The job of alternative revenue generation, especially, in a Nigeria facing the clear and present danger of losing its primary revenue source to aggressive innovation in technology is one that must be approached with all sense of seriousness, responsibility and expertise. This is even as tax experts have before now lamented Nigeria’s lackluster approach to taxation as several tax streams appear to have been underutilised, or completely abandoned or still depending on obsolete practices.
The appointment of Muhammad Nami to replace Fowler who was himself appointed because of his track record in Lagos, was seen by many as clear statement of intent by the President Muhammadu Buhari administration. Nami comes cradling a staggeringly intimidating CV in the taxation value chain. Originally, a lawyer by training, the Borno state born tax expert has traversed the entire length and breadth of the taxation subsector.
The decision to appoint Nami will soon prove to be an inspirational substitution from a coach deep foresight when the world including Nigeria was upended by the COVID-19 pandemic. Aside from the deadly health consequences of the virus, the first and most consequential casualty of the pandemic was the global economy. And since Nigeria, a mono-economy, depends almost wholly on multilateral trade, anything that threatens her source of foreign earnings becomes a catastrophe.
Knowing that without innovative ideas, laws by themselves will not mainstream the kind of change that will manifest in the form of positive tax receipts, he oversaw the transition from the old system of postage stamps to the brand new Adhesive Stamps. Furthermore, in a bid to plug many of the loopholes through which tax revenue is lost, FIRS committed to a huge investment in technology which has seen to the near elimination of human interface with customers while also making it convenient for them to remit taxes even from the comfort of their homes in keeping with his agenda of making FIRS a Customer-Centric Institution. It was pursuant to this agenda, for instance, that the FIRS came up with the decision to create a window for taxpayers with outstanding liabilities, allowing them to enjoy an extended payment period while enjoying a waiver of penalties and interests during this period.
Nami identified collaboration with stakeholders as one of the agenda that will guide his stewardship of FIRS. This is perhaps why it is quite disturbing that anyone will start a VAT conundrum. Although, discussing the salient points of the matter becomes subjudice, it offends the sensibility to imagine that anyone will want to challenge an efficient system, especially since it is the direction of global practices just for sport. It becomes even more unfortunate when one considers that this FIRS has been more open to dialogue than anytime in history.
Faced perhaps with the most daunting task since independence in 1960 as the global oil market entered into a glut, Nami had to find a new means of shoring up the country’s income. He set out early to modernise the tax system, dropping obsolete practices in favour of global best approaches. And it was this bold decision that kept Nigeria afloat during the pandemic. For instance, in the first quarter of 2020 alone, stamp duty earnings jumped to over N66 billion from the N18 billion recorded the previous year.
Nami’s wealth of experience in this sector, cutting across years of auditing and tax advisory, was enough for him to understand that it may be impossible to pursue aggressive tax reforms under the legal framework he inherited. It was in keeping with one of his 4-point agenda, which is “Rebuilding FIRS’ Institutional Framework”, that he made lots of moves aimed at redefining the legal framework of FIRS. In this regard, the Finance Act 2019, a landmark piece of legislation that amended the existing Stamp Duties Act, among others, which made it unambiguously clear that the FIRS is the sole competent tax authority to assess, collect and account for stamp duty relating to matters between a company and an individual or group of individuals in Nigeria, was quite timely. The Act also expanded the list of dutiable items, as well as reviewed the amount payable. This was in a bid to equate Nigeria’s duty tax regime with global best practices.
Thanks to Nami’s agenda of making FIRS a data-centric institution, everyone can see how efficient the Nami approach has been since 2019. A simple analysis of the data hosted in a dedicated data website of the revenue agency will reveal an increase of over 60% of Nigeria’s revenue in both 2019 and 2020. Specifically, non-oil tax accounted for N3,147,6479 of the N5,261,9163 generated in 2019. The 2020 data was not different in that non-oil revenue accounted for N3,435,2311 of the N4,952,2245 generated in 2020.
Facts are stubborn and do not pander to emotions. The facts of Nigeria’s new tax regime are there for everyone to appreciate. Those who prefer instead to mire the system in needless legal battles must come out clearly to tell Nigerians why now, considering the VAT system predates the Nami regime!
Abubakar writes from Kano.
