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2022: Our Target Is To Achieve 100% Automation Of Tax Administration Processes – FIRS

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Muhammad Nami

…We will give priority to the taxation of the digital economy

Olushola Okunlade Writes

The Federal Inland Revenue Service (FIRS) has stated that it will achieve 100% automation of all its tax administration processes with the aim of blocking revenue leakages thereby revolutionizing revenue generation in Nigeria.

Calling for the cooperation of Nigerians to achieve this, the Executive Chairman of the FIRS, Muhammad Nami while speaking as the Special Guest at the Pedabo 2022 Annual Public-Private Sector Engagement on Tuesday highlighted that by virtue of the amendment to Section 25 of the FIRS (Establishment) Act in the 2021 Finance Act, any person who fails to grant the Service access to its information technology systems to connect to its automated tax administration solution is liable to penalties under the law.

“We will seek to achieve 100% automation of all our tax administration processes, which will block revenue leakages and revolutionize revenue generation in the country. We expect your full cooperation in this regard, considering that by the  amendment to Section 25 of the Federal Inland Revenue Service (Establishment) Act in the 2021 Finance Act (through Section 18 of the 2021 Finance Act), any person who fails to grant the Service access to its information technology systems to connect to its automated tax administration solution is liable to penalties under the law.”

Muhammad Nami in his address had earlier noted that in the year 2021, the Service had leveraged on the amendments to its Establishment Act to embark on “a major infrastructure overhaul, focusing on the deployment of technology for the automation of its processes and procedures,” thereby deploying its home-grown integrated tax administration system, TaxPro Max.

He went further to state that in 2022, the Service will give priority to the collection of taxes from the digital economy, and that it will deploy technological tools in assessing entities that fall within the Significant Economic Presence (SEP) threshold and relevant turnover generated from Nigeria.

“With the amendment of Section 10 of the VAT Act by the Finance Act 2021, we will implement the published Guidelines on the Simplified Compliance Regime on VAT for Non-Resident Suppliers, to collect VAT on the digital supply of services and intangibles to Nigeria.

“The Service has deployed a digital service interface, the Digital Economic Compliance (DEC) Tool, to facilitate the implementation of the Regime. The implementation of the DEC Tools will also assist the Service in determining entities that fall within the SEP threshold and relevant turnover generated from Nigeria. This tool will go live shortly.”

He also stated that the Service “will focus on compliance and enforcement strategies in 2022, by leveraging on intelligence, strategic data mining, and analysis, to enhance audit and investigation functions and implementing the penalty regimes in accordance with the laws;” adding that, “the Service is poised to ensure prosecution of recalcitrant taxpayers in 2022.”

Mr. Muhammad Nami called on taxpayers, tax consultants, tax collection agents, and other stakeholders in the tax system to partner with the FIRS in 2022 to make taxation and tax revenue collection a pivot for economic growth and national development, stating that “no society can grow without its citizens paying their taxes.”

Taxation

Nigeria Did Not Endorse The OECD Minimum Corporate Tax Agreement In The Country’s Best Interest – FIRS

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2021 Performance: “We Achieved Over 100 Percent Of Our Target” – FIRS

Nigeria Did Not Endorse The OECD Minimum Corporate Tax Agreement In The Country’s Best Interest – FIRS

Olushola Okunlade Writes

Nigeria’s cautious approach to the endorsement of the Organization for Economic Cooperation and Development (OECD)/ G20 Inclusive Framework’s two-pillar solution to the taxation of the digital economy is in the best interest of the country, and to ensure that Nigeria does not lose out on potential revenue from the digital economy.

This was explained in a statement issued to the press by the Executive Chairman of the Federal Inland Revenue Service (FIRS), Muhammad Nami, on Monday.

Explaining in his statement, why the agreement is unfair to Nigeria and the developing countries in general, Muhammad Nami stated that the country, having reviewed the conditions of the agreement had concerns over the impact that the signing of the agreement would have on the country’s tax system and tax revenue generation.

“There are serious concerns on how the rules would compound the issues in our tax system. For instance, to be able to tax any digital sale or any multinational enterprise (MNEs), that company or enterprise must have an annual global turnover of €20 billion and global profitability of 10%. That is a concern. This is because most MNEs that operate in our country do not meet such criteria and we would not be able to tax them.

“Secondly, the €20 billion global annual turnovers in question is not just for one accounting year, but it is that the enterprise must make €20 billion revenue and 10% profitability on average for four consecutive years, otherwise that enterprise will never pay tax in our country, but in the country where the enterprise comes from, or its country of residence,” the statement read.

Thirdly he noted that for Nigeria to subject a Multinational Enterprise to tax under the rule, the entity must have generated at least €1 million in turnovers from Nigeria within a year.

Mr. Muhammad Nami stated that this is an unfair position, especially for domestic companies which, with a minimum of above N25 million (that is about €57,000) turnover, are subject to companies’ income tax in Nigeria. He added that this rule will take off so many Multinational Enterprises from the scope of those that are currently paying taxes to Nigeria. In other words, even the MNEs that are currently paying taxes in Nigeria would cease to pay taxes to us because of this rule.

Fourthly, on the issue of dispute resolutions under the Two-Pillar Solution, the FIRS Executive Chairman explained that the rules were such that in the event of a dispute between Nigeria and a Multinational Enterprise, Nigeria would be subject to an international arbitration panel against Nigeria’s own justice system.

“It would be subject to international arbitration and not Nigeria’s judicial system and laws—even where the income is directly related to a Nigerian member of an MNE group, which is ordinarily subject to tax in Nigeria on its worldwide income and subject to the laws of Nigeria. We are concerned about getting a fair deal from such a process. More so, such a dispute resolution process with a Multinational Enterprise, in an international arbitration panel outside the country, would lead to heavy expenses on legal services, traveling, and other incidental costs.

“Nigeria would spend more; even beyond the tax yield from such cases,” the statement read.

On the issue of Nigeria losing significant revenue if it fails to sign in to the OECD Inclusive Framework rules for the taxation of the digital economy, the FIRS Executive Chairman noted that this was not a problem as the country had already put forward four ongoing solutions to the challenge of taxation of the digital economy.

“One, we have made it a point of practice to annually amend our tax laws to reflect the current global realities, it was courtesy of these reviews that we developed the Significant Economic Presence (SEP) rule, through the Finance Act of 2019 and 2020. The SEP rules set a threshold for Multinational Enterprises, without a physical presence in Nigeria, for registration and payment of taxes to the country.

“Two, we have deployed technology in order for us to bring digital transactions to the tax net. Coupled with the Significant Economic Presence rule, we have started seeing the impact of the technology we have deployed; companies like Twitter, Facebook, Netflix, and LinkedIn, among others who have no physical presence in Nigeria and that were hitherto not paying taxes, have now registered for tax purposes and are paying taxes accordingly. A positive to this is that we surpassed our target in the year 2021, despite the challenge posed to the global economy, including our own economy, by the Covid-19 pandemic.

“The third initiative is the Data-4-Tax Initiative, a blockchain technology which FIRS is jointly developing with the Internal Revenue Service of the 36 states and that of the FCT, under the auspices of the Joint Tax Board. With this project, we are confident that we are going to have a seamless view and access to all economic activities of individuals and corporate bodies in Nigeria going forward, including money spent on digital commerce.

“The fourth is that we have set up a specialized office, the Non-Resident Persons Tax Office, to manage the taxation of non-resident persons and cross-border transactions, including all tax treaty operational issues and the income derived from Nigeria by non-resident individuals and companies,” the statement read.

The Executive Chairman, FIRS appreciated members of the Nigerian public who had raised concerns on various occasions over Nigeria’s decision not to endorse the Two-Pillar solution, stating that their concerns came from a place of genuine passion and patriotism, anchored on seeking a better Nigeria.

“The concerns over Nigeria’s decision not to endorse the agreement are well-understood by us. We know that these questions come from a place of genuine concern and passion for a better Nigeria. We appreciate your patriotism,” Mr. Nami said.

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FIRS Lists Nigeria’s 2021 Top-Performing Taxpayers; Hails Taxpayers For Compliance, Payment, And Support

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FIRS Lists Nigeria’s 2021 Top-Performing Taxpayers; Hails Taxpayers For Compliance, Payment, And Support

Olushola Okunlade Writes

The Federal Inland Revenue Service (FIRS) has listed Nigeria’s top-performing taxpayers in the year 2021 and commended them for their exceptional efforts in contributing toward providing the necessary funds for the government to meet its social contract with the Nigerian citizens, despite the harsh economic conditions imposed by the COVID-19 pandemic.

The FIRS, in a Press Release signed by the Executive Chairman, Muhammad Nami, appreciated the country’s taxpayers, noting that without them the Service would not have been able to achieve the feat it recorded in 2021 when it surpassed its tax collection target for the year and crossed the N6trillion threshold for the first time.

“The FIRS is pleased to celebrate the top-performing taxpayers who contributed to her success in 2021,” the release stated. “The Service surpassed its tax collection target in 2021, and in doing so, crossed the N6trillion threshold for the first time.”

The Service further stated that the tax revenue collection of N6.405 trillion in 2021 was made possible courtesy of the leadership of President Muhammadu Buhari, the support of the Ministry of Finance, Budget and National Planning, and the National Assembly too.

“The feat recorded by the Service was made possible by the uncommon leadership of the President, Commander-in-Chief of the Armed Forces of Nigeria – Muhammadu Buhari, the active support of our supervisory Ministry, the backing of the National Assembly and its leadership as well as the cooperation of all other stakeholders in the tax area.  

“To everyone who contributed to FIRS’ success in 2021, we say thank you.

“Of particular importance is the contribution of our much-esteemed taxpayers; they defied the very harsh global economic conditions imposed by the lingering COVID-19 pandemic to produce a heroic performance in tax payment, compliance, and support. 

“The combined efforts of all taxpayers made it possible for the Service to achieve the tax revenue collection of 2021 which provided our governments with necessary funds to meet their social contracts with the citizens,” the FIRS noted.

The list of top-performing taxpayers included the Nigeria Liquified Petroleum Gas Company Ltd, which was recognized as the Most Supportive Taxpayer; In contrast, the Nigeria National Petroleum Company was listed as the Highest Taxpayer.

Others on the list of Top-Performing Taxpayers included Mobil Producing Limited, Star Deep Water Petroleum, MTN Nigeria Communications Plc, Shell Petroleum Development Company Limited, Chevron Nigeria Limited, Total E & P Nigeria Limited, Airtel Networks Limited, Nigeria Petroleum Development Company Limited, Nestle Nig. Plc, Dangote Cement, Nigeria Breweries Plc, Total Upstream Nigeria Ltd, Indorama Eleme Petrochemicals Ltd, NIG Agip Oil Co. Ltd, British American Tobacco Marketing, Guaranty Trust Bank Plc, Stanbic IBC Bank Plc, and Lafarge Africa Plc.

The FIRS appreciated the Northern Cables Processing and Manufacturing Limited (NOCACO) and Ikeja Electric Plc for being the most improved tax filing and VAT compliance.

The revenue authority urged taxpayers to join hands with the FIRS to make taxation the pivot of the nation’s development and economic growth.

Recall that the country’s top-performing taxpayers were scheduled to be unveiled, recognized, and awarded by President Muhammadu Buhari at an exclusive dinner during the FIRS 2022 National Tax Week; this was however canceled in honor of the victims of the unfortunate attack on the Kaduna-Abuja railway on the 28th of March, 2022.

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CITN 24th Annual Tax Conference: Yemi Osinbajo Drums Support For FIRS Digitisation Agenda

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CITN 24th Annual Tax Conference: Vice President Yemi Osinbajo Drums Support For FIRS Digitisation Agenda

CITN 24th Annual Tax Conference: Vice President Yemi Osinbajo Drums Support For FIRS Digitisation Agenda

Olushola Okunlade Writes

The Chartered Institute of Taxation of Nigeria (CITN) has been urged to support the Federal Inland Revenue Service (FIRS) in its drive towards full digitalisation of tax administrative processes.

Vice President Yemi Osinbajo SAN made this call in his speech at the Chartered Institute of Taxation of Nigeria’s (CITN) 24th Annual Tax Conference held at the International Conference Centre, Abuja.

The Vice President was represented at the event by the Executive Chairman of the FIRS, Muhammad Nami who delivered the address on his behalf.

Professor Osinbajo noted that the theme for the tax conference, “Global Disruption, Taxation, and Digitalisation: Implication for Socio-Economic Development” aptly captures the prevailing realities within the national and global fiscal space.

CITN 24th Annual Tax Conference: Vice President Yemi Osinbajo Drums Support For FIRS Digitisation Agenda
Executive Chairman, FIRS, Nami Muhammad, delivers the keynote address at the Chartered Institute of Taxation 24th Annual Tax Conference in Abuja on behalf of Vice President Yemi Osinbajo SAN. 18th May 2022.

He said, “Nigeria’s economy is fast digitalising”. The digitalisation of the Nigerian economy means that the ways and manners of organising and doing businesses have changed. Indeed, the radical changes brought about by digitalisation have displaced the traditional approach to tax administration. Consequently, the digitalisation of tax administration is unavoidable, that is why  our government has continued to heavily invest in the automation of tax administrative processes and digital infrastructure.”

He further noted that the government had provided the enabling environment for digitalised tax administration by making necessary tax policy changes, developing rules for taxation of the digital economy, enactment of required legislation, and providing necessary political backing for the team negotiating the new international tax rules for the digitalised economy.

CITN 24th Annual Tax Conference: Vice President Yemi Osinbajo Drums Support For FIRS Digitisation Agenda
Executive Chairman, FIRS, Nami Muhammad with Dr. James Kayode Naiyeju, FCTI; CITN President, President, Chartered Institute of Taxation of Nigeria, Adesina Isaac Adedayo, mni, FCTI; Vice President CITN, Agbeluyi, S.O. (Barr.), FCTI and Chairman 24th Annual Tax Conference Committee, Ruth Oluwabamike Arokoyo, FCTI, at the Chartered Institute of Taxation 24th Annual Conference in Abuja. 18th May 2022.
CITN 24th Annual Tax Conference: Vice President Yemi Osinbajo Drums Support For FIRS Digitisation Agenda
Executive Chairman, FIRS, Muhammad Nami, with President, Chartered Institute of Taxation of Nigeria, Adesina Isaac Adedayo, mni, FCTI; Vice President CITN, Agbeluyi, S.O. (Barr.), FCTI; Chairman 24th Annual Tax Conference Committee, Ruth Oluwabamike Arokoyo, FCTI, Dr. James Kayode Naiyeju, FCTI, and CITN past Presidents at the Chartered Institute of Taxation 24th Annual Conference in Abuja. 18th May 2022.

The Vice President urged the institute to see its role in society as a pillar for the country’s socio-economic development.

“The possible impact of non-compliance by taxpayers-whom you hold briefs for—on the government’s revenue and the larger society is crucial and must be given topmost priority while holding briefs for them.

“In doing so, you must always bear in mind the pronouncement of the Court of Appeal in Phoenix Motors v. National Provident Fund Management Board (1993) that it is in the best interest of the society at large that government be in revenue.

“It is through this prism that I see your Institute as a pillar for the socio-economic development of Nigeria and the emancipation of the downtrodden of our society. Without a doubt, your members will continue to discharge the solemn and sacred responsibility of ensuring that the interest of the larger society in Nigeria is not trodden upon; and this you must do with patriotic zeal.” He noted.

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