By Emma Ujah, Abuja Bureau Chief
When President Bola Tinubu appointed Mr. Zacch Adedeji as acting Executive Chairman of the Federal Inland Revenue Service (FIRS) on September 14, 2023, it was not a surprise to close observers of the administration.
It was particularly so because Mr. Adedeji had played critical roles in the formulation of the economic direction of the new administration, having earlier been appointed Special Adviser to the President on Revenue.
Before his appointment as S A on Revenue, the First Class Accounting graduate of the Obafemi Awlowo University, Ile-Ife, Osun State, had been the Executive Secretary of the National Sugar Development Council.
Before then, Mr Adedeji, an astute accountant, corporate tax and public finance development expert, had also been a Commissioner for Finance in Oyo State, between 2011 and 2015.
The mandate of collecting the sum of N19 trillion in the 2024 fiscal Year is by no means a mean task. The N19 trillion tax revenue target set by the President Tinubu administration remains the highest ever and realizing the target will certainly challenge the expertise in Mr. Adedeji and his team at the Federal Inland Revenue Service (FIRS).
Interestingly, the Executive Chairman, at the Management Strategic Retreat, last week, in Abuja, declared his enthusiasm and determination to embark on a structural transformation of the FIRS with a view to making it more tax-payer-centric, ensuring tax administration seamless in the country, encouraging voluntary tax payment by both members of the public, as well as, corporate organisations and by so doing raise the unprecedented revenue target, in the next 12 months.
Mr. Adedji told his lieutenants, “Today marks a historic moment as we unveil the new FIRS organizational structure, a critical milestone in our commitment to revolutionize tax administration in Nigeria.
“The cornerstone of this paradigm shift is the establishment of a customer-centric organizational structure designed to streamline processes and enhance efficiency in our tax operations. We are not merely adapting to change; we are leading it. The forthcoming structure, set to kick off from February 2024, embodies our dedication to modernize and digitize the tax administration landscape in Nigeria.
“In our pursuit for a more efficient and contemporary tax administration methodology, we are embracing an integrated tax approach, leveraging technology at every step. This approach positions FIRS at the forefront of innovation, ensuring that we meet the evolving needs of our taxpayers in a rapidly changing world.
“The structure advocates for a comprehensive approach to taxpayer services, consolidating our core functions and support under one umbrella. By tailoring our services to specific taxpayer segments, we aim to simplify the taxpayer experience. No more complexities, no more overlaps—just a seamless and user-friendly interaction for every taxpayer.”
The Executive Chairman said that the new FIRS he will be leading in the years ahead will shift from traditional tax categorization. The new structure, he revealed, will be based on thresholds.
His words, “In a groundbreaking move, we are shifting away from traditional tax categorization. Instead of maintaining different departments for distinct tax categories, the new structure formulates taxpayer segments based on thresholds. This tailored approach ensures that taxpayers are guided and serviced according to their specific needs, eliminating confusion and redundancy in tax administration.
“Behind this transformative initiative are carefully considered considerations detailed in our operations plan. We highlight the rationale behind our integrated approach, the benefits of comprehensive taxpayer services, and the logic behind tailored taxpayer categories, which will be presented to management in the subsequent sessions of this workshop.
These considerations set the stage for a more responsive, efficient, and user-friendly tax administration system.”
While undertaking the restructuring, the FIRS boss assured members of management and staff that due process will be followed and that adequate re-orientation and training will be carried out to enable them contribute to the attainment of the set target.
“Let me assure you that due process will be followed in this reformation. Extensive re-orientation and change initiatives will be implemented to ensure that no one is left behind. We recognize the need for meticulous planning, effective communication, and unwavering commitment to navigate this transformative journey successfully.
”As we stand united in this endeavor, let me reassure you that FIRS is already a formidable force, and with these new efficiencies, we can indeed meet and exceed our targets. This is not just a restructuring; it is a catalyst for a monumental leap forward, a collective investment in our shared future, and an unyielding commitment to excellence in tax administration.
“The forthcoming structure is not just a set of reforms; it is a commitment to redefine FIRS’s role in shaping a modern, efficient, and customer-focused tax administration system. Through innovative organizational restructuring and process optimization, FIRS is committed to fostering a taxpayer-friendly environment that aligns with global best practices and positions Nigeria as a leader in contemporary tax administration,” he said.
Eliminating hurdles to tax payment
Mr. Adedeji must, as a matter of priority, remove all hurdles to tax payment. Members of the public and corporate organisations that want to pay taxes should be able to do so without undue obstacles created by FIRS staff.
Giving taxpayers quick access to excellent service delivery and making tax returns filing for them in a very seamless manner should be the top priority of the Executive Chairman.
It is encouraging that he has promised to place taxpayers at the centre of attention. He needs to personally pay attention to the implementation of this policy. When taxpayers walk into FIRS offices, across the country, they should be cordially received and provided whatever information they need to pay their taxes or file returns.
Eliminate Multiple taxation
The negative impact of multiple taxation on the survival and growth of businesses in Nigeria is well known. Multiple taxation does not only hurt businesses, it inadvertently hurts tax revenue.
Businesses in the country are often subjected to various taxes and levies imposed by federal government agencies, other than the FIRS. State governments and the local government councils often collect levies from the same companies or business enterprises which have become a great burden on their finances. Multiple taxation increases the cost of doing business.
Micro, Small and Medium Enterprises (MSMEs) suffer multiple taxation the most in the country, mainly because the operators have no voice and don’t have the clout to challenge government agencies that impose such taxes and levies on them. Sometimes their business premises are sealed by officials of such revenue agencies. A company that is sealed or forced to close cannot contribute to the nation’s GDP (Gross Domestic Product).
The Federal Government recognizes the challenges confronting Micro and Small (MSMEs) and decided, from 2020, that such businesses with a turnover of less than N25 million be exempted from Companies Income Tax (CIT.
However, the implementation of the Finance Act, in this regard, remains a challenge.
State revenue agencies and those of local government councils continue to be a menace to MSMEs.
Mr. Adedeji, needs to pay particular attention to this. Revenue agencies need to give MSMEs some breathing space to enable them to blossom. As they grow up to a particular threshold, when they become profitable, the same businesses will be in the position to contribute more robustly to tax revenue, provide employment for more Nigerians, and indeed contribute hugely to the socio-economic development of the nation.
Multiple taxation makes it more difficult for Nigerian companies to compete with other producers in the market. Companies have been closing down or exiting the Nigerian space since the early 1980s.
The two most-cited factors driving companies out of business or the country are multiple taxation and lack of electricity.
62 taxes, levies in Nigeria
The Chairman, Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC), Mr. Taiwo Oyedele, at the 2023 Annual Conference of the Institute of Chartered Accountants of Nigeria, in Abuja, disclosed that there are 62 taxes and levies in the country.
The Chairman compared Nigeria’s Tax revenue of N15. 194 trillion 2022 to the equivalent of N78 trillion revenue of South Africa, with only 10 taxes in the same period.
The PFPTRC Chairman has repeatedly said that the less the number of taxes, the more tax revenue Nigeria will generate because tax administration will become a lot easier and more effective.
Since Adedeji is statutorily the Chairman of the Joint Tax Board, he needs to tackle this challenge head-on with a view to reducing the number of taxes and levies drastically, across the country.
Some taxes in Nigeria
The types of taxes in Nigeria include Personal Income Tax (PIT), Capital Gains Tax (CGT), Companies Income Tax (CIT), National Information Technology Development Levy (NITDL), Value Added Tax (VAT) and Withholding Tax (WHT).
Others include: Stamp Duties (SD) and Tertiary Education Tax (EDT). Tenement Rate: These rates are property taxes paid by landlords or occupiers of buildings, payable to local government councils as part of their internally generated revenue.
Harmonisation of taxes
There is a clear need for the harmonization of taxes and levies in the country. This will make it easier for businesses to pay their taxes. Revenue agents, especially at the state and local governments level, also need a thorough re-orientation to end their aggression against taxpayers in the process of collecting revenue.
There is hardly a proper understanding on the logic of tax payment at the lower tiers of government, especially for MSMEs. Taxes should be paid from profits. However, revenue collectors at the state and local government hardly recognize the need for businesses to make profit from which to pay tax. To tax capital is a sure way to kill a business and that should not be allowed to continue.
Source: Vanguard