When Muhammed Nami was appointed to head, Federal Inland Revenue Service (FIRS), majority of Nigerians were however skeptical for inexplicable reasons; however, in the past two year, Nami has proved doubting Thomases wrong and shown his capacity to drive the tax body to help bridge the revenue gap in the economy. BENJAMIN UMUTEME writes.
Appointed on December 9, 2019 as chairman of the Federal Inland Revenue Service (FIRS) Muhammed Nami, was not the flamboyant type that was to be the toast of the media;
however, with over 30 years of practical experience in auditing, tax management and advisory, President Muhammadu Buhari was sure he was the right man to head the tax agency, considering the rocky times it was passing through at that point in time.
Like a fish in the water, Nami quickly settled to do the job that has been entrusted with. Since that time, he has not disappointed as the service continues to break new grounds in its bid to not only drag more people into the tax net but help to increase government revenue which has become a challenge with falling oil prices.
On assumption of office, the FIRS boss drew up a four-point objective as a template for his mission to reposition the service, for efficient service delivery.
Hitherto, the service had operated without a clear direction thereby dampening the morale of the staff. The cardinal objectives of his administration were rebuilding FIRS institutional framework, collaboration with stakeholders, making FIRS a customer-centric institution and making FIRS a data-centric institution.
The helmsman of the FIRS has proved bookmakers right that he is more than equal to the task. And the reforms he is implementing at the service attests to his dexterity, visionary leadership and patriotism.
It has been acknowledged by tax experts that Mr Nami applies himself diligently to his work since he assumed leadership of the FIRS. The range of initiatives and reforms he has implemented thus far bespeak of him as a focused and devoted tax administrator and team player who understands how to harness human and financial resources to improve the country’s tax system.
Rebuilding FIRS institutional framework
Nami together with his team continue to show zest and zeal for the job. This they have exhibited in their commitment to building and strengthening the capacity of the departments and units of the service to deliver their mandates on a long term and sustainable basis. In line with this, the board approved a new structure for the service on January 17, 2020. The new organogram is composed of six groups and 32 departments including the Internal Affairs Department that reports directly to the executive chairman. Also, taxpayer segmentation has been re-introduced and audit and investigation departments were also reviewed for effectiveness.
The Annual Corporate Plan Retreat was reintroduced and was held between February 7 and 8 2020 with the theme: ‘Repositioning FIRS for Efficient Service Delivery’. Also, the 2020 Corporate Plan was approved by the chairman and exposed to the staff at the headquarters.
The Intelligence, Strategic Data Mining & Analysis Department (ISDMA) was established to deploy technological tools in analyzing tax data and distil for improved assessment of taxpayers.
The Tax Incentive Management Department (TIMD) was also established to manage, implement and report on tax incentives as provided by relevant extant laws and regulations. This department is specifically in charge of the tax affairs of companies/ enterprises enjoying tax exemptions and holidays. Companies enjoying pioneer incentives, NGOs, co-operative societies, companies in Export Processing Zones, Free Trade Zones, Oil and Gas Export Processing Zones, those engaged in Downstream Gas Utilisation and all others enjoying tax holidays are being managed by this department to forestall revenue leakages, such that companies, enterprises do not use their statuses as a cover to earn taxable income and refuse to pay tax on those income.
Tax policy
Knowing that incidences of double taxation continue to be a major drawback to business (local&foreign), the FIRS in a bid to minimise incidences of double taxation and facilitate international trade and investment between Nigeria and the rest of the world, is in collaboration with the Federal Ministry of Finance, Budget & National Planning on bilateral/multilateral agreements.
In 2020, FIRS concluded the negotiation of the Avoidance of Double Taxation Agreements with Turkey. Negotiations are also at different stages with Hong Kong, Saudi Arabia, Cyprus, Iran, Germany, Switzerland, India, Botswana, Japan, Greece, New Jersey and Russia. These would be concluded as soon as the few outstanding issues have been resolved.
As at today, Nigeria has an active ADTA agreement with 16 countries namely South Korea, Spain, Sweden, Singapore, France, Mauritius, UAE, Qatar, Kenya, Morocco, Ghana, Cameroon, Turkey, Sudan, Gambia and Denmark.
Another key tax policy issue which the management of the service continues to focus on is that of transfer pricing. The management has, by way of follow-up to the introduction of the Income Tax (Transfer Pricing) Regulations 2018, issued Demand Notes totaling 1.074 billion naira on 222 companies for failing to file their transfer pricing returns in line with the requirements of the Regulations. 54 companies paid penalties imposed on them and these amounted to ₦47.433 million. Currently, the service is involved in several audits that have the potential for substantial revenue yield resulting from adjustments and additional assessments.
The service also maintained its relationship with ATAF, WATAF, CATA and the OECD and organised a WATAF workshop on Risk Management in Bamako, Mali in June 2020.
Calming troubled waters
Over the years, precisely some professional bodies in taxation and economy remained at loggerheads over areas of influence. This poses a serious challenge to the economy because where there is no peace and unity, there is no progress. In May 2021, Nami put a machinery in motion which finally resolved the issue. The professional bodies are the Institute of Chartered Accountants of Nigeria (ICAN), the Chartered Institute of Taxation of Nigeria (CITN) and the Association of National Accountants of Nigeria (ANAN).
He said, “Following the disagreement and various court disputes since 2004 to date, between ICAN, ANAN and CITN on issue of tax practice, it became necessary that FIRS under my leadership should intervene by inviting the three sister professional bodies for amicable resolution.
“The FIRS facilitated signing of a memorandum of association which was meant to provide an atmosphere in which the bodies could operate seamlessly to support what FIRS does and also contribute to the improvement of the country’s position on the ease of doing business index”.
That was the very first time, ICAN, CITN and ANAN came together on one platform to affix their respective hands and seals to a document and affirmed their commitment to the growth and development of tax administration, compliance and practice in Nigeria. The result is what has been attested to by many.
A look at revenue targets and actuals collected since 2015 showed that Nami continues to soldier on in spite of the blitzed onslaught especially from recession and COVID-19 shutdown which greatly impacted businesses.
Data from FIRS revealed that collection target between 2015 and 2018 was N4.572 trillion, N4.907 trillion, N4.809 trillion, N6.747 trillion. While Actual collected was N3.742 trillion, N3.304 trillion, N4.047 trillion, and N5.320 trillion, respectively.
However, between 2019 and 2020, with recession and Covid-19 disruption, Nami, in concert with his management board showed that in adversity there are boundless opportunities. Between 2019 and 2020, when collection target was N8.802 trillion and N5.077 trillion, the service actual collection was N5008 trillion and N4.952 trillion, respectively.
In addition, more people were brought into the tax net with the e-registration platform where so far 195,986 persons/businesses have been registered.
June 2021 Performance
The collection performance for June 2021, contrary to what economists and pessimists said, surpassed that of June 2020. The service collected over N650 billion in June 2021 as against N526.6 billion collected in the same month the previous year. This represents a 20% increase in collection over the 2020 figure.
The performance for 2021 is significant considering that the full effect of the over 5-month lockdown of 2020 became fully manifest in 2021 YOA. Despite this phenomenon, the service out-performed June 2020 (which was based on 2019 accounts – a year that experienced no lockdown) by 58.9% after adjusting for the one-off payment of N90 billion by an E&P company and NCS VAT collection, usually in the range of N40 billion.
Participation in international tax engagements
Nami’s leadership of the FIRS has also launched Nigeria and the FIRS to international tax spectacle. For the first time in history, Nigeria heads the Commonwealth Association of Tax Administrators (CATA). Nami was unanimously elected president by the 47-member country organisation on November 12, 2021 during the organisation’s General Assembly which held virtually. Nami becomes the 15th president of CATA and first Nigerian to be so elected and will occupy the office for a three-year tenure.
In September, 2021 Nigeria hosted the 17th General Assembly and 10th Anniversary of the West African Tax Administration Forum (WATAF).
As at 30th November 2021, the service had collected over 5.03 trillion naira, being 85% of the national tax target. It projects to meet and even overshoot its target by 31st December 2021.
Financial experts have continued to comment the FIRS boss for the various initiatives that have non-oil revenue a filip. They opined that the Q3 2021 GDP is a testament to the enormous work Nami is doing at the tax body.
For political economist and development researcher, Adefolarin Olamilekan, “FIRS must engage in socio-economic tax research study of the non-oil sector, alongside massive enlightenment across the country. Furthermore, FIRS should lead advocacy for a strong tax policy in Africa through international fora and platforms,” he added.
