The Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr Muhammad Mamman Nami, on Thursday announced that the Service has achieved 114.66 percent of its Value Added Tax (VAT) collection target in the first half of the year.
This is as he also announced that the FIRS has collected a total of N4.2Trillion as revenue from January to September, 2021.
Nami, who announced these when he led the management staff of the FIRS to play host to some members of the National leadership of the Nigeria Union of Journalists (NUJ), led by its National President, Comrade Chris Isiguzo, said that the Service has created 10 VAT Regional Coordination Offices across the country to drive collection of VAT.
The FIRS Executive Chairman said that the feat was achieved as a result of the efficiency and effectiveness of the TaxProMax Solution and intelligence/data gathered, mined and analyzed during the period under review.
Nami further said that the Service successfully facilitated both the mock and external audits for the ISO 27001:2013 certification of the Exchange of Information (EOI) centre, to meet international information security management standards.
He also said that the FIRS successfully facilitated the OECD assessment (virtual) on Confidentiality and Data Safeguards for Nigeria’s Automatic Exchange of Information-Common Reporting Standard (AEOI-CRS) system.
Nami said that this will enable Nigeria conduct full reciprocal exchange of AEOI-CRS data in 2021, which shall enable the country obtain information on foreign earned income of her Tax residents for tax compliance purposes.
The Executive Chairman also announced that the Service has commenced usage of VAT Form 002A for enrolment and tracking of branch offices of major VAT payers, adding that this will certainly improve VAT collection and capacity.
Nami also said that the FIRS is aware of some companies who operate in the country but are in the habit of evading taxes through their various tax evasion schemes of shifting profit to tax havens.
He explained that in such situations, the companies do not shift capital & profits to tax havens only but also shift indirect taxes that include Value Added Tax (VAT) as well as direct taxes Company Income Tax (CIT).
Nami pointedly said that citizens that evade tax do not have the morale right to question government’s expenditures
The Executive Chairman said that the recent rise in the price of crude oil ordinarily should have impacted positively on the Petroleum Profit Tax payable by oil producing companies, adding however that it has shown otherwise due to some of the following reasons:
“Crude oil production has been limited by OPEC quota. Nigerian OPEC quota as at July 2021 was about 1.5mbpd as against its crude oil production budget of 1.8mbpd. This is a shortfall of 300,000 barrels per day.
“Our average daily crude oil production is around 1.250mbpd as against the allocated 1.5mbpd OPEC quota which has resulted in a shortfall of almost 250,000 barrels per day mainly caused by crude oil theft and force majeure declared by some of the IOCs. The total shortfall to FGN budgeted production is about 550,000 barrel per day.
“Huge losses brought forward and unrecouped capital allowances reported by most of the companies due to production shut in and the fall in oil price in 2020 as a result of the covid-19 pandemic which reduced their revenue.
“About ten (10) out of the sixteen (16) producing Contract Area PSCs/PSAs filed nil PPT payable in their 2020 Estimated PPT Returns due to huge unrelieved Investment Tax Credit/Investment Tax Allowance (ITC/ITA) brought forward. The remaining six (6) PSCs that have PPT payable from their estimated PPT returns filed did not have enough crude entitlement from NNPC-COMD to fully pay their installment.
“The increase in Royalty Rate at the Deep offshore by virtue of 2019 Deep offshore Amendment has also significantly reduced the PPT Collectible from the PSCs operators at the Deep offshore,” he said.
Commenting on reforms and impact by the FIRS, Nami said that with the challenges in the Oil & Gas Sector, and with increased, however invisible economic activities, the Service had no option other than to carry out some reforms which are yielding positive impact on the Service’s operations.
He also said that for many years, FIRS revenue generation architecture had been largely manual with limited use of technology, stressing that adopting technology in tax administration is crucial in improving domestic revenue mobilization in view of dwindling oil prices in order to avoid falling into debt crisis.
The FIRS boss said that it was against this backdrop that the TaxPro-Max became the channel for filing Naira-denominated tax returns effectively from 7th June, 2021.
According to him; “The TaxPro-Max enables seamless registration, filing of returns, payment of taxes and automatic credit of withholding tax as well as other credits to the Taxpayer’s accounts among other features.
“The technology also provides a single-view to Taxpayers for all transactions with the Service.
“The Solution has a real-time integration with the CAC database, which ensures taxpayers are verified and matched with taxpayers’ information on the web-portal.
“The K-card on the TaxProMax Solution has been fully automated and now called Ledger balance on the platform. All payments by taxpayers are now tied to assessments,” Nami said.
He also said that the FIRS management established the Intelligence, Strategic Data Mining and Analysis Department, adding that while the TaxProMax will serve as the flagship tool for mining data, it will be complemented by other tools that the ISDMA department may deploy, with the data engineers in the department carrying out necessary distillations.
