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Nami: Road Infrastructure Tax Credit Scheme, One Of The Greatest Innovations Of FG

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Nami Charges Professional Tax Bodies On Contribution To Tax Development In Nigeria

Olushola Okunlade Writes

The Road Infrastructure Tax Credit Scheme has been described by the Executive Chairman of the Federal Inland Revenue Service (FIRS), Muhammad Nami as one of the greatest innovations of the Federal government in its resolve to tackle Nigeria’s infrastructure deficit.

The scheme which provides for public-private partnership intervention in the construction, refurbishment, and maintenance of critical road infrastructure in the country with participants being entitled to Tax Credits against their future Companies’ Income Tax was the subject of debate at the Senate Stakeholder and Public Hearing on the 2023 Medium-Term Expenditure Framework (MTEF) and Fiscal Paper, which held yesterday at the Senate Chambers.

“I think one of the greatest innovations of the government of the day is Executive Order 007, which was signed into law in 2019,” Mr. Nami said.  “I want to speak to the one we are handling jointly with the NNPC. The NNPC through its subsidiary for instance is investing in about 1,824 kilometers of roads across the 6 geopolitical zones in Nigeria.

“Some of these roads had been constructed as far back as 1976. I could remember when I was still rounding up my primary school education, the road that leads Suleja to Lapai-Agaie-Bida was constructed by a company called DTV. I am not aware of any significant work done on that road 40 years later, only until now when the NNPC is using Executive Order 007 to reconstruct the road.

“I can report authoritatively to the Chairman and members of this committee that from December 2021 to July this year, the contractor has completed the reconstruction of well over 50 percent of that road.

“The challenge of road construction in Nigeria has always been funding. Yes, there are contracts for the construction of roads, but funding these constructions is a challenge.

“The road leading from Suleja to Minna for instance was awarded some 11 years ago to a company for over N20 billion. Ironically, an annual budgetary provision in our National Budget every year stands between N150 million to N200 million per annum. If we are to complete that road, going by the annual budgetary provisions it would take an average of 35 to 40 years before we finish it.

“I can confirm to the Chairman that with Executive Order 007, NNPC is now providing funds and in the next two to three years that road will be completed. This is an important innovation of the government and I would plead with this distinguished Committee of the National Assembly to support the government on it,” Mr. Nami noted.

Supporting the position of the FIRS Executive Chairman, the Minister of Finance, Budget and National Planning, Hajia Zainab Shamsuna Ahmed explained further that the tax credit was only provided to the beneficiaries after the completion of the construction work, and not before.

She noted that several companies had indicated an interest in carrying out construction and rehabilitation of roads under the scheme across the country, adding that while some of these companies had commenced work, others were yet to as they were still finalizing some of the documentation requirements such as Bill of Quantities.

On the issue of revenue challenges being faced by the country, Mr. Muhammad Nami noted that a major cause of tax revenue losses for the country is the issue of having “fragmented tax systems and agencies.”

“In Nigeria, we have 774 Local Governments, each of them has a tax authority; each of the 36 States, too, have revenue authorities with their respective mandates; then we have the FIRS and Customs. What I would advise for efficiency and to do things in line with global best practices, is that we should amend our tax laws to harmonize the tax agencies and tax system.

“With this, when the FIRS, for instance, visits ‘Company A,’ it can serve one assessment on the company, and also on the individual that owns the Company; it can also ask the company to account for the VAT it has collected, and ask for PAYE it has deducted from its employees as well as the Personal Income Tax of the Promoters of the Company.

“This is currently not the case, and as such has created a huge gap in our tax system.”

The Senate Finance Committee, led by Senator Solomon Adeola charged the Federal Government through the Ministry of Finance and members of the government’s economic team to explore novel strategies that would shore up revenue for the Federal Government, including restructuring the remitting formula for Government Owned Enterprises (GOEs).

The Committee urged the Federal Government to consider a situation where Government Owned Enterprises (GOEs) remit 100% of their revenue to the government while being funded by a determined percentage of the Cost of Collection as is the case with the FIRS and Customs.

Arguing for this, the Committee opposed the current situation where some government agencies were retaining a hundred percent of their revenue, spending from it, and paying government operating surplus.

The Committee recommended that these GOEs should keep only 5 to 15 percent as their cost of collection from the revenue generated to cater for their salaries, operational expenses, and capital expenditure as is currently done by the Nigerian Customs and FIRS while remitting the difference of 85 to 95 percent of their gross earnings as against the current practice of operating surplus where they spend between 70 and 90 percent of their gross earnings.

The Committee noted that this also has the capacity to make them put in more effort to improve their revenue when compared to the FIRS and Customs.

The Committee further urged the Federal Government to apply the same logic to the running of government-owned universities by providing funding for only research and infrastructure needs through the Education Tax already being administered by the FIRS, while allowing the Vice Chancellors to use the revenue from school fees and other innovative revenue sources to run the Universities.

Taxation

Good Use Of Tax Revenues Will Enhance Tax Morale And Compliance – FIRS

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Good Use Of Tax Revenues Will Enhance Tax Morale And Compliance - FIRS

Olushola Okunlade Writes

When governments deploy tax revenues for the common good of the citizens, there is a concomitant increase in tax compliance by citizens who see the direct benefit of the taxes they pay.

This was the position held by the Executive Chairman of the Federal Inland Revenue Service (FIRS), Muhammad Nami during his opening remarks at the launch of the Public Finance Database by the Nigeria Governors’ Forum at the Wells Carlton Hotel, in Abuja, on Tuesday, last week.

Mr. Nami argued that the low compliance tax rate in most developing countries was a result of the failure of the social contract between the taxpayers and the government, noting that those in political leadership in the country had a duty to promote a tax-paying culture by relating projects and infrastructural developments executed by them to taxes paid by taxpayers.

“Taxpayers need to see what has been done with their money to be encouraged to continue to pay their obligations under the Social Contract they have with the government.

“I am delighted that one of the sessions focuses on the tax-for-service programs as they impact tax revenues. This issue is dear to us as tax administrators as there is a nexus between the effective utilization of tax revenue and tax compliance,” he stated.

“The low level of tax compliance in developing countries can be attributed to the failure of the social contract between the taxpayers and the government. It is expected that if the citizens are committed to paying taxes, the government should be committed to using the taxes for the common good of all citizens.”

The FIRS boss further argued that projects funded by taxpayers’ moneys should be reported as such and not personalized so that citizens would begin to relate these projects as the proceeds of their taxes.

“Those in political leadership should promote the tax-paying culture by relating projects and infrastructural developments executed by them to tax.

“The government at all levels is doing a lot with taxpayers’ money but citizens do not easily appreciate these facts because of the way and manner the projects are reported.

“There is the need to de-emphasize and de-personalize projects so that the citizens will begin to relate all the ongoing laudable projects in the states to tax revenue. This singular act to a great extent will increase the tax morale and enhance compliance.”

In 2019, the Southern Swamp Associated Gas Solutions project was commissioned, and the SPDC JV is planning to reduce associated gas flaring further through its Forcados Yokri gas-gathering project, of which large parts are set to be completed in 2022. Despite such efforts to reduce continuous flaring, unfortunately flaring intensity (the amount of gas flared for every tonne of oil and gas produced) at both SPDC- and SNEPCo-operated facilities increased in 2021 owing to short-term operational issues. Flaring from SPDC-operated facilities increased by around 5% in 2021 compared with 2020. The increase was primarily because of the extended outage of the gas compression system in SPDC’s shallow-water operations. The system was restored and became operational from January 2022. Flaring at SNEPCo-operated facilities rose by around 160% in 2021 compared with 2020. This was mainly because of an increase in flaring on the Bonga floating production, storage and offloading (FPSO) vessel. Repairs to a flex-joint on the Bonga FPSO’s gas export riser in the second quarter took longer than expected, in part because of weather conditions. While repairs were under way, the FPSO continued to produce oil and therefore flaring was necessary for safety reasons. The repairs were safely concluded in July 2021. Although flaring intensity levels rose in 2021, SPDC and SNEPCo over the last 10 years have almost halved the combined amount of hydrocarbons they flare from 1.5 million tonnes in 2012 to 0.8 million tonnes in 2021. This reduction is the result of a strict flaring reduction management process and both SPDC and SNEPCo will continue to work in close collaboration with joint-venture partners and the government to make progress towards ending routine flaring of associated gas. NIGERIA LNG EXPANSION UNDERWAY Global demand for LNG continues to grow as the world increasingly seeks reliable supplies of lowercarbon energy. Shell’s investment in Nigeria’s gas infrastructure for export is expected to help 6 This is according to a data provided by global research and consultancy business Wood Mackenzie. the country benefit further from revenues. Shell Gas B.V. and its partners took a final investment decision in 2020 on a new LNG processing unit – known as Train 7 -- at NLNG. The expansion is expected to create around 12,000 jobs for Nigerians during construction and stimulate growth of the local oil and gas service sector, with 55% of engineering and procurement of goods and services being sourced in-country. Train 7 is expected to ensure Nigeria’s continued place as a global player in a lower-carbon energy source. Once operational, Train 7 will add around 8 million tonnes per annum of capacity to the Bonny Island LNG facility, taking the total production to around 30 million tonnes per annum. In 2021, NLNG began awarding procurement and construction contracts. Early works started at the site. The first phase of the worker village is expected to be ready for occupancy in 2022 and the new material offloading facility ready for use by the end of 2022. NLNG’s Train 7 is expected to come onstream in the middle of the 2020s. KEY LICENCE RENEWED FOR DEEP-WATER SNEPCo has interests in four deep-water blocks in the Gulf of Guinea, two of which it operates. Today, nearly one-third of Nigeria’s deep-water oil and gas production comes from the Bonga and the nonoperated Erha fields.6 Since production began in 2005, Bonga alone has produced more than 950 million barrels of oil with the 2021 average oil production per day at 105,000 barrels. The Bonga FPSO vessel has a total production capacity of 225,000 barrels of oil per day and 150 standard cubic feet of gas export per day. In 2021, the availability of the FPSO vessel increased to 80% from 70% in 2020. In addition to Bonga, SNEPCo’s exploration activities have led to several significant discoveries of oil and gas over the last two decades, including the Bolia and Doro fields (Shell interest 55%). Nigeria Briefing Notes Helping to power Nigeria’s economy 13 In the right investment climate, SNEPCo believes that there are opportunities to expand. In 2021 the OML 118 (Bonga) production sharing contract was renewed and the lease extended for 20 years. Bonga North and Bonga South West Aparo (BSWA) oil fields are two such potential opportunities. Bonga North is a proposed tie-back project to the existing Bonga FPSO with Phase 1 comprising 14 wells. BSWA is a development of a new FPSO with Phase 1 comprising 23 wells. SUPPORTING RENEWABLE ENERGY STARTUPS Millions of Nigerians are excluded from the country’s power grid and Shell Companies in Nigeria have established and provided substantial funding for a not-for-profit, impact-investing company called All On. Operating as an independent company, All On works to bring reliable electricity – often from renewable energy sources -- to off-grid urban and rural customers. This support aims to build a solid pipeline of viable businesses that can create the scale required to address Nigeria’s access to energy gap. In December 2019, SPDC and SNEPCo made a significant additional 10-year financing commitment of $160 million in All On, bringing the total commitment to $200 million. By the end of 2021, All On had provided investment capital to over 40 renewable energy start-ups in its portfolio – an increase of more than 30% from 2020. One such company is Infibranches Technologies Limited, to which All On has committed $2 million, which is expected to enable the indigenous technology company to expand sales of solar home systems via its more than 13,000 agent banking partners across Nigeria. With the support of the Rockefeller Foundation, the All On Hub was established in 2020 to provide nonfinancial support and build the capabilities of off-grid energy entrepreneurs. In 2021, the hub supported 81 ventures – nearly double the 41 supported in 2020. Also in 2021, All On, Odyssey Energy Solutions and the Global Energy Alliance for People and Planet launched a $10 million equipment financing facility as part of the DART pilot programme in Nigeria. 7 Hydraulic flying leads support the delivery of hydraulic fluid and/or chemicals between subsea equipment. 8 Subsea trees are an assembly of valves and other components used to monitor and control the production of a subsea well. DART will combine demand pooling, aggregated purchasing of solar equipment, and access to affordable finance to unlock economies of scale for solar companies, achieve cost savings for end-users, and accelerate the growth of the renewable energy sector in Nigeria and beyond. DEVELOPING LOCAL CONTENT AND SKILLS Shell Companies in Nigeria contribute to the growth of Nigerian businesses that can provide technical and support services to the industry. This includes the manufacture of tools and technical kits, the operation of helicopter flights in the Niger Delta, and strategic partnerships between foreign and local companies to stimulate technology transfer and capacity development. While there are government-required programmes in some areas, such as the Nigerian and Community Content Strategy embedded in the Assa North/Ohaji South gas development project, Shell Companies in Nigeria deliberately seek to contract local businesses wherever possible. In 2021, Shell Companies in Nigeria awarded $800 million worth of contracts to Nigerian-registered companies. Of these, 92% were companies with at least 51% Nigerian ownership. SNEPCo has awarded major engineering and construction contracts to companies that are indigenous, have local staff, or possess domestic capabilities in the country. At present, the manufacture and rebuild of hydraulic flying leads7 (HFLs) is being carried out in-country by wholly indigenous companies. Pressure Controls Systems Nigeria Limited, another Nigerian company, continues to refurbish old subsea trees.8 Sometimes, a lack of access to capital hinders Nigerian companies from competing for and executing contracts effectively. Shell Companies in Nigeria have provided access to nearly $1.6 billion in loans to 901 Nigerian vendors under the Shell Contractor Support Fund since 2012. These loans help improve their tendering opportunities.

Mr. Muhammad Nami, an advocate for a harmonized tax system as a cure for tax revenue leakages used the platform to call for the country to make a bold paradigm shift by harmonizing the country’s tax system to optimize tax revenue collection.

“Recently, there has been a clamour for a holistic review of our tax system. Its proponents, including myself, argue that if Nigeria must achieve its tax revenue potential as the fulcrum of economic development, a harmonisation of our tax system must be undertaken.

“Tax harmonisation for enhanced revenue generation, which was the theme of the 2nd National Tax Dialogue was carefully chosen to reiterate the need for us as a nation to rethink the current tax system being operated.

“There was a consensus at the dialogue that Nigeria needs a transition to a unified tax administration as practiced globally by most of the efficient and effective tax jurisdictions that have achieved optimum tax revenue collection. 

“Certainly, there is no gainsaying that if Nigeria must be less dependent on external borrowing and buffer from the volatility and dwindling oil revenue, there should be a paradigm shift. Beyond politics and sentiment, the country should be willing to make those bold and hard but beneficial tax reforms and there is no better time than now if we must avert the looming debt crisis. The gains from a harmonised tax system far outweigh the fears expressed in some quarters, if dispassionately analysed.”

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FIRS Cautions MDAs: Stop Contracting Tax Assessment, Collection, Enforcement To Consultants

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FIRS Cautions MDAs: Stop Contracting Tax Assessment, Collection, Enforcement To Consultants

Olushola Okunlade Writes

The Federal Inland Revenue Service (FIRS) has cautioned Ministries, Departments, and Agencies of Government (MDAs) against the appointment of consultants and concessionaires to collect taxes due to the Federal Government or any of its agencies, as the FIRS is the sole agency of government saddled with the responsibility of tax collection.

In a Public Notice it issued Thursday, 22nd September 2022, signed by its Executive Chairman, Muhammad Nami, the FIRS accused some MDAs of including functions of assessment, collection, accounting, and enforcement of taxes and levies in their agreements with concessionaires and consultants.

“It has come to the notice of the Federal Inland Revenue Service that some Ministries, Departments, and Agencies of Government (MDAs) are appointing concessionaires or consultants for the assessment, collection, accounting or enforcement of taxes and levies due to the Federal Government or any of its agencies. 

“Some MDAs include such functions in their agreements with concessionaires or consultants,” the Public Notice read. 

Citing Section 68(2) of its Establishment Act, the FIRS highlighted that by law it is “the primary agency of the Federal Government of Nigeria responsible for the administration, assessment, collection, accounting and enforcement of taxes and levies due to the Federal Government or any of its agencies, except as may be authorised by the Minister responsible for Finance by regulation as approved by the National assembly”.

The Notice also stated that while Section 12(4) of the FIRS Establishment Act has provided that the Service may engage consultants, accountants, or other agents to carry out certain functions on its behalf, the law has expressly prohibited the carrying out of assessing and collecting tax by consultants. 

The law provides that: “The Service may appoint and employ such consultants, including tax consultants or accountants and agents to transact any business or to do any act required to be transacted or done in the execution of its functions under this act; provided that such consultants shall not carry out duties of assessing and collecting tax or routine responsibilities of tax officials”.

In 2019, the Southern Swamp Associated Gas Solutions project was commissioned, and the SPDC JV is planning to reduce associated gas flaring further through its Forcados Yokri gas-gathering project, of which large parts are set to be completed in 2022. Despite such efforts to reduce continuous flaring, unfortunately flaring intensity (the amount of gas flared for every tonne of oil and gas produced) at both SPDC- and SNEPCo-operated facilities increased in 2021 owing to short-term operational issues. Flaring from SPDC-operated facilities increased by around 5% in 2021 compared with 2020. The increase was primarily because of the extended outage of the gas compression system in SPDC’s shallow-water operations. The system was restored and became operational from January 2022. Flaring at SNEPCo-operated facilities rose by around 160% in 2021 compared with 2020. This was mainly because of an increase in flaring on the Bonga floating production, storage and offloading (FPSO) vessel. Repairs to a flex-joint on the Bonga FPSO’s gas export riser in the second quarter took longer than expected, in part because of weather conditions. While repairs were under way, the FPSO continued to produce oil and therefore flaring was necessary for safety reasons. The repairs were safely concluded in July 2021. Although flaring intensity levels rose in 2021, SPDC and SNEPCo over the last 10 years have almost halved the combined amount of hydrocarbons they flare from 1.5 million tonnes in 2012 to 0.8 million tonnes in 2021. This reduction is the result of a strict flaring reduction management process and both SPDC and SNEPCo will continue to work in close collaboration with joint-venture partners and the government to make progress towards ending routine flaring of associated gas. NIGERIA LNG EXPANSION UNDERWAY Global demand for LNG continues to grow as the world increasingly seeks reliable supplies of lowercarbon energy. Shell’s investment in Nigeria’s gas infrastructure for export is expected to help 6 This is according to a data provided by global research and consultancy business Wood Mackenzie. the country benefit further from revenues. Shell Gas B.V. and its partners took a final investment decision in 2020 on a new LNG processing unit – known as Train 7 -- at NLNG. The expansion is expected to create around 12,000 jobs for Nigerians during construction and stimulate growth of the local oil and gas service sector, with 55% of engineering and procurement of goods and services being sourced in-country. Train 7 is expected to ensure Nigeria’s continued place as a global player in a lower-carbon energy source. Once operational, Train 7 will add around 8 million tonnes per annum of capacity to the Bonny Island LNG facility, taking the total production to around 30 million tonnes per annum. In 2021, NLNG began awarding procurement and construction contracts. Early works started at the site. The first phase of the worker village is expected to be ready for occupancy in 2022 and the new material offloading facility ready for use by the end of 2022. NLNG’s Train 7 is expected to come onstream in the middle of the 2020s. KEY LICENCE RENEWED FOR DEEP-WATER SNEPCo has interests in four deep-water blocks in the Gulf of Guinea, two of which it operates. Today, nearly one-third of Nigeria’s deep-water oil and gas production comes from the Bonga and the nonoperated Erha fields.6 Since production began in 2005, Bonga alone has produced more than 950 million barrels of oil with the 2021 average oil production per day at 105,000 barrels. The Bonga FPSO vessel has a total production capacity of 225,000 barrels of oil per day and 150 standard cubic feet of gas export per day. In 2021, the availability of the FPSO vessel increased to 80% from 70% in 2020. In addition to Bonga, SNEPCo’s exploration activities have led to several significant discoveries of oil and gas over the last two decades, including the Bolia and Doro fields (Shell interest 55%). Nigeria Briefing Notes Helping to power Nigeria’s economy 13 In the right investment climate, SNEPCo believes that there are opportunities to expand. In 2021 the OML 118 (Bonga) production sharing contract was renewed and the lease extended for 20 years. Bonga North and Bonga South West Aparo (BSWA) oil fields are two such potential opportunities. Bonga North is a proposed tie-back project to the existing Bonga FPSO with Phase 1 comprising 14 wells. BSWA is a development of a new FPSO with Phase 1 comprising 23 wells. SUPPORTING RENEWABLE ENERGY STARTUPS Millions of Nigerians are excluded from the country’s power grid and Shell Companies in Nigeria have established and provided substantial funding for a not-for-profit, impact-investing company called All On. Operating as an independent company, All On works to bring reliable electricity – often from renewable energy sources -- to off-grid urban and rural customers. This support aims to build a solid pipeline of viable businesses that can create the scale required to address Nigeria’s access to energy gap. In December 2019, SPDC and SNEPCo made a significant additional 10-year financing commitment of $160 million in All On, bringing the total commitment to $200 million. By the end of 2021, All On had provided investment capital to over 40 renewable energy start-ups in its portfolio – an increase of more than 30% from 2020. One such company is Infibranches Technologies Limited, to which All On has committed $2 million, which is expected to enable the indigenous technology company to expand sales of solar home systems via its more than 13,000 agent banking partners across Nigeria. With the support of the Rockefeller Foundation, the All On Hub was established in 2020 to provide nonfinancial support and build the capabilities of off-grid energy entrepreneurs. In 2021, the hub supported 81 ventures – nearly double the 41 supported in 2020. Also in 2021, All On, Odyssey Energy Solutions and the Global Energy Alliance for People and Planet launched a $10 million equipment financing facility as part of the DART pilot programme in Nigeria. 7 Hydraulic flying leads support the delivery of hydraulic fluid and/or chemicals between subsea equipment. 8 Subsea trees are an assembly of valves and other components used to monitor and control the production of a subsea well. DART will combine demand pooling, aggregated purchasing of solar equipment, and access to affordable finance to unlock economies of scale for solar companies, achieve cost savings for end-users, and accelerate the growth of the renewable energy sector in Nigeria and beyond. DEVELOPING LOCAL CONTENT AND SKILLS Shell Companies in Nigeria contribute to the growth of Nigerian businesses that can provide technical and support services to the industry. This includes the manufacture of tools and technical kits, the operation of helicopter flights in the Niger Delta, and strategic partnerships between foreign and local companies to stimulate technology transfer and capacity development. While there are government-required programmes in some areas, such as the Nigerian and Community Content Strategy embedded in the Assa North/Ohaji South gas development project, Shell Companies in Nigeria deliberately seek to contract local businesses wherever possible. In 2021, Shell Companies in Nigeria awarded $800 million worth of contracts to Nigerian-registered companies. Of these, 92% were companies with at least 51% Nigerian ownership. SNEPCo has awarded major engineering and construction contracts to companies that are indigenous, have local staff, or possess domestic capabilities in the country. At present, the manufacture and rebuild of hydraulic flying leads7 (HFLs) is being carried out in-country by wholly indigenous companies. Pressure Controls Systems Nigeria Limited, another Nigerian company, continues to refurbish old subsea trees.8 Sometimes, a lack of access to capital hinders Nigerian companies from competing for and executing contracts effectively. Shell Companies in Nigeria have provided access to nearly $1.6 billion in loans to 901 Nigerian vendors under the Shell Contractor Support Fund since 2012. These loans help improve their tendering opportunities.

According to the Notice, going by “the above provisions of the law, it is clear that the duty of administration, assessment, collection, accounting or enforcement of taxes and levies due to the Federal Government or any of its agencies is that of the Federal Inland Revenue Service and its tax officials. No part of these responsibilities can be contracted to a private enterprise by any other MDA.”

The Executive Chairman FIRS further cautioned MDAs who were in the business of appointing consultants for tax assessment and collection that they were not just acting against the letters of the law, but were committing offences that were punishable under the FIRS Establishment Act as amended. 

“Furthermore, appointment or authorisation of any person, other than by the Federal Inland Revenue Service, to assess, collect, enforce or account for taxes constitutes an offence under Section 68(3) of the FIRSEA. Such appointment or authorisation is punishable, upon conviction, with fine, imprisonment, or both under Section 68(6) of the Act.

“In view of the foregoing, where any person, individual or corporate, has any information or assistance that may be of use to the Service for the purpose of administration, assessment, collection, accounting or enforcement of taxes and levies due to the Federal Government or any of its agencies or for the performance of its duties under the FIRSEA, such person should approach the Service directly with such useful information,” the Notice read.

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Taxation

Our Mandate Is To Collect Taxes, Not To Grant Tax Waivers To Taxpayers – FIRS

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

Olushola Okunlade Writes

The Executive Chairman of the Federal Inland Revenue Service (FIRS), Muhammad Nami has disclosed that the mandate of the Service is to collect taxes that are due to the federation and the Federal Government not to grant tax waivers to any taxpayer in the country.

Nami stated this in a swift reaction to the news making the rounds that some companies among them Dangote Sinotruck Limited, Lafarge, Honeywell, etc had been granted tax waiver on pioneer status between 2019 and 2021 in the sum of N16 trillion by the FIRS and the other Federal Government agencies.

In his reaction, Nami stated that “FIRS does not have the power or responsibility of facilitating or even implementing tax waivers to investors in Nigeria. There are relevant agencies of government that are charged with such responsibility.”

He, however, noted that the Service is not unmindful of the objectives of granting tax waivers to investors, which he said include “helping to grow local companies, stimulate economic growth, and earn investors’ confidence”. He also stated that he is “confident that the companies which are now enjoying tax breaks will eventually exit shortly and begin to pay taxes to the Federal Government as is currently being done by the companies that have equally enjoyed such tax breaks in the past and are now paying taxes in hundreds of billions of naira. Such companies will continue to pay taxes to the government so long as they remain in business.”

The FIRS Executive Chairman also clarified that “the companies enjoying the Pioneer Status will be exempted from paying only the Direct Taxes (eg CIT, EDT) from their profits but will continue to act as agents of collecting and remitting Indirect Taxes (eg VAT, WHT) in the ordinary course of their operations”.

He concluded the statement by emphasising that he remains focused on the task of achieving the mandate of the Service which is to assess, collect, and account for taxes due to the federation and the Federal Government. This task, he noted, “is challenging, more so at this time of global economic disruption occasioned by the Russia-Ukraine war and the Pandemic. However, the Management is steadfast in achieving the target set for it by the Federal Government. For instance, last year the Service surpassed its target by collecting an unprecedented amount of N6.4 trillion in taxes. So far this year, the Service is poised to perform even better than its record for last year.” 

He then called on the stakeholders to join hands with him to grow the nation’s economy.

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