Q1, 2020. Value Added Tax (VAT) increased by 27 per cent at the Customs Level and 13 per cent at the Non-Import Level.
The passage of Finance Act 2019 led to a drop in Withholding Tax rate from 5 per cent to 2.5 per cent in some sectors. The Act also tinkered with Pre-operational levy (levy paid by taxpayersto obtain TCC) thereby resulting in a 5 per cent collection in Q1, 2020, a drop from 7 per cent in Q1, 2019.
With the full take-over of PAYE and PIT in the FCT by FCT-IRS, the FIRS lost all FCT collection, which led to the fall in both Pay As You Earned (PAYE) and Personal Income Tax (PIT) for Q1, 2020.
In December, while giving his first Christmas message and felicitation to the revenue agency’s staff, Nami accused his predecessor, Mr Babatunde Fowler’s management of superintending a steady decline in revenue collection by the service since the inception of his tenure in 2015.
He recently told journalists that his first 100 days in office were challenging.
“It appears I am having to build the entire structure of the Service again from scratch in addition to meeting the huge target set for us by the federal government.
“So, you can see that it is not an easy ride. But, so far I thank God that we are gradually patching things up. The members of staff have been very cooperative and supportive,” he said.
More so, the FIRS under Nami has moved to mitigate the effects of COVID-19 challenges by unveiling a new electronic and automated platform for taxpayers to file transfer pricing declaration and disclosures in Nigeria and block leakage in tax collection, especially the Stamp Duty collected by banks across the country.
“It is to ensure 100 per cent compliance. Banks should be fully prepared for the adoption of the new compliance programme as failure to comply is not an option.
“The need for total compliance and aggressive revenue drive is imperative now in view of the recent crash of oil price from $50 to $29 which will definitely affect our collection from the Petroleum Profit Tax. Similarly, the outbreak of the Coronavirus has occasioned a global economic meltdown with serious consequences to our economy. You will recall that recently about Fifty Nigerian oil bearing trucks could not discharge crude oil to buyers because of this Coronavirus pandemic. This has the combined effect of reducing government revenue target and, subsequently, the provision of infrastructures and social amenities.
“We earnestly need to shore up against the looming economic meltdown. It is on this note that I solicit your cooperation and understanding in the drive to use automation to rev up our revenue so that the government of President Muhammadu Buhari will be able to deliver on its mandate”, the FIRS boss explained.