President Muhammadu Buhari Thursday in Abuja directed the Federal Inland Revenue Services (FIRS) and related government agencies to plug all revenue leakages by ensuring strict compliance of tax payments by foreign companies operating in Nigeria, urging deployment of more digital platforms and seamless connections.
Speaking virtually at the First National Tax Dialogue held at the Conference Hall of the State House, the president ordered all government agencies to automate operations and ensure more synergy in advancing the interest of the nation in revenue generation.
He said, “It is not enough that our citizens and local businesses pay their fair share of taxes. Equally, foreign businesses must also not be allowed to continue to exploit our markets and economy without paying appropriate taxes.
“Accordingly, the FIRS has my mandate to speedily put all measures in place to fully implement programmes to stamp out Base Erosion and Profit Shifting in all their ramifications and generally automate its tax processes.
“In line with this, I have directed all government agencies and business enterprises to grant FIRS access to their systems for seamless connection. FIRS must ensure that its deployment of technology for automation is done in line with international best practices. In particular, FIRS can borrow a leaf from other countries which have successfully automated their tax processes.”
The president assured citizens that the government would continue to pursue its mandate of improving lives through investments in infrastructural projects like railways, roads, electricity, healthcare and education, in spite of dwindling revenues and the challenge of coronavirus.
“Our government has continued to pursue all those projects despite massive decline in government revenues occasioned by a combination of factors among which is the COVID-19 pandemic.
“The devastating effect of COVID-19 on the health and economy of the world is evident across every strata of our society. It is obvious to every citizen of this country that our economy is not immune from the global economic downturn.
“As such, we have had to confront the conflicting situations of reflating the economy and at the same time raising revenue to meet our budgetary needs. It is within this context that the government undertook an expansive budgetary projection of over N13 trillion for 2021,” he said.
The president said the government had “inevitably resorted to deficit budgeting as a result of declining revenues for some years,’’ resulting to increase in Nigeria’s debt profile.
“As we might expect, this has led to increase in Nigeria’s debt profile which stood at about N32 trillion in September 2020. This funding gap created by the dwindling government revenue therefore underscores the importance of the national tax dialogue we are holding today.
“No nation has ever made progress without having to pay for it or make the necessary sacrifice. I therefore call on all Nigerians to be alive to their tax obligations. This government is strategically restructuring the tax revenue mix in favour of indirect taxes in accordance with our national tax policy document.
“To this end, FIRS is mandated to do all that is required in order to efficiently collect tax revenue due from transactions carried out using local and foreign online platforms. The government has made relevant statutory amendment to tax laws in the Finance Act 2020,” he said.
The president said necessary amendments had been made to the FIRS Establishment Act in the Finance Act 2020 in order to provide the legislative framework for the adoption of technology in tax administration.
“Every Nigerian must see tax payment in its proper context, which is, as a solemn and patriotic obligation that is necessary for building a better society,” he said.
In his keynote presentation, President of the African Development Bank (AfDB), Dr Akinwunmi Adesina, projected a rebound of the Nigerian economy from recession, with a 1.5 per cent growth rate in 2021, and 2 per cent growth in 2022.
He said taxes should be employed as instruments for promoting development by encouraging private sector companies to take up responsibilities in infrastructure, and attracting Foreign Direct Investments, admonishing that prolonged tax holidays could be counterproductive.
He said youths should be incentivised to grow businesses with appropriate tax regimes, adding that Africa loses about 60 billion U S dollars annually from taxes.
In his welcome address at the event, Executive Chairman, FIRS, Mr. Muhammad Nami, underscored the importance of the dialogue, saying: “The universal collapse of traditional government revenue sources and the consequential resort to tax is a testimony. The well-known arms race among nations is gradually giving way to “tax-race. The international struggle for and against digital services tax is just the beginning of the tax race. It is a race for all nations – developed or developing. And for Nigeria, it is ‘a must-win’ race.”
Mr. Nami stressed that the FIRS would match on to digitalise the tax process fully and canvassed the cooperation of the three tiers of government, the citizens and corporate organisations in the country for the success of the digitalization drive.
His words: “The FIRS started the journey to automation several years ago when it launched “Project Fact”. Several other initiatives were launched to further take advantage of evolving technology in taxpayer registration, online payment platforms, remote filing of returns, etc. However, there was very limited success with the various initiatives due to inadequate statutory framework.
“A quantum leap was achieved with the 2020 Finance Act which copiously provided legal grounds for deployment of technology in tax administration. The Service is grateful to the President, the leadership of the National Assembly, the Honourable Minister of Finance, Budget and National Planning and all other stakeholders that worked together to enact the necessary laws.No tags for this post.