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Tag: FIRS

  • NCC, FIRS inaugurate joint committee to boost revenues in telecoms sector

    NCC, FIRS inaugurate joint committee to boost revenues in telecoms sector

    The Nigerian Communications Commission (NCC) and the Federal Inland Revenue Service (FIRS) have taken their collaboration a notch further by setting up a Joint Committee of senior and management staff of the two agencies towards the implementation of inter-agency strategies for enhancing national revenues in the telecommunications sector.

    The NCC’s Executive Commissioner, Stakeholder Management, Adeleke Adewolu, inaugurated the 17-member committee on behalf of the Commission’s Executive Vice Chairman, Prof. Umar Danbatta, and the Executive Chairman of the FIRS, Mr. Muhammad Nami, at the NCC’s Board Room in Abuja on Tuesday, May 10, 2022.

    The inauguration of the committee, comprising six officials of NCC and eleven officials of FIRS, was carried out with senior officials of NCC and those of the tax agency led by its Coordinating Director for Compliance Support Group, Dr. Dick Irri, who represented the FIRS’ Executive Chairman, Muhammad Nami at the event.

    While inaugurating the Committee on behalf of the heads of the two agencies, Adewolu stated that the terms of reference (ToR) of the Committee include: review the Memorandum of Understanding (MoU) signed between the NCC and the FIRS on June 9, 2020; and carry out inter-agency interaction on the implementation of the NCC’s Revenue Assurance System (RAS), to ensure that it incorporates the needs of FIRS to the extent that RAS can remain the sole interface with telecom service providers’ networks vis-à-vis the Tax Authority’s information needs from the telecoms sector.

    Given the Committee’s composition and with the extensive experience and commitment of its members – which had informed their selection by the agencies – Adewolu stated that the managements of NCC and the FIRS expected no less than an excellent output from the Committee, tasking them to work together harmoniously and in the overall national interest.

    Also in his comments, Dr. Dick Irri, who led the FIRS delegation to the inauguration, advised the Committee to take the assignments very seriously. “I would like to task you to take this assignment as a national matter as we expect the two agencies to work in harmony, collaborate effectively and have a warm handshake that will make this synergy between the two agencies a great example of collaboration between Federal Government agencies towards enhancing fiscal governance in Nigeria,” he said.

    The decision to set up the Committee was one of the major outcomes of the meeting between the FIRS and the NCC on March 8, 2022 organised at the instance of the Honourable Minister of Communications and Digital Economy, Prof. Isa Ali Pantami, to discuss the request by the FIRS for data and documents from the telecoms industry for enhancing national revenues from the sector.

    The inauguration is a significant achievement, as it deepens the strategic collaboration between the two government agencies in the pursuit of their statutory objectives. It also vindicates the emphasis placed on achieving mutually-sustainable relationships with relevant stakeholders as detailed in both the NCC’s Strategic Management Plan (SMP), 2020-2024 and the Strategic Vision (Implementation) Plan (SVP 2020-2025) as well as FIRS’ strategic framework.

    The activities of the NCC and the FIRS are acknowledged as pivotal to the achievement of sustainable revenue and growth projections of the Federal Government. In this regard, the telecoms sector has sustained a relatively high contribution to Gross Domestic Product (GDP) over the years – ending fourth quarter of 2021 at 12.6 per cent.

    Besides, the FIRS recently acknowledged that some telecom licensees contribute significantly high percentage of total national tax revenue. It is expected that the Joint Committee will enable both organisations to further optimise revenues for the Federal Government from the telecoms, digital economy and adjacent sectors of the economy.

  • How FG, States, LGCs shared N699.8 bn FAAC allocation for December 2021

    How FG, States, LGCs shared N699.8 bn FAAC allocation for December 2021

    The Federal Government, States and Local Government Councils (LGCs), on Friday, shared N699.824 billion as federation allocation for Dec. 2021.

    A statement issued by Mr Oshundun Olajide, Acting Director, Information, Ministry of Finance, Budget and National Planning, said that the amount was shared at the Federation Accounts Allocation Committee (FAAC).

    According to it, the virtual conference was chaired by the Permanent Secretary, Mr Aliyu Ahmed.

    “From this amount, inclusive of cost of collection to Nigeria Customs Service (NCS), NUPRC and Federal Inland Revenue Service (FIRS), the Federal Government received N279.457 billion, the States N210.046 billion, while LGCs got N155.456 billion.

    “Meanwhile, the oil-producing states received N49.003 billion as derivation (13 per cent of Mineral Revenue).”

    The statement said that the communiqué issued by FAAC at the end of the meeting, indicated that the gross revenue available from Value Added Tax (VAT) for Dec. 2021 was N201.255 billion as against N196.175 billion distributed in November.

    This, it said, resulted in an increase of N5.080 billion.

    Of the VAT, Federal Government got N28.111 billion, States N93.705 billion and LGCs N65.593billion.

    “The gross statutory revenue of N560.066 billion received for the month was lower than the N643.481 billion received in the previous month by N83.415 billion.

    “From this, the Federal Government received N248.885 billon, States N126.238 billion, LGCs N97.324 billion and derivation (13 per cent mineral revenue) got N34.820 billion.”

    It said that the communiqué also revealed that Companies Income Tax (CIT) and VAT increased reasonably.

    It added that Petroleum Profit Tax (PPT) and oil and gas royalties decreased significantly while import and excise duties decreased marginally.

    “The distributable statutory revenue of N507.267 billion, VAT of N187.409 billion, Exchange Gain of N5.148 billion, brings the total distributable revenue for the month to N699.824 billion.”

  • How to bring small businesses into the tax net

    How to bring small businesses into the tax net

    The federal government has a burning desire to increase its tax revenue to enable it provide critical infrastructure and stimulate economic growth in the country.

    However, the Federal Inland Revenue Service (FIRS), the principal organ of government responsible for tax administration in the country, is having a tough time bringing Small and Medium Enterprises (SMEs) into the tax net.

    According to the National Bureau of Statistics (NBS), SMEs in Nigeria have contributed about 48 per cent – on average – to the national GDP in the last five years.

    There are about 17.4 million enterprises, accounting for about 50 per cent of industrial jobs and nearly 90 per cent of activities in the manufacturing sector.

    However, most operators of SMEs claim ignorance of tax laws and the appropriate taxes they ought to pay.

    For instance, Jumoke Eyitayo, who operates a shoe making business in Ikotun, Alimosho Area, Lagos State, says she does not pay tax simply because she does not know which tax to pay.

    “I do not know the tax to pay because there are too many taxes in Nigeria and I am confused and do not know which one to pay, and which one not to pay.

    “And again the government keeps changing the tax law; I hear that from next year more taxes and levies will be imposed on Nigerians.

    “This is not fair; it means there will be a new tax law when some of us do not even understand what the law is saying,” said Eyitayo.

    She urged the government to improve electricity supply and repair the bad roads across the country with tax proceeds.

    “I run my business on generator 24 hours and six days a week.

    “If government can sincerely provide these simple basic amenities for Nigerians, businesses will thrive and people will be happy and willing to pay whatever taxes they bring,” she said.

    Similarly, Barnabas Enahoro, who operates a Food and Beverage business in Bucknor, Ejigbo Area, Lagos State, said the government should provide information on taxation and create more awareness to ginger operators of small businesses to pay taxes.

    According to Enahoro, proceeds of taxation are supposed to help create a thriving environment that will encourage entrepreneurship and new businesses, “Instead, we are faced with a harsh environment that stifles growth and progress for businesses.

    “As a small business with staff strength of 12 and being in existence for the past four years, we were paying taxes in our first year in business.

    “But we stopped after we realised we were not having value for what we were paying for and we did not really understand why we were paying these taxes.”

    The tax conundrum has become a source of concern for the authorities.

    Mrs Olajumoke Simplice, immediate past president, Chartered Institute of Taxation of Nigeria (CITN), said the reason there was inertia was lack of political will by government to impact the lives of the citizens positively.

    According to her, when people in position of authority declare their taxes as and when due and from all sources, more Nigerians will be encouraged to pay taxes.

    She also said in some states where the taxpayers’ money was being reasonably applied, compliance was higher than in those that did little or nothing with revenues collected.

    “The high net-worth individuals, politically exposed personalities are not paying taxes or paying peanuts, while employees are paying to the last kobo.

    “The state of infrastructure, the rate of inflation, the fast erosion of earned income all add to the disenchantment of tax payers.

    “A situation where it is not mandatory for politicians to produce their Tax Clearance Certificate for them to contest for elective position, whereas, employees are mandated to produce the same for selective official or educational transactions is also a disincentive to tax compliance,” Simplice said.

    She urged the government to be accountable, transparent and lead by example.

    Mr Taiwo Oyedele, Africa Tax and Legal Services Leader, Price Water Coopers, said the government needed to earn the trust of Nigerians to get more businesses into the tax net.

    He said a research carried out by NESG-OSIWA DMR on all regions in Nigeria revealed many Nigerians lacked trust in government and the most untrusted government being the local government, followed by states, then the federal government.

    He said Nigeria’s revenue would grow when people were satisfied with public services, hence he urged the government put in more efforts to provide basic infrastructure.

    The tax expert said the research showed people also complained about the complexity of the process of tax collection, unprofessional and corrupt practices of tax officials.

    He said Nigerians would be willing to pay taxes if electricity issues among others were fixed.

    He said the government could address these challenges by developing a national integrated revenue approach to address the concerns regarding social contract and leverage technology to drive revenue, so as to let Nigerians see something for the little they were paying.

    He said the government could boost tax morale by improving information and communication about tax obligations, along with simplified and clean payment mechanisms so as to provide taxpayers with the confidence that their money was not being stolen.

    He also urged the government to stimulate economic development through robust policies and sound governance, and suggested the use of data and intelligence to ensure that those that had the capacity to pay, were paying their fair share of taxes.

    NAN

  • Take a look at FIRS budget to understand Nigeria’s predicament – Godwin Etakibuebu

    Take a look at FIRS budget to understand Nigeria’s predicament – Godwin Etakibuebu

    By Godwin Etakibuebu

    Below is the content of the 2022 budget of the Federal Inland Revenue Service [FIRS]; an agency of the federal government responsible for assessing, collecting and accounting for all taxes and other revenues accruing to the Federal Government of Nigeria or any of its agencies, presented to the Nigerian National Assembly for approval.
    Before going into reading the details of this budget proposal, we need to know that the FIRS do not create revenue or wealth. It brings nothing – nothing whatsoever, to the table of the Nigerian peoples’ wealth table.

    Its duty and operation is limited only to the following: collects Value Added Tax, Company Income Tax, Stamp duty, Technology levy, Personal Income Tax, Capital Gains Tax, Nigeria Customs Service Import VAT, Electronic Money transfer and Gas income. These are what it calculates, collect and remit to the Federal Government’s account. It does not create wealth at all. This is one fact that must be known.
    Now, we can embark on scrutinizing the details of the budget, and we should, by all prudential instincts, take recognition of the expenditures, as being presented by this Federal Government Department; a Department that does not generate nor create wealth.

    FIRS to spend N2.8bn on uniforms, N550m on meals
    Board members to earn N370m sitting allowance

    The Federal Inland Revenue Service has earmarked the sum of N2.8bn for “uniforms and clothing” for the year 2022.
    The tax body has also budgeted about N550m for refreshments and N200m for sporting activities. The FIRS, which is one of the highest revenue generating government bodies, set aside N262.5m for security votes while N17.8bn would be spent on “miscellaneous” expenses.

    The details are included in the 2022 budget proposal the agency submitted separately to the National Assembly.
    Already, there are concerns over the cost of governance and the percentage of the annual budget that goes into recurrent expenditure.
    In the 2022 budget proposal the President, Major General Muhammadu Buhari (retd.), presented to the joint section of the National Assembly on October 7, a whopping N4.69tn out of the total N16.39tn budget was appropriated for personnel costs and pensions (inclusive of
    N617.72bn for the 63 GOEs). Also, the overhead cost would gulp N792.39bn (inclusive of N451.0 billion for the 63 GOEs).
    Owing to the nation’s scarce resources and low revenue, the Federal Government would spend N3.61tn on debt servicing while it would borrow an additional N6.25tn from domestic and external sources to fund the deficit in the budget.

    Meanwhile, the total budget of the FIRS stands at N228bn, surpassing the 2022 budget of the National Assembly (N134bn) and the judiciary (N120bn).
    The FIRS budget also surpasses the current 2021 budgets of Abia, Adamawa, Anambra, Bauchi, Benue, Ebonyi, Edo, Ekiti, Enugu, Gombe, Jigawa, Kano, Kebbi, Kogi, Kwara, Nasarawa, Niger, Ondo, Osun, Plateau, Sokoto, Taraba, Yobe and Zamfara states.
    Budgets N17.8bn for miscellaneous expenses

    In its 2022 budget proposal, the tax body earmarked N2.5bn for the purchase of land, N3bn for office furniture, N1.5bn for photocopying machines, N2.04bn for computers and N500m for the construction of sports facilities. The agency set aside N1bn for generator fuel and N250m for maintenance while a separate N550m was set aside for purchasing more generators.
    The FIRS will spend N6bn on its new headquarters and N2bn on the purchase of vehicles. It budgeted about N1.3bn for cleaning and fumigation of its offices nationwide while N1.4bn will be spent on general maintenance services. The FIRS budgeted about N1.3bn for office stationery and computer consumables while N3bn will be spent on printing non-security documents. The agency will spend N1.4bn on electricity charges, N460m on telephone charges and N1.3bn on security services. The FIRS will spend N7.9bn on donations and N200m as contributions to international organisations. The agency earmarked N800m for legal services, N1.04bn on bank charges, N9.5bn on welfare packages; N1.1bn on staff retreat and N2.9bn on repairs.

    The first shocking item confronting us in this budget proposal obviously must be the sum of N2.8bn for “uniforms and clothing” for the year 2022. The “uniforms and clothing” being mentioned here is strictly “drivers’ uniform” – talking of uniforms made with Khaki materials, and we are not talking of those designers’ khaki made up of Comrade Aliyu Adams Oshiomhole’s fame [I am not too sure if the Comrade still wear khaki these days], but just the every poor man’s Khaki in the Nigerian market square.
    Hold your breath if you think the cost is too high, even for heaven’s sponsorship. In the year 2019, the same FIRS budgeted One Hundred and Sixty Million Naira [160,000,000] for 850 drivers’ uniforms, bringing the cost of each driver uniform to N188, 235, 29. Can you beat that? And that was in 2019. Enough look on drivers’ uniform as we must look at other items.
    Board members shall be earning N370m sitting allowance for the incoming year, N550m for refreshments, N200m for sporting activities, set aside N262.5m for security votes while N17.8bn would be spent on “miscellaneous” expenses.

    Other items budgeted for by this Tax-Collector Agency in its 2022 proposal; include N2.5bn for the purchase of land, N3bn for office furniture, N1.5bn for photocopying machines, N2.04bn for computers and N500m for the construction of sports facilities. The agency set aside N1bn for generator fuel and N250m for maintenance [of same we may want to assume] while a separate N550m was set aside for purchasing more generators.

    After marking out N1bn for generator fuel and N250m for maintenance of same it set aside again another N550m for purchasing more generators.
    Above is the sad tale of the Nigerian State. It is the same story through all the Ministries, Departments, Agencies, Parastatals, and even the Presidency.

    IS THERE ANY HOPE FOR THE COUNTRY CALLED NIGERIA?
    Sources of Information: Punch Newspaper of 17 October 2021.
    Godwin Etakibuebu; a veteran Journalist, wrote from Lagos.
    Contact:

    Phone: +234-906-887-0014 – short messages only.
    You can also listen to this author [Godwin Etakibuebu] every Monday; 9:30 – 11am on Lagos Talk 91.3 FM live, in a weekly review of topical issues, presented by The News Guru [TNG].

  • Multichoice Africa loses suit over dispute on $342m outstanding tax to FIRS

    Multichoice Africa loses suit over dispute on $342m outstanding tax to FIRS

    South African Company, Multichoice Africa Holdings B.V has lost the legal battle with the Nigerian government-owned Federal Inland Revenue Services (FIRS) over the disputed $342 million tax has been struck out.

    The Tax Appeal Tribunal, on Tuesday, struck out the appeal by the company for want of diligent prosecution and ordered It to pay up the $342 million tax assessment handed over to It by the FIRS.

    Multichoice Africa Holdings is the parent company of Multichoice Nigeria and has engaged FIRS in court to challenge the assessment of the FIRS on it of unpaid Value Added Tax (VAT) amounting to over $123.7 million.

    The Tribunal while delivering its judgment on the appeal filed by the company upheld the preliminary objection of the FIRS against the appeal of Multichoice Africa Holdings B.V and stated that the South African company did not comply with Order 3 Rule 6 of the Tax Appeal Tribunal (Procedure) Rules, 2021, which requires that an appellant is to deposit half of the assessed amount it is disputing before it can be heard on appeal.

    In addition to depositing the sum, the appellant is required to file along with its appeal an affidavit verifying the payment which the company also failed to comply with.

    According to the Tribunal, the sum is to be paid as a security for the hearing of any tax appeal. The rule states that “for an appeal against the tax authority, the aggrieved person will pay 50 per cent of the disputed amount into designated account by the Tribunal before hearing as security for prosecuting the appeal.”

    FIRS had served a notice of unpaid VAT on Multichoice Africa Holdings B.V. but the company challenged the assessment and filed an appeal at the tribunal.

    It however failed to comply with provisions of tax laws by the refusal to make the required deposit as stipulated by the Tribunal Rules.

    It will be recalled that the FIRS had served Multichoice Africa Holdings B.V. a notice of assessment of unpaid VAT on the 16th of June 2021.

    The company had consequently appealed the assessment at the Tax Appeal Tribunal on the ground of being too excessive.

    Multichoice Africa Holdings, the parent company of Multichoice Nigeria, though providing services to its Nigerian arm was said not to have paid Value Added Tax since inception.

  • FG insists FIRS must collect VAT

    FG insists FIRS must collect VAT

    The Federal Government has said the Federal Inland Revenue Service (FIRS) will continue to collect Value Added Tax (VAT) following the ruling of the Court of Appeal on the matter.

    The Attorney-General of the Federation (AGF) and Minister of Justice, Abubakar Malami made this known in New York while speaking on the disagreement over the collection of VAT between FIRS and Rivers Government.

    The chief law officer of the federation explained that the ruling of the Court of Appeal that FIRS and the Rivers Government maintain status quo, favoured FIRS.

    He said that it was Federal Inland Revenue Service (FIRS) that had been collecting the VAT before the dispute arose, over which the Rivers government approached the High Court.

    “The position of not only the Federal Government but indeed the judiciary is the fact that status quo associated with the collecting of VAT should be maintained,” Malami said.

    “And as far as the judicial system is concerned, the status quo as at the time the parties approached the court, it was the Federal Inland Revenue Service that was indeed collecting the value added tax.

    “So with that in mind, the Federal Government has succeeded in obtaining an order that establishes the sustenance of the status quo, which status quo is that the Federal Inland Revenue Service should continue collection.

    “This is pending the determination of the cases that were instituted by states, particularly the Rivers State Government and the Lagos State government. The cases are being determined by the court.”

    The Rivers government had urged the Supreme Court to set aside the Court of Appeal’s Sept. 10 ruling ordering it and FIRS to maintain status quo on the issue of VAT collection.

    A three-member panel of the Court of Appeal headed by Haruna Tsammani, issued the order being challenged at the Supreme Court by the Rivers government.

    The state also urged the apex court to disband the panel of the appelate court, which gave the interim order and ordered another one to be constituted to hear the case.

    “But one thing of interest is the fact that the Federal Government had indeed taken cognisance of the fact that where there exists a dispute between a State and Federal Government, it is the Supreme Court that should naturally have the jurisdiction to determine the dispute between the state and the federation.

    “And we are taking steps to consider the possibility of instituting an action before the Supreme Court for the purpose of having this matter determined once and for all,’’ Malami said.

  • Why is the OPS staying out of VAT dispute – Dele Sobowale

    Why is the OPS staying out of VAT dispute – Dele Sobowale

    By Dele Sobowale

    The Value Added Tax, VAT, dispute has taken centre-stage in the nation’s political agenda. Rivers and Lagos states have challenged the right of the Federal Internal Revenue Service, FIRS, to collect VAT exclusively. Rivers State dragged the FIRS to a Federal High Court, FHC, in Portharcourt and received a favourable decision in that regard. Other states have since joined the fray. That is most surprising. Only three states – Lagos, Rivers and Ogun readily stand to gain if the FHC’s decision is upheld all the way to the Supreme Court, SC. The wave of euphoria observed in the South is probably premature. In a matter like this, it is the final battle that counts. And, we are still a long way from that.

    Meanwhile, Nigerians, especially the Southern elite, never cease to amaze me. On several occasions such as this, when Southern interest is directly opposed to that of the North, we celebrate our temporary victories only to end up losing the decisive battle. I will urge those dancing in the streets, as well as those dancing naked in the market place, to go and sit down; look at the composition of the SC and tell me if they see a chance for victory there. I hate to spoil their party.

    Furthermore, I am amused that despite the fact that only three states will gain, indigenes of Southern states which will lose revenue are among those getting drunk in the celebration of a victory not yet assured.They include professors, Senior Advocates of Nigeria, columnists and Editors, who, while being half correct,that the principle of true federalism is being upheld,forget that it is the revenue the states will collecteventually that matters. Let any of our erudite elites or SANs go to the Main Market in his state capital and announce to the traders that he has brought good news. “The FHC has upheld fiscal federalism. Henceforth Lagos will receive N120 billion more per annum, but, our state will receive N10 billion less.” It is doubtful if he will leave the scene intact without police escort. True federalism is an abstraction. You cannot ask the people of your state to rejoice that they are going to lose money on account of a court judgment which favoured only three states. How does this decision favour Ebonyi or Ekiti? People should put on their thinking caps!!

    However, that is only a long preamble to the main issue today. There must be something wrong with the leaders of our private sector who behave as if this matter does not concern us. Nobody seems to notice that the struggle for revenue control is only about who will spend it; not if it will not be embezzled as usual. Nothing in that judgment forbids the state governments from appointing “consultants” to collect the tax and pocket half of it; or forbids the Governor from making his mother’s residence the “clearing house” for all contracts. The entire palaver is about whether FIRS or Governors should collect VAT.

    Yet, most of the revenue from which VAT is derived originates from the private sector. We are major stakeholders as individuals and as corporate entities. Noticeably, we were not consulted. The Organised Private Sector, OPS, under the leadership of Chief Ernest Shonekan, Chairman/Managing Director of the UAC of Nigeria, ably supported by Dr Omolayole of Lever Brothers, Chief Eze of John Holt among others, would not have kept quiet for so long. They could foresee trouble from miles away. They would have seen that this matter is setting us back about 30 years. It is going to add significantly to the cost of doing business; increase possibilities of tax avoidance and tax fraud, as well as, make tax audit a nightmare. For Nigerian businesses, tottering on the edge of collapse, this might be the final straw.

    So far, only the Institute of Chartered Accountants, ICAN, has counselled caution on this issue. What might be regarded as a legal victory could end up as the triumph of ignorance over practical fiscal sense. Accountants and the Sales/Marketing people will bear the brunt of the additional work load that this new measure will entail. So, it is only natural that ICAN should speak up first. Other managers in companies better raise their voices before the roof caves in on them. There are reasons for my concern for the private sector. I was a victim of taxes paid to large number of states and Local Governments in the 1970sto 1980s. Let me again repeat the history for our readers.

    There were twelve states in 1974 when I returned to Nigeria. Added to these were Lagos Federal Capital Territory; making thirteen tax authorities. Each had its own Sales Tax law – with which we complied as best as we could. In 1975, seven new states were created; bringing the number of tax authorities to twenty. The accounts department was forced to add fifty per cent more staff – just to cope with the increased workload. Each state reserved the right to send auditors, with or without notice, to audit the company’s accounts.

    In 1987, two more states were created. In addition, the Federal Capital Territory was already functioning. That brought the number of tax authorities to twenty three. In all these, the reader must remember that sales turnover was not increasing on account of states creation; it was the cost of computing and paying tax to them that was going through the roof. The year 1991 was a watershed. Nine more states were created to bring the number to 30. Long term employees in the accounts departments of many firms were working to the point of breakdown in order to keep up with sales tax accounts calculation and payments to be dispatched to 32 destinations.

    As can be expected, there were disputes between states and companies. In some cases, companies closed offices in some states to reduce the burden of preparing taxes; the states were often not in position to know if they were underpaid or not; negotiations occurred invariably favouring the firms and corruption set in.

    It was this unsustainable situation which prompted the search for a new method of generating and collecting sales taxes. Contrary to conventional wisdom, it was not the Federal Government alone which wanted VAT. Virtually, all the stakeholders wanted it. And only God knows what would have happened when on October 1, 1996, General Abacha created six more states – if VAT had not been adopted earlier. Those writing out of ignorance, castigating the FG for wanting to keep the states poor by collecting VAT, were probably not old enough, nor knowledgeable enough to know that the states voluntarily handed the assignment to the FG.

    To me, it is understandable why the states now want to collect VAT. I recollect going to Abuja shortly after the VAT Decree was signed by President Babangida to meet the first Director General. The budget for the next year was N5 billion for the entire country. Mr Zukogi (I hope that is the correct name because I am away from my records) lamented that he had been punished by his enemies. “Nigeria can never generate N5 billion in one year”, he declared. I disagreed. I told him that N20 to N30 billion was a strong possibility. He smiled derisively before saying, “You Americanas think everything is possible”.

    Certainly, there would no controversy over VAT today if all we generate is N30 billion a year. States would have been too eager to leave the FG with the burden of collection. N1.5 trillion is big enough to make everyone avaricious. But, the OPS must step forward now. It is our money they are fighting over. Better to pay one entity than 38. Damn it.

    P.S. Given the sharp division in the polity, it is easy to understand why some of us forget that the current FG, despite its faults, is also our own.

    Attachments area

  • FIRS takes tax battle to NGOs, threatens sanctions

    FIRS takes tax battle to NGOs, threatens sanctions

     

    The Federal Inland Revenue Service (FIRS) has said all Civil Society Organisations (CSOs) are expected to register for tax purposes and obtain Taxpayer Identification Number (TIN).

    This was revealed by the Director, Tax Policy and Advisory Department of the service, Mr Temitayo Orebajo in Abuja on Thursday at a webinar on CSOs tax responsibilities and compliance.

    He said the webinar was aimed to promote CSOs understanding and knowledge of their tax responsibilities.

    The webinar was organised by FIRS and the European Union Agents for Citizen-Driven Transformation (EU-ACT), a Non-Governmental Organisation.

    Orebajo said that the CSOs were statutorily required to maintain accurate record of employees, proper books of accounts for tax purposes.

    He said that failure to comply would attract appropriate penalties under the extant tax laws.

    Orebajo said that VAT on goods purchased by NGOs for use in humanitarian donor funded projects was at zero rate under the value added tax.

    “The NGO itself is not exempted from VAT where the organisation procures contracts or purchases goods that are not directly used in humanitarian donor funded projects.

    “Likewise, any service procured or consumed by NGO is liable to VAT, except where such service is exempted under the VATN Act,” he said.

    Orebajo said that NGOs were required under the Pay As You Earn (PAYE) obligation to deduct tax at source from salaries and other emolument of the employees, directors, officers among other.

    According to him, the obligations under the Companies Income Tax Act (CITA) in section 25 of CITA provides tax relief to any company making donations to an organization listed under the fifth schedule to CITA.

    He said that such donation must be made out of its profits for the year of assessment and total donation shall not exceed 10 per cent of the total profits of the company for the said year of assessment.

    “Donation is not of capital nature, except where the donations are made to universities or other tertiary or research institutions and should not exceed 15 per cent of total profits or 25 per cent of tax payable.

    “NGOs requiring to be listed under the fifth schedule to CITA may apply to the Minister of Finance through FIRS,’’ Orebajo said.

    He advised the organisations to see the important of returns to the government because most of them take payment to government for granted.

  • FIRS should continue to collect, redistribute VAT to states -Gov Umahi

    FIRS should continue to collect, redistribute VAT to states -Gov Umahi

    EBONYI State Governor David Umahi has said that the Federal Inland Revenue Service (FIRS) should keep collecting value added tax (VAT) and be redistributing to states.

    The governor said this while speaking during a state dinner organised in honour of former Chief of Army Staff and Nigerian Ambassador to the Republic of Benin Tukur Buratai on Monday night.

    “Evil will continue to thrive if good people keep quiet. We must make Ebonyi State very exceptional by rising to the challenges,” he said.

    “Ebonyi state is not in support of any state collecting VAT. We are in support that FIRS should continue to collect tax and share.”

    Umahi noted that he was in support of true federalism, but it should focus on administrative instead of economic restructuring.

    “When we shout true federalism, I say, I agree;, but it should be administrative restructuring.”

    Ebonyi joins Kogi and Katsina states to openly oppose the collection of VAT by states.

    Controversies have continued to grow across the country after a Port Harcourt Federal High Court ruled last month that Rivers State government had the powers to collect VAT within its territory.

    In response, through its house of assembly, Rivers State enacted the state VAT law and immediately expressed its readiness to enforce the judgment beginning from this month.

    Last week, Lagos State followed suit by enacting and signing the state VAT bill into law.

    The state joined Rivers State as a co-defendant in an appeal filed by the FIRS against the Federal High Court judgement.

    But an Abuja Court of Appeal has ruled that all parties in the matter should maintain the status quo.

    The case was adjourned till September 16 for a hearing.

    Meanwhile, on Tuesday, the Rivers State Government asked the Supreme Court to set aside the ruling of Court of Appeal.

  • I support FIRS on media tax – Dele Sobowale

    I support FIRS on media tax – Dele Sobowale

    By Dele Sobowale

    Before the reader gets upset, let her/him remember that I also will be paying the FIRS media tax which this article supports. So, I am not promoting a measure from which I will be exempted. To be quite candid, the media tax is long overdue. The surprising thing to me is that it has taken the tax authorities so long to recognise that media usage constitutes consumption; not in any way different from going to a concert or the cinema. Nobody seriously argues or objects when such activities are taxed. Why, then, the opposition to this particular tax? Before attempting to answer that question, let me make my principle on this matter very clear. It was derived from ancient history.

    “We must therefore not shrink from accusing our friends or praising our enemies; nor need we be afraid of praising or blaming the same people at different times. Since it is impossible that men who are engaged in public affairs shall always be in the right; and unlikely that they should always be in the wrong. We must therefore detach ourselves from the actors in our own story; and apply to them only such statements and judgments as their conduct deserves.” Polybius, Greek Philosopher, c200-118 BC.

    Neither Buhari nor the Head of the Federal Internal Revenue Service, FIRS is my friend or my enemy. The FIRS chief is unknown to me beyond the pages of newspapers and occasional appearances on television. I have no pathological hatred for anybody in government; on account of which every measure proposed by them must be opposed – despite the inequities inherent in the allocation of the tax revenue now federally collected.

    Recently, Governor Wike pointed out that Rivers State generates N15 billion a month and receives N4.7 billion in return. That was the basis for the court action he undertook recently. Lagos State which generates 48 per cent of the N120 billion is fast tracking its own law that will empower the state to collect its own VAT. Despite being a Lagosian, I have my doubts that the consequences will be as envisaged by the states now leading the agitation for states’ financial Resource Control. The battle has just started.

    The Federal and State Governments share the same fate in one regard. Aggregate revenue is dwindling nationally; while, at the same time costs of running governments are rising steeply. Two elements, in particular, are drilling holes in the pockets of governments more than anybody imagined two years ago – insecurity and COVID. They are unlikely to go away any time soon. Meanwhile, citizens are demanding for better education, improved health care, and above all, an end to unprecedented insecurity. The question which only those in government are called upon to answer is: where will the funds come from?

    Several suggestions have been floated. But, all of them have faced strong opposition from segments of society – as well as media. Two examples will illustrate the point.

    Right-sizing the public service will reduce the payroll bill. But, organised Labour and media will object to increasing the number of unemployed people. So, that is out. Re-introducing toll gates on Federal roads will not only raise several billion naira, concessioning will place the burden of road repairs on the contractors. Funds now deployed to those areas will be available for other purposes. Another objection arose. Toll gates will cause inflation by increasing the cost of goods transported. So, that is out too.

    “You cannot make omelettes without breaking eggs.”

    Every time governments propose introduction or increase, of taxes, tolls, tariffs, or rates, most Nigerians assume, what to me, is a puerile attitude. Egged on by superficial analysts, they are always against. Broad statements such as “let then find other sources to increase internally-generated revenue” or “reduce security votes” or “stop corruption” are offered as “solutions” to gullible Nigerians – who applaud them. In reality, it is all nonsensical. In reality, fiscal problems can only be properly solved by, first quantifying them (how much is needed monthly, annually? Etc); secondly, identification of revenue sources (where will the money come from?) and finally introduction of measures to mobilise the funds follows.

    Taxes, especially consumption taxes, are the major sources of revenue in every advanced country. The curse of oil, which started in the 1970s, was responsible for our collective loss of senses. And, while the signs are clear to a few Nigerians, the vast majority of us, including leaders of Labour and most commentators, are still wedded to a the past when revenue from crude oil sales paid all our bills. Fellow Nigerians are encouraged to continue in the fools’ paradise where toll-free roads are built and maintained with public funds so that riders can enjoy free rides. The questions I want to ask such people are: where else in the world is that happening? Why should Nigeria be an exception? And, if not this tax, which tax do you support to generate revenue for governments? Certainly, nobody who is against all taxes can expect to be taken seriously.

    WHY MEDIA TAX?

    The short answer is: because it is easy to collect and there is a large pool of it. Three of the top seven most valued companies on Nigerian Stock Exchange, NSE, are networks. Collectively, they generate more revenue than more than ninety per cent of the rest put together. That is a lot of consumption. If we already tax other activities in the services and entertainment sectors, it was a gross error on the part of the tax authorities not to have included this sector in the tax revenue basket. It will amount to criminal negligence for the National Assembly not to pass the necessary bill to correct this monumental mistake.

    “Nigeria’s oil production falls to 1.24mbpd.” That was a recent news report – which should alarm all of us. Our quota imposed by the Organisation of Petroleum Exporting Countries, OPEC, stands at 1.8mbpd. We are under-producing by 31 per cent. Even with the price fluctuating above our benchmark, we are not benefiting. Instead there is a wide negative variance between budgeted and actual revenue. The reasons for the production decline are also well-known. First, the number of rigs is down. And, none of those now idle are getting ready to return to production any time soon. So, this is not a temporary setback. It appears almost permanent. Nigerians can expect no increase in crude revenue for a long time to come.

    Still, governments all over Nigeria need more revenue; and crude oil can no longer save us by providing the dollars we need. And, there is no other large pool of taxable expenditure to bail us out of the national fiscal prison than this one. We might as well brace up to the inevitable.

    Meanwhile, the controversy over the collection of VAT is only about re-distribution, not increase, of the VAT revenue between FG and states; as well as the Federal Capital Territory – 38 governments in total. A few states will benefit; most will lose a great deal. Incidentally, the FG will still receive 50 per cent, which will again be allocated according to existing formula. Without closing the gates to people from the impoverished states, the winners can expect invasions from the losers. Businesses and organizational VAT taxpayers, hitherto preparing one cheque and audited by one government, will be called upon to prepare up to 38 cheques and expect audit visits from up to 38 governments. The cost of doing business will go up. Some might choose to pack up and go.

    The VAT battle has just started. I stand solidly behind FIRS.