For the first time, the Federal Inland Revenue Service (FIRS) has recorded an all-time high tax revenue collection of 5.23 trillion naira and Value Added Tax (VAT) of 1.11 trillion naira in 2018.
The highest revenue figure ever attained by FIRS was N5.07 trillion in 2012, when oil price hovered around $100-$120 per barrel. However, it is remarkable the institution achieved this feat, given that it was recorded at a period when oil prices averaged $70 per barrel.
FIRS will be expanding its dragnet and tightening noose against tax evaders, as there are indications that it would be given an 8 trillion naira target this year.
During the 2019 Management and Stakeholders Retreat in Lagos, the Chairman of FIRS, Dr. Babatunde Fowler said the 8 trillion naira target is being finalised, but assured of the readiness of the agency to take it as a challenge.
Fowler said that there would not be any serious discussion on diversification of the economy without reviewing the country’s tax regime for optimal performance.
Babangida Ibrahim, the Chairman of House of Representatives Committee on Finance, commended the FIRS on its achievement and pledged the lawmakers’ support for every initiative that would lead to efficient tax system in the country.
Ibrahim said “the taxation of any economy and growth of policies of government depends largely on the revenue generated by the tax authorities. We agree that to achieve effective taxation, the support of the parliament cannot be over-emphasised”.
He affirmed that the Stamp Duty Account domiciled at the Central Bank of Nigeria is still accumulating revenue, but said he is not sure whether the accumulation is in trillions as claimed by people.
Fowler said FIRS has adopted initiatives that ensure a robust tax administration that is agile and beneficial to all stakeholders.
According to the FIRS Chairman, “While we have been steadily increasing revenue collection over the years, our cost of collection has actually been going down. In 2016, we collected 3. 307 trillion naira; in 2017, we collected 4.027 trillion naira and in 2018, we collected N5.320 trillion naira. Meanwhile, the cost of collection as a percentage of actual taxes collected has been reducing. In 2016, it was 2.6 percent. In 2017, it was 2.49 percent, while in 2018 it was 2.14 percent”.
It was revealed that of the total tax collected, oil-related taxes amounted to 2.47 trillion naira, while the non-oil-related taxes totaled 2.85 trillion naira, against 1.52 trillion naira and 2.51 trillion naira respectively in 2017.
Fowler also noted that for the period in review, the automation of VAT collection in key sectors facilitates reduction in compliance cost in the long term; created system to system integration between banks and FIRS; and resulted to 31 percent increase year on year in VAT collection in the banks, as well as 25 billion naira so far in 2019.