Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, who is also First Vice Chairman of the United Nations International Committee of Tax Experts and Chairman, African Tax Administration Forum (ATAF), said it was imperative for developing countries to grow Value Added Tax (VAT) and tax revenue from the digital economy to lessen dependence on revenue from natural resources.
Fowler, who gave the advice while speaking in New York at the opening of the Meeting of the United Nations’ Economic Council (ECOSOC) on Taxation and Digitalisation of the Economy, revealed that developing nations should focus on taxation, as they have no control over prices of goods produced by developed economies from the natural resources they export.
The FIRS Chairman said in a year, Nigeria has increased its tax revenue base by 800,000 corporate accounts and grown non-oil tax revenue to a stage that it now accounts for 64.3% of total revenue, up from 42.8 per cent recorded between 2012 and 2014. Fowler noted that the improvement was made possible by using technology to capture all the VAT available.
According to Fowler, “we have moved away from an oil-dependent revenue source to a non-oil revenue source. At the same time we have focused on VAT. VAT continues to be the fastest growing tax type in the world and I was quite amazed when the UAE spoke about introducing VAT”.
Fowler noted that due to political will, international collaboration and cooperation of the judiciary, Nigeria realised N767 billion from VAT in 2015, N828 billion in 2016 and N972 billion in 2017. He urged other developing countries to follow the Nigerian example, which includes tax treaties that assist collection and remittance.
The chairman acknowledged that the only way to ensure sustainable socio-economic development is through taxation. He called on developing countries to reform their tax processes, revealing that developing countries are deprived of profits and taxes because their economies sell 90 percent of items produced in developed economies.