As new audit units track illicit financial flow
BY COBHAM NSA, ABUJA – The Federal Inland Revenue Service (FIRS) says Nigeria reportedly “lost over US$178 billion (about N5.4 trillion at today’s rate) through tax evasion by Multinationals” doing business in the country between 2007 and 2017.
And the Service is determined to erode such ugly past with the 35 additional Tax Audit Units created in 2020 fully focused on effectively checking illicit financial outflow from the country and also improving tax compliance rate nationwide.
According to the FIRS, in its resolve to enhance the nation’s revenue streams, priority is set on tax auditing and relevant transfer pricing to boost compliance level.
Speaking at a workshop on “Effective Audit of Multinational Corporations for Domestic Revenue Mobilisation in Nigeria”, Executive Chairman of FIRS, Mr Muhammad Nami, said; “At the FIRS we are paying greater attention to tax audit in general and Transfer Pricing audit in particular in order to improve the level of tax compliance in the country.
“As a result, in the last one year, we have created more than 35 additional Tax Audit Units and deployed experienced and capable staff to take charge of these offices.”
Nami said though some multinational corporations were “leading in tax compliance in various sectors”, there were still worries that “many rich Multinational Corporations do not pay the right taxes due from them, let alone pay their taxes voluntarily.”
He challenged the workshop, packaged by FIRS, in partnership with the Tax Justice Network, to come up with “a novel methodology that would be used to uncover illicit financial flows” and “provide an overview of related policy options for enhancing tax revenue collection in general.”
The FIRS boss disclosed that “between 2007 and 2017” Nigeria reportedly “lost over US$178 billion (about N5.4 trillion at today’s rate) through tax evasion by Multinationals” doing business in the country.
He also cited a 2014 report by the High-Level Panel on Illicit Financial Flows from Africa, which stated thus; “Nigeria accounted for 30.5% of money lost by the continent through illicit financial flows.”
Nami said with President Muhammadu Buhari signing the 2021 budget of N13.588 trillion on December 31, 2020 and the recent decline of oil resources that hitherto has remained Nigeria’s major revenue earner for the country, taxation will be relied upon to shoulder government’s budget performance the way it did in 2020.
He said the plans therefore underscores the workshop’s importance because tax audit of Multinational Corporations remains a critical component in Nigeria’s domestic revenue mobilisation.
To further emphasize its importance, a statement by FIRS’ Director of Communications and Liaison Department, Abdullahi Ismaila Ahmad quoted Nami as saying; “For me, this Workshop is an important step towards boosting compliance level; and, I have strong hopes that its outcome will further increase our efforts at driving tax compliance among Multinational Corporations in Nigeria.”