FIRS: Triumph of Tax Reforms

Julius Asemota

If proof was needed on the effectiveness of the reforms being implemented in the country’s tax/ revenue collection and administration system by the Federal Inland Revenue Service (FIRS), it was provided by the Service’s 2018 Half Year (HY) Revenue Performance Report, which showed an improvement of about 42 per cent over that of the same period in 2017 and indicated that the Service had already realized 75 per cent of its target for 2018.

Total revenue generated from various taxes between January and July this year amounted to N2.997 trillion, an increase of N885.96billion over what was collected for the corresponding period in 2017.

Analysis of the total amount showed that between January and June 2018, a total of N1.16 trillion was collected as Petroleum Profit Tax (PPT) as against the N636.1 billion collected in the corresponding period of 2017.

From Company Income Tax (CIT), the FIRS realized N680.09 billion as against the N551.94 billion generated in the previous year. Value Added Tax (VAT) yielded a total of N536.52 billion in between January and June 2018 as against 2017 by N68.84 billion generated in the same period of 2017.

Similarly, the Service generated N77.19 billion as Education Tax as compared to the N58.86 billion that was generated in 2017.

In addition, revenue from Stamp Duties rose to N7.49 billion, a difference of N2.34 billion from what was realized in 2017.

The jump began in the first quarter of the year, a period that saw the FIRS generate N1.17 trillion. The sum represented a significant leap over the N778.19billion recorded in the first quarter of2017. This amounted to a difference of N393.39bilion from what was generated in the corresponding period of last year.

In a letter to the Minister of Finance, Mrs. Kemi Adeosun, FIRS Chairman, Mr. Tunde Fowler, wrote: “The analysis shows that we have so far collected the sum of N1, 171,588,583,152.96 for January to March, 2018, which is 69.5 per cent of the total target to date. This further indicates that there is an increase of N393, 395,141,988.50, representing an overall increase of 51 per cent in 2018, when compared with the collection performance for the corresponding period in 2017.”     

The breakdown of the revenue collection, according to the letter, dated 9 April and entitled: ‘Brief on revenue projections performance for the period January to March 2018’, showed that Petroleum Profit Tax (PPT) collection rose by 91 per cent from N338.29billion in the first quarter of 2017 to N644.76billion in the first three months of 2018. It also equally revealed that Company Income Tax (CIT) rose by 30 per cent from N155.57billion to N202.16billion.

In addition, a total of N269.09billion was collected as Value Added Tax (VAT) in the first quarter of 2018, compared to N221.38billion in the first quarter of last year, a difference of 22 per cent difference. In addition, Stamp Duty collection climbed by N1.43billon from N3.08billion to N4.45billion, while Capital Gains Tax (CGT) recorded a 179 per cent rise from N110.94bn in the first quarter of 2017 to N309.17billion in the first quarter of this year.

There was, however, a slide in Education Tax collections, which fell by N8.06billion in the first quarter of 2018 to N25.87billion from N33.93billion in the first quarter of last year. In similar vein, the National Information Technology Development Fund (NITDF) levy fell by nine per cent to N163.6million in the first three months of 2018 as against N179.17m realized at the same period last year. Also affected was the consolidated revenue, which dipped by N931.37million from the N25.7billion recorded in the first quarter of last year to N24.77billion in the first quarter of this year.

Experts reckon that much of the rise in revenue collection was occasioned by a variety of reform initiatives aimed at expanding the tax net and blocking leakages.  Among steps taken to widen the tax net 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.  Official figures show that the succeeded in growing the country’s tax base from 13 million in 2015 to 19.3 million in 2018.

Also, enhanced collaboration with other stakeholders such as the Joint Tax Board (JTB) and other government agencies in addition to a virile enforcement strategy contributed in no small measure to the increase.  In a registration exercise that is continuous, the FIRS registered 814,000 fresh corporate tax entities in collaboration with the Corporate Affairs Commission, Central Bank of Nigeria and Nigeria Customs Service. It also established the FIRS/Economic and Financial Crimes Commission (EFCC) Joint Task Force to strengthen the fight against tax-related fraud. This was in addition to the establishment of the Service’s Anti-Corruption and Transparency Monitoring Unit (ACTU) to headline the anti-graft activities of the FIRS. Along with these ran strengthened enforcement activities, in collaboration with security agencies, which have led improved taxpayer compliance and collection of huge tax debts from defaulters.

These initiatives sit atop the previously erected foundation of the use of technology in tax administration, review of the National Tax Policy, amendment of tax laws and a reworking of international tax. The use of technology brought about the ease of tax payment, manifested in the introduction of e-Registration, e-Filing, e-Payment, e-Receipt, e-TCC (Electronic Tax Certificate), e- Stamp Duty, AutoVAT Collect, Integrated Tax Administration System (ITAS) and Government Information Financial Management Information System (GIFMIS), all of which resulted in automation and blocked leakages.

Asemota, a tax expert, writes from Abuja