The Executive Chairman, Federal Inland Revenue Service (FIRS) Tunde Fowler, on Tuesday called for an increase in the number of Nigerians and companies paying VAT and not a 50 per cent increase in VAT rate, the Service has declared.
A statement from the FIRS Wednesday in Abuja said “contrary to reports in the media yesterday and today, the FIRS Executive Chairman called for a reduction in Companies Income Tax (CIT) rate for small businesses so as to improve compliance.
“Though he indicated that there should be an increase in VAT rate by the end of the year, he NEVER, for once suggested a 50 per cent hike of any percentage increase at all.
“Rather, he promised improved collection in CIT, Petroleum Profits Tax, PPT and VAT in 2019 relative to the collection performance of the Service in 2018.
In 2018, FIRS collected the sum of N1.1 trillion in VAT N1,42 in Companies Income Tax (CIT) and N2.4 trillion in Petroleum Profits Tax (PPT).
The statement said the FIRS boss and committee members of the Senate Finance Committee had an interaction at the 2019-2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper ((PSP) interactive meeting on Tuesday.
During the meeting, Senator Yusuf Abubakar Yusuf, (Taraba), had asked that the “Companies Income Tax rate has been at 30 per cent over the years. What is your view. Should it be increased or lowered for so many years?
And Fowler had responded—“Thank you. My personal opinion is that the rate of CIT should remain at 30 per cent, to make sure that we do not reduce the tax rate, without getting others who are not in the tax net into the tax net.
But for small businesses, it’s a discussion we are having with the Ministry of Finance for people who are having a certain turnover. I believe that that can be reduced to may be 20 per cent to promote the small-scale businesses. But in terms of immediate reduction, I think we should try and stabilize to ensure a 90 per cent compliance of those in the tax net. I’m sure that at the end of the year, we can consider reducing, our corporate income tax rate.”
Also the Chairman Senate Committee on Finance, Senator John Owan Enoh, (Cross River), wanted to know…..”The target for 2018… and the fact that you were able to do 78.8 per cent. Now suddenly there is about 3 trillion added to that. How challenging will that be for the Service? Two, you recall when this committee confirmed you as Executive Chairman, there was this issue about the rate of VAT, the issue of VAT being the lowest and whether it should be raised to something higher. You said and we agreed with you that it wasn’t much about the rate but about compliance. Some years down the line, what do you think your impressions should be on that? Do you think you still stand by that? And how well has the service done in terms of improving on that.
In his response, Fowler said: “In terms of VAT, the Service has increased VAT collection over the last three years by over 25 per cent.
In terms of whether there should be an increase. I believe there should be an increase.
One issue about taxation is that it should be fair to all. We have discovered after the VAIDS (Volountary Assets and Income Declaration Scheme) that a high percentage of businesses are collecting VAT and not remitting. We’ve also tried to address this issue. We’ ve issued new VAT certificates. We have appealed to the public that if they are charged VAT and they are not sure it had been remitted they should contact us. We even gave a small promotion that for every 25 names, that they give to us, we give them a little gift either a power bank or something to show appreciation.
“But that aside, we are also on the streets. We have a team called FEETT, Federal Engagement and Enlightenment Tax Teams, going around to confirm that they (businesses) are registered for VAT. And I believe with the substitution of over 50,000 bank accounts that we just started this week I am sure that those businesses that have been collecting VAT and not remitting the same or not remitting any tax payment, are beginning to ensure that the level of tax compliance thus improve. And I believe that by the end of this year, government and Nigerian people should be ready for an increase in VAT.”
