The FIRS, it was gathered, devised the approach, in addition to recommendations for amendment of extant tax laws, so as to imbue more integrity and trust in the tax system and grant incentives to encourage compliance.
Chief of the initiatives, introduced by the new helmsman at the agency, Babatunde Fowler, who is said to have revolutionalised the tax system at his former duty post in Lagos State, is the Tax Refund initiative, which ensures that taxpayers, who are unduly over taxed or doubly taxed, get refunds on the element of over-taxation.
Accordingly, The Guardian learnt that the agency has moved to simplify the process of tax refund to taxpayers, who have genuine evidence of over-taxation arising from either wrong assessment or over remittance by tax consultants, who collect tax for government.
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In the proposal document, which is also seeking amendment to existing tax refund conditions, the affected items include double remittance by a tax payer or collecting agent, stamp duty, Value Added Tax (VAT), and other taxes such as the Companies Income Tax (CIT), Petroleum Profit Tax (PPT), Capital Gains Tax (CGT), Personal Income Tax (PIT) and Withholding Tax (WHT).
Relevant staff are said to have been sensitised on the checklist requirements to fast track the process of refund, so as not to unduly delay taxpayers and also encourage them to embrace voluntary compliance.
Taxpayers’ education and sensitisation on the amendment is underway, after due approval from relevant authorities like the Federal Ministry of Finance and the Joint Tax Board, as the new rule is to cover all tax authorities in the country.
This, apparently, is in response to the herculean task of meeting the target for tax earnings as projected in the 2016 budget, a development that has put revenue-generating agencies on their toes.
In the N6.08trn 2016 budget estimate before the National Assembly, borrowings constitute the highest plank of expected revenue at N1.8trn, followed by non-oil revenue of N1.45 trillion. Another stream of about N1.45trn would come from expected savings from ministries, departments and agencies of government, arising from reforms initiatives of the current administration.
Oil mineral earnings, which before now traditionally bears the burden of providing the bulk of the budget financing, is expected to yield N820b. The target is unlikely, as crude oil price is already about $10 below the budgeted benchmark of $38 per barrel, a trend that would task revenue-generating agencies to make up for revenue gaps.
Last year, the FIRS was given an income target of N4.5trn by the Federal Government but by the end of August 2015, the agency had only generated N2.66trn. The cumulative generated revenue for the year was not available as at press time, but it is very unlikely that the target would have been met, a situation, which confirms the doubt of analysts, who question the ability of the agency to drive the Federal Government’s recourse to run its affairs with tax earnings.
However, Fowler and the President of the Chartered Institute of Taxation of Nigeria (CITN), Dr. Olateju Somorin, assured that the tax agency, and by extension, taxes can comfortably fund the 2016 fiscal plan, even as there is high level of tax evasion in the country.
The immediate past Acting Chairman of FIRS, Samuel Ogungbesan, told The Guardian that out of the 450,000 identified companies in Nigeria, only 125,000, representing 27.7 per cent, pay taxes. This implies that about 325,000 companies are evading tax, thus denying the government of huge revenue annually.
In his first official meeting with the staff in August last year, Fowler vowed to ensure that all tax revenue due to government are recovered from taxpayers.
He warned that his administration would not take the issue of tax evasion lightly, adding that some foreign companies operating in Nigeria were being investigated in England for evading taxes and would not see why Nigeria should continue to condone such heinous infractions.
He said: “We will make sure that we cover all grounds, especially on the corporate level; all tax payers within each state will be covered.”
It appears that following the grim reality that the burden of the financing of the 2016 plan really falls on the tax agency, Mr. Fowler has already got to task by ensuring that he cover the usual lost grounds, including hauling into the tax nets the over 300,000 tax evaders.
Somorin in an exclusive chat with The Guardian said that raising task revenue from between N5trn and N6trn yearly, was not a difficult task for tax administrators in the country, but that some tax laws are encumbrances to the task.
She called on the Federal Government to, as matters of urgency, undertake a review of the laws to smoothen tax collection and administration in the country.
She maintained that the ambiguity in most Nigerian tax laws were at the base of the challenges of the low tax to GDP ratio in the country.
“Tax laws, if they are not well drafted, present problems in understanding what they say. Likewise, tax administrators, who are the tax collectors, will not understand tax laws. So, there shouldn’t be ambiguity in tax laws because if there is ambiguity in the laws, it is always in favour of the taxpayer. And when it is in favour of the taxpayer government will lose revenue. I am talking about tax laws because taxation is a statue and there is nothing you can do if a tax is not tied to any form of tax law,” she said.
She continued, “If you tell anybody that the rate of company’s income tax is 30 per cent, somebody will ask you which law supports that? If you tell somebody that there is something called self-assessment, he will ask you which law introduced that? So, tax law must be correctly drafted in such a way that taxpayers understand it.”
Also, the tax agency has increased its sensitisation of the public on the benefits of paying taxes aimed at ensuring an increased buy-in.
In pamphlets and other media platform, the FIRS has commenced the education of citizens, reminding them that it was socially responsible and law abiding for individuals, groups, organisations and corporate entities to voluntarily pay taxes because, by so doing, citizens will derive valuable benefits.
Some of the benefits, according to the agency, include providing sustainable finance and funding for governance, public and social services and economic development; promoting civic responsibility, patriotism by citizens and social responsibility by corporate citizens and bridging sharp disparities in living standards, among others.
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