Mr Muhammad Nami, the Chairman, Federal Inland Revenue Service (FIRS) says bringing the informal sector to the tax net will tackle budget deficit and increase revenue in the country and Africa.
Nami said this at the 9th African Tax Administration Forum’s (ATAF) Country Correspondents Conference and Experts meeting on Taxation of informal sector in Abuja on Tuesday.
He explained that those that constituted the informal sector were huge and could contribute significantly while paying their taxes, thereby addressing budget deficit in Nigeria and other African countries.
Nami, also the chairman of ATAF said it was estimated that the informal sector in Africa constituted between 21 to 70 per cent of Gross Domestic Product (GDP) of African countries.
According to him, with the above figure, the sector accounts for between 30 to 90 per cent of employment and revenue generation.
The chairman said that in spite of the large size of the informal sector, it was the most difficult to tax.
He added that most of the businesses operating in the sector were concealing their activities from tax authorities wherever they operated.
Nami said such businesses also operated a cash risk and maintain a poor and no accounting records, adding that most of those businesses were small and fragmented which made it inefficient for revenue administrators to enforce compliance.
“Taxing the informal sector is also critical because it will ensure that there is a perception of fairness in the tax system.
“Those who operate in formal sector view it as unfair that they are paying taxes while those in the informal are not. Those in informal sector use infrastructure built with the formal sector taxpayers’ money which is injustice,’’ he explained.
Nami said the meeting was to strategise, exchange information and views aimed at advicing tax authorities and government of African countries on the need to bring the informal sector on board the tax net.
Earlier in his remarks, the ATAF Executive Secretary, Mr Logan Wort lamented that the continent’s tax to GDP ratio was low, the reason they brought tax authorities and experts together to discuss the way forward.
Wort said that the low tax to GDP on the continent was largely due to tax evasion, adding that the informal sector with huge impact must be brought to tax net.
Edited By: Ese E. Ekama
The Independent Corrupt Practices and Other Related Offences Commission (ICPC) has threatened legal action against 44 property owners including two buildings in Abuja belonging to Pinnacle Communications Ltd.
In a letter to the Management of Pinnacle Communications, ICPC also dismissed allegation by the digital telecommunication company that its operatives illegally invaded their Abuja office on Jan. 15.
A copy of the ICPC letter, dated Jan. 24 and signed by the agency’s Director of Operations, Mr Akeem Lawal, was made available to the Nigeria News Agency on Sunday.
The company had claimed that the two buildings in question housed its operational office on Charles De Gualle Street, Asokoro, Abuja, that was allegedly invaded by operatives of the ICPC.
On Jan. 21, Pinnacle Communications held a news conference alleging that the ICPC operatives attempted to break into its office in a bid to arrest its Chairman and Managing Director.
Speaking through its lawyer, Mr Abayomi Oyelola, the company had described the “invasion’’ as despicable and contemptuous since a fraud case instituted by ICPC against it was pending in court.
But in its response, the anti-graft agency said its operatives stumbled on the buildings while investigating a “totally different” case of tax evasion.
The commission said the buildings were among 44 property (buildings and plots of land) whose list was forwarded to it by the Federal Inland Revenue Service (FIRS) for investigation.
The commission said FIRS requested the investigation after the ownership of the property was denied upon efforts to make their owners pay the relevant tax due.
According to ICPC, Pinnacle Communications was not mentioned as owners of any of the property on the list attached to the letter from FIRS.
It said its operatives arrived at the building in a bid to ascertain their coordinates and mappings as indicated by FIRS and confirmed by the FCT Department of Land Administration.
The commission dismissed Pinnacle’s “skewed and misleading’’ allegation as an attempt to link an honest investigative exercise with “the almost concluded case’’ against its chairman and others.
It further said that its operatives “do not go out to arrest persons in the course of locating property under investigation’’, contrary to the company’s allegation that they were there to kidnap the chairman.
“The reference at the briefing to the alleged lamentation of our staff `that they should have shot their way into the premises as soon as they arrived,’ is definitely far from the truth in the face of a legion of over ten armed mobile policemen on your premises.
“The commission deplores the bad faith evident in your media briefing and finds it really unprofessional that one of your counsels in the criminal case before the court, Abayomi Oyelola, who accosted our operatives after they had been denied entry into the premises by the policemen, was the same person that addressed the media on behalf of your company.
“Rather than come to our office the next day January, 16, 2020 as he had promised our officers, he thought otherwise and held a media briefing with the sole objective of painting the commission in bad light,’’ it said.
ICPC said since Pinnacle Communications had now claimed ownership of the two buildings, it should proceed to resolve the issue of ownership with the FCTA and tax evasion with FIRS.
The anti-graft agency gave the company three weeks from the date of the letter to act accordingly as it was prepared to take further legal actions on all the property.
Edited By: Chioma Ugboma/Ali Baba-Inuwa
Mrs Zainab Ahmed, the Minister of Finance, Budget and National Planning says the implementation of Value Added Tax (VAT) increase from five per cent to 7.5 per cent will take effect from Feb. 1. Ahmed said this during the inauguration of the Chairman and Board members of the Federal Inland Revenue Service (FIRS) in Abuja on Thursday. “We planned that going forward, the annual budget will always be accompanied by Finance Bills to enable the realisation of revenue projections. “Future Finance Bills will therefore, provide us with additional opportunities to incrementally improve the fiscal policy and regulatory and legal environment. “This is in order to further strengthen our domestic capital market, and ultimately ensure sustained and inclusive growth and development,” she said. The minister recalled that the Finance Act had also taken care of essential palliatives to support Micro, Small and Medium Enterprises (MSMEs) and mitigate the impact of VAT rate increase on the most vulnerable businesses, communities and citizens in the economy. While inaugurating the board, the minister urged the new board to ensure steadfastness of the service in meeting non-oil revenue targets to accelerate the nation’s development. Ahmed said the board was saddled with various responsibilities, including the supervision of the FIRS. In his remarks, the FIRS Executive Chairman, Mr Muhammad Nami, said the new board had dedicated itself to the task at hand as the nation was looking up to the service, to provide a leeway out of the present economic crunch. “As a tax administrator and custodian of the Nigerian tax system, we have the responsibility to the nation to implement all tax policies and laws in a manner that would ensure optimal benefits to the nation.” Nami said FIRS had a duty to strengthen, withstand and overcome the challenges that was ahead of it. He pledged to rebuild FIRS institutional framework, robust collaboration with stakeholders, build a customer taxpayer centric institution and data centric institution. He also said the board intended to achieve this through building staff capacity for service delivery and close all lien cases in order to build new enforcement strategies. Nigeria News Agency , reports that members of the board are Mr Muhammad Nami, the Executive Chairman of the FIRS, Mr James Ayuba (North-Central), and Mr Ado Danjuma (North-West). Others are Mr Adam Mohammed (North-East), Mr Ikeme Osakwe (South-East), Mr Adewale Ogunyomade (South-West) and Mr Ehile Aibangbee (South-South). Also inaugurated were members of boards of Ministries, Departments and Agencies (MDAs) of the Federal Government. They are Ladidi Mohammed, Attorney-General of the Federation Office and Mr Folashodun Shonubi, Central Bank of Nigeria (CBN). The membership also includes Hajiya Fatima Hayatu (Ministry of Finance), Mr Samuel Maagebe (Revenue Mobilisation Allocation and Fiscal Commission), and Mr Umar Ajiya (Nigerian National Petroleum Corporation). Others include DCG Mairo Isah of the Nigeria Customs Servic (NCS) and Mr Garba Abubakar, Registrar-General of the Corporate Affairs Commission (CAC). Edited by: Olabisi Akinbode/Ese E. Ekama
Alhaji Lado Abdullahi, Chairman, House of Representatives Committee on ICT, says EFCC will join the committee to investigate telecom providers, over alleged non-remittance of the one per cent annual turnover to NITDA.Abdullahi told newsmen in a telephone interview on Monday that effort of the committee is to ensure it meets the one-month deadline by the House. Nigeria News Agency reports that the National Information Technology Development Agency (NITDA) Act says telecoms providers should remit a percentage of their annual turnover to NITDA to install infrastructure. A source at NITDA alleged that telecom providers owed the agency over N200billion which he said had caused Nigeria to lose a verifiable source of revenue generation thus hampering development. Abdullahi said the house would ensure that the Chief Executive Officers of the nation’s telecom providers accounted for their alleged failure to remit the fund to NITDA for several years. The lawmaker alleged that the telecom providers had not remitted the said amount since the Act became effective in 2007. “Our committee has been given a month deadline following a motion sponsored by a member from Ukwa East/West federal constituency in December 2019. “The committee has not started working because the motion was moved during our last session before we went on recess and we have not resumed. “So when we resume, we will be able to investigate the matter. Hopefully by 20th of this month, the committee will take off,” he said. Abdullahi said that the committee would write the telecom providers to furnish it with vital information about their annual turnover starting from 2007, when NITDA Act was enacted, to date. “We want to know when last they released their turnover to the Federal Inland Revenue Service (FIRS) from 2007 till date. “We also need to know whether the FIRS too gets information from them. “FIRS will also provide us with the turnover of each service provider from 2007 till date. “The Attorney-General, Accountant-General, Central Bank of Nigeria (CBN) will furnish us with useful information to do our job. “The process ought to have been that once the FIRS collects the money, it makes it known to the Accountant-General, who will release same to the Ministry of Finance and then to NITDA,” he said. He said that majority of them were defaulters which necessitated the investigation of the matter and to prosecute whoever was involved. “We are involving the Attorney-General, the Inspector General of Police (IGP), Department of State Services (DSS) and EFCC. “Any CEO coming to make presentation has to be on oath. They will be summoned before the national assembly to resolve the issue. The Attorney-General too will do the investigation and prosecute them accordingly,” he said. NAN recalls that the house had directed the Abdullahi-led committee to investigate the collection and remittance of the levy on behalf of the National Information Technology Development Fund (NITDF). The directive followed the adoption of a motion of urgent public importance moved by Uzoma Nkem-Abonta on the need to investigate payment and remittances of taxes acruable to NITDF established by NITDA Act 2007. Edited by: Chioma Ugboma/Donald Ugwu
MTN Nigeria Communications Plc on Friday said its case with the Federal Government over alleged revenue indebtedness of N242.24 billion and $1.28 billion had been withdrawn.
MTN Nigeria stated this in a regulatory filing to the Nigerian Stock Exchange (NSE) signed by its Company Secretary, Uto Ukpanah.
The company said its legal counsel received a letter from the Attorney General of the Federation, which formally withdrew the government’s demand for the funds.
“MTN Nigeria is pleased to report that its legal counsel has received a letter dated Jan.8 2020 from the Attorney General of the Federation and Minister of Justice (the AGF) formally withdrawing the demand for N242,244,452,215.97 and $1.283,610,357.86 alleged revenue indebtedness,” the company said in a statement.
It said the letter confirmed that the AGF had referred the matter to the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS) with a view to resolving the contentious issues.
“MTN Nigeria will consequently follow due court process to withdraw its legal action against the AGF and engage with the FIRS and NCS on the issues.
“MTN Nigeria remains committed to conducting its business in accordance with applicable laws in Nigeria,” it said.
“We are very pleased with the decision of the AGF and we commend him for his wisdom.
“We maintain our dedication to building and maintaining cordial relationships with all regulatory authorities in Nigeria.
“And we remain fully committed to meeting our fiscal responsibilities and contributions to the social and economic development of Nigeria,” Moolman stated.
The Nigeria News Agency reports that Lagos division of the Federal High Court adjourned the suit filed against Nigeria by MTN over the disputed claims of tax evasion to Jan. 30 and 31.
The telecoms firm had filed the suit against the government, following the demand by the AGF that MTN should pay the tax bill relating to the import of equipment and payments to foreign suppliers from 2007 to 2017.
The plaintiff was seeking among other declaratory reliefs, a declaration that the AGF’s demand of the sums of N242.24 billion and 1.28 billion dollars from MTN was premised on a process which was malicious, unreasonable and made on an incorrect legal basis.
Edited by: Chioma Ugboma/Salif Atojoko
The Federal Inland Revenue Service (FIRS) has served a seven-day notice to tax defaulters across the country.
The Head, Communications and Servicom Department, Mr Wahab Gbadamosi, made this known in a statement in Abuja on Tuesday.
with a view to prosecuting defaulters and recovering all outstanding tax liabilities.
“The enforcement is pursuant to the provisions of Sections 8, 26 (2), 33 and 35 of the FIRS establishment Act, 2007.
“The taxes referred to are as follows: Petroleum Profits Tax, Companies Income Tax, Value Added Tax, Withholding Tax, Tertiary Education Tax, NITDA Levy, Stamp Duty and Capital Gains Tax,” he explained.
Edited by: Donald Ugwu
No fewer than 1,000 exhibitors have indicated their interest to participate in the North- East Trade Fair scheduled to commence on Monday, Dec.16 in Bauchi State.
Dr Bala Abubakar, the Vice Chairman, Central Organising Committee of the fair, disclosed this in an interview with the News Agency of Nigeria on Sunday in Bauchi.
Abubakar said 45 exhibitors out of the figure, had already set up pavilions while another 25 also paid for spaces.
He said that the remaining exhibitors were either busy purchasing materials to set up their pavilions or clearing sites.
Abubakar, who is also the Vice Chairman, Coalition of Northern State Chambers of Commerce, Industry, Mines and Agriculture, said that the exhibitors include Federal and State Government agencies as well as private companies from within and outside North East zone.
He said that the Vehicles Assembly Plant of the Nigerian Army was among the exhibitors that would feature at the fair, adding that “it has already established its pavilion at the fair complex”.
He said the others with pavilions at the fair were the Federal Inland Revenue Service (FIRS) and its Bauchi Board of Internal Revenue counterpart, Nigerian Transport Research Institute and a host of others.
He said that Adamawa, Borno, Bauchi, Gombe, Taraba and Yobe States that constituted the North East Zone were also participating in the fair.
According to him, Benue and Plateau States that did not participate in the Abuja Fair are also participating in the fair.
Abubakar attributed the large turn out of participation and patronage by exhibitors to marketing strategies by six organizing committees of trade fair during Abuja, Lagos, Jos and Kano International trade fairs.
“The fair will create greater business connections for business communities and attract investors to see the potentials of the states and the region,” he said.
Edited by: Philip Dzeremo/Tukur Muntari.
Mr Akinsanya Niyi, a financial expert has urged the newly appointed executive chairman of Federal Inland Revenue Service (FIRS) to improve on deployment of Information Technology (IT) system to expand tax net.
Niyi gave the advice on Tuesday while speaking with the Nigeria News Agency in Abuja.
The expert while reacting to appointment of the new FIRS boss, said improving usage of technology would improve revenue generation.
NAN reports that President Muhammadu Buhari on Monday named Muhammad Nami as the new executive chairman of FIRS.
Niyi said currently, the FIRS was at the vanguard of using some of the most innovative approaches of technologies to tax administration, adding that such development should be sustained.
Emphasis should be placed on sustainability of existing practices, especially on the use of IT as this will increase the number of taxpayers in the tax net.
The continuous use of technology will allow existing taxpayers to get accustomed to the digital approach.
Introducing new things again may not help matters because too much innovation or changes can lead to confusion on the part of taxpayers and bring about gaps in knowledge and compliance,’’ he said.
The expert, however, commended the outgoing chairman of the service, Mr Tunde Fowler for leading a team that had brought in some innovation to tax administration.
According to him, Fowler’s effort has brought an increase in revenue generation for the Federal Government.
Edited by: Chioma Ugboma/Ese E. Ekama
The Independent Corrupt Practices and Other Related Offences Commission (ICPC) on Friday said it had seized 44 assets valued at N14.7 billion.
Spokesperson of the anti-graft agency, Mrs Rasheedat Okoduwa, disclosed this in a statement in Abuja.
Okoduwa said the assets, located in the Federal Capital Teritory, comprised two mansions, 27 pieces of land, one factory building and 15 buildings at Asokoro, Maitama and other districts.
She stated that the assets were linked to 32 corporate entities and that the seizures followed the denial of ownership by the supposed owners.
She said: “The commission, in collaboration with the Federal Inland Revenue Service (FIRS), had found that the entities had N883.7 million tax liability on the seized properties.
“The seizure is based on Section 45(4) of the Corrupt Practices and Other Related Offences Act .”
Edited by Tayo Ikujuni/Maharazu Ahmed
A News Analysis by Mustapha Sumaila of News Agency of Nigeria
The proposed increase in the Value Added Tax (VAT) from five per cent to 7.5 per cent by the Federal Government and its resolve to commence implementation in 2020 after necessary consultations has been raising dust by many Nigerians.
A lot of Nigerians complained that the planned increment would cause inflation and further aggravate the hardship being experienced by the people.
Some experts believe the proposed upward review of VAT is the right step in the right direction owing to dwindling oil prices while others faulted the timing.
The Federal Government had explained in various fora that the proposed tax was not targetting the poor and the rural dwellers but the rich in urban areas with a view to getting more revenue to run the government.
VAT is a consumption tax levied on products at every point of sale where value has been added, starting from raw materials and going all the way to the final retail purchase.
Ultimately, the consumer pays the VAT, buyers at earlier stages of production receive reimbursements for the previous VAT they have paid.
A VAT system is often confused with a national sales tax. With a sales tax, the tax is only collected once at the final point of purchase by a consumer and so only the retail customer pays it.
The VAT system is invoice-based and collected at several points throughout an item’s production each time value is added and a sale is made.
Every seller in the production chain charges a VAT tax to the buyer, which it then remits to the government and the amount of tax levied at each point of sale along the chain is based on the value added by the latest seller.
In September, after the Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed announced plan by the Federal Government to raise VAT from five per cent to 7.5 per cent.
Ahmed had said that consultations would begin at all levels on the review of the VAT to 7.5 per cent, just as it was ready to begin deductions to recover bailout funds given to states.
“We will begin consultations and it will be at various levels in the country. Those to be consulted include the state governments, the local governments, the parliament as well as the Nigerian public.
“For the VAT increase to take effect, there has to be an amendment to the VAT Act,” she said.
The finance minister also recently said the VAT increase would impact more on consumption by urban communities and the wealthier sections of the population.
She explained that the proposed tax increase would not affect the poor masses as perceived by some people.
“The proposed VAT increase is likely to impact more on consumption by the urban communities and the wealthier sections of the population than on the poor.’’
According to Ahmed, her ministry will coordinate its fiscal policies with the Central Bank of Nigeria (CBN)’s current tight monetary policy stance to ensure that the appropriate out turns are achieved in terms of growth, consumption and inflation.
She, however, said that Nigeria’s VAT contribution to the nation’s GDP had declined from one per cent between 2010 and 2013, to 0.8 per cent between 2015 and 2018.
“This is significantly below the median of five per cent of GDP in other comparable African countries.
“Nigeria’s low VAT-to-GDP is attributable to the low nominal VAT rate, which at five per cent is the lowest in the African region which averages at about 16 per cent.
“Furthermore, the efficiency of VAT collection at 0.2, is well below the African regional average of 0.33,’’ she explained.
Similarly, Mr Ben Akabueze, the Director-General, Budget Office of the Federation also said the proposed VAT would be implemented in threshold, adding that it would affect only certain category of businesses as some small businesses would be exempted.
Akabueze explained that the new VAT would not affect poor and vulnerable Nigerians contrary to perception in some quarters.
“The proposed VAT review has minimal engagement with the poor or common man because they hardly engage in platform where VAT is chargeable.
“In doing this, the new VAT will consider two things such as expansion of the exemption list and the threshold which considers the quantum of the capital of a particular business such with VAT registration to N25 million turnover per annum.
“The VAT has an exemption list as those selling basic commodities such as food, medical services and medicines as well as education and we have expanded it to cover as many basic things as possible” he explained.
The director-general said that VAT in Nigeria was still low considering the tax to Gross Domestic Product’s (GDP) ration which he said was about six per cent and the lowest in the world.
He added that Nigerians should not expect the government to perform optimally without increasing the revenue base.
According to him, 85 per cent of the total VAT goes to sub national governments while the remaining goes to the Federal Government.
Akabueze said the Federal Government was not pushing for increase to address its own problem but rather to ensure a vibrant economy.
In his reaction, Mr Godwin Emefiele, the Governor of Central Bank of Nigeria (CBN), said the plan to increase VAT from five per cent to 7.5 per cent was in the right direction to raise the country’s revenue.
Emefiele said the government had responsibility to fend for every Nigerian by providing basic infrastructure like roads, electricity and hospitals among others.
He explained that the government has only two ways to fund such projects, which are by raising revenue and through loan collection.
According to him, the present administration has been criticised by some people for high debt rate incurred.
“Government unfortunately has no option if it does not borrow, it must raise revenue and you all agree with me that it has obligations to meet up with.
”The increase of VAT to 7.5 per cent is low compared to other countries, in fact, with this increase, Nigeria has the lowest in the world.
“If the government can meet its obligations through this increment, it should be supported, I am therefore appealing to Nigerians to show understanding and support government’s policies,” he said.
Also reacting, Mr Akinsanya Niyi, a tax expert said he was in support of the upward review of VAT but the government should not be in a hurry to implement it due to obvious reasons.
Niyi said that the government should wait for the right time because the economy was just picking up and the standard of living was still low as well as high unemployment rate.
He said the new VAT might force a shift in consumption patterns which could affect consumption of some finished goods and production of such goods, thereby causing reduction of the work force.
According to him, VAT is an indirect tax charged by the service provider but being bore by the final consumers, its a stage by stage type of tax that is charged at a percentage of Value added.
The expert, however, tasked the management of the Federal Inland Revenue Service (FIRS) and other stakeholders in tax administration to sensitise the general public on what the proposed VAT was all about.