Federal inland Revenue Service FIRS collected a total of N6.405 trillion in both oil (2. 008 trillion) and non-oil (4.396 trillion) against a target of N6.401 trillion. It broke the 2021 record as it raked in 10.1 trillion in 2022. And in the first half of 2023, the Muhammed Nami-led revenue agency has generated about 5.5 trillion naira. Experts say that what is even more remarkable is the fact that non-oil revenue accounted for over 60% of the tax income in 2021. The dramatic leap has drawn the attention of experts as well as policymakers. But while some a cursory evaluation of the progress may simply confer praises on the deployment of a new automated tax administration system the “TaxProMax” in June 2021 as the game changer, it is trite to acknowledge the human agency behind the revolution.
Before now, experts within the Nigeria’s fiscal arena have in the past harped on the need for effective and efficient tax collection as a panacea for revenue challenges that ail us as a nation. Many even argued that tax administrators’ continued refusal to embrace the goldmine that Nigeria’s tax receivables was everything but patriotism. It made sense to assume that the sheer size and population ordinarily should translate to a robust tax receipt.
Nigerian tax regime at the time needed to face a drastic revolution if it was to match up with the very lofty dreams of making ours an economy where revenue from taxes could contribute substantially to the nation’s income. Basically, the tax system operated at a suboptimal level for ages as the nation lost trillions of Naira to tax evasion amidst a chocking economy sustained mainly by crude oil exports.
The solution enabled taxpayers to experience ease of registration, reporting, payment and issuance of Tax Clearance Certificates while the service experienced greater efficiency in the deployment of resources thereby leading to improved revenue collection.
Describing what the situation was, the Executive Chairman of the Federal Inland Revenue Service FIRS, Muhammad Nami said that “the Nigerian tax question has lingered for ages with many entities evading tax due to weak tax legislations and a rather lackluster attitude towards enshrining global best practices “This half-year performance was achieved as a result of improved voluntary tax compliance by taxpayers, the continued improvement of automation of our tax administration processes, including the updated VAT filing processes; as well as our dogged engagement with stakeholders in both the formal and informal sectors of the economy.”
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Beginning with the strengthening of the tax legal framework, headlined by the Company Income Tax Act (CITA) 2021, the FIRS has continued to break new grounds in tax collection as it strives to improve the overall tax experience of Nigerians, while also daring the elements by taking on innovative ways of improving tax receipts. Nami’s FIRS has indeed upped the ante in tax administration.
To ensure that all entities doing business with Nigeria and Nigerians regardless of whether they have a physical presence in the nation or not are not spared from paying the taxes that should accrue to the country, the FIRS boss noted that the service would implement the published Guidelines on the Simplified Compliance Regime on VAT for Non-Resident Suppliers, to collect VAT on digital supply of services and intangibles to Nigeria. The audacious move is a smart move to take good advantage of the amendment of section 10 of the Value Added Tax (VAT) Act by the Financial Act 2021.
The Federal Inland Revenue Service, FIRS is now deploying emerging technologies to improve taxpayer experience, strengthen the institution, and increase its revenue generation capability and ultimately economic development of Nigeria. It has also incorporated the use of technology to block some of the gaps in the agency’s establishment Act.
Nami by virtue of the amendment to Section 25 of the FIRS (Establishment) Act in the 2021 Finance Act, made clear that any person who failed to grant the Service access to its information technology systems to connect to its automated tax administration solution is liable to certain penalties under the law. It is pursuant to this that the tax digitisation model was unveiled for implementation.
The views of various stakeholders on the workability of the country’s revenue generating potentials tell somewhat of a national consensus that that something ought urgently to be done. And truly, something was done. Work started with Mr. Babatunde Fowler. Having started off with the turnaround of the tax fortunes of Lagos state, it was easy for him to do well as a forerunner for a revolutionary tax administrator like the man Nami. For it was under its present boss Muhammad Nami that the FIRS began to witness the real groundwork for a sustainable tax model
