Taxation

Citizens’ Right To Demand Accountability, Subject To Compliance With Tax Obligations – FIRS

Published

12 months ago

October 7, 2022

Citizens’ Right To Demand Accountability, Subject To Compliance With Tax Obligations - FIRS

Olushola Okunlade Writes

The moral right of citizens to demand accountability from the government on what their taxes have been used for is dependent on when citizens have themselves heeded their civil obligations to pay taxes.

This was the position of the Executive Chairman of the Federal Inland Revenue Service (FIRS), Muhammad Nami during the unveiling of the FIRS Service Charter on Tuesday in Abuja.

Mr. Nami, while delivering the opening remarks at the unveiling, which was one of the events hosted by the Service in commemoration of the 2022 Global Customer Service Week, called on citizens to be fair to the government by paying their taxes, noting that this was the pathway to the country’s civilisation.

“Nigerians should be fair to the government,” he stated. “We must start to trust the Government. Nigerians must also understand that tax is a statutory responsibility and they should pay their taxes.”

Mr. Nami further stated that “Globally, tax is a social contract between government and its citizens. It is when citizens fulfill their obligations that they have moral rights to ask the government to account for taxes they pay. Nigerians are expected to understand that globally citizens pay for their own civilization; as most infrastructures and privileges in advanced countries are made possible by the revenue generated through the taxes their citizens pay to the government.”

The Executive Chairman of FIRS also appealed to governments at the Federal, State, and Local Government levels to give value to citizens for the money they pay as taxes.

On the occasion of Global Customer Service Week, Mr. Nami noted that the Week aligned with one of his four-cardinal objectives for the FIRS, which is making the Service a “Customer-centric institution”. He noted that the FIRS had taken steps and actions to institutionalise effective and efficient service delivery to all its stakeholders.

“For us at the FIRS, the essence of the customer service week is to further promote the culture of quality service delivery and team spirit among staff and reward them for their commitment to the mission and vision of the Service.

“The importance of efficient service cannot be relegated in a service-oriented institution like ours as quality service to our taxpayers and customers in general leads to an increase in tax compliance and revenue generation, which is integral to nation building.

“The theme of this year’s celebration has been appropriately chosen: Celebrate Service! At FIRS, we recognize the commitment of our staff and have every reason to celebrate them for the services they render to our customers.

“To demonstrate our commitment to quality service and a delightful customer experience, I am pleased to inform you that Management has approved a Service Charter, which will be unveiled shortly. The Service Charter contains the services we render, and is our service agreement, promise, and commitment on how we will be rendering service to FIRS esteemed customers and our expectations from them.”

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.

The CEO of SERVICOM Presidency, Mrs. Nnenna Akajemeli who delivered the keynote address at the unveiling commended the FIRS for being one of the agencies of government that were committed to providing value to taxpayers.

The Global Customer Service Week is a week-long international celebration that calls attention to the importance of customer service and the people that provide it with a view to boosting morale and teamwork.

Related Topics:#citizenright #corporatetax #firs #tax #taxation #taxcollector #taxcompliance

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Taxation

Tax: Dangote Cement Remits N412.9bn To Govt In 3 Years

Published

3 weeks ago

September 4, 2023

Business Echo Magazine

Rashidat Okunlade Writes

Dangote Cement Plc, a subsidiary of Dangote Industries Limited, (DIL), paid a total of N412.9 billion into the coffers of the Federal Government as tax for 3 consecutive years. A total of N97.24 billion was paid by Dangote Cement in 2020, N173.93 billion in 2021, and N141.69 billion in 2022.

This huge tax payment from only one of the conglomerate’s subsidiaries, re-affirms Aliko Dangote’s position that prompt and accurate tax payment is a duty for everyone who wishes to witness real growth and development. He posited that government cannot offer social services to the citizens without tax collection.

Dangote also advised the government to automate the tax system in the county, while commending the inauguration of the Presidential Committee on Fiscal Policy and Tax Reforms

“Maybe they should look at automating the tax system, just like what they did in India. If you go to India today, the country collects at least $1 trillion in various taxes. On petroleum products alone, India makes $100 billion yearly, because they charge 100 per cent on petroleum products. So, what I am suggesting is that people should pay taxes and if you pay, you demand services from government. I think it is a social contract.

“Once people start seeing that government is using the money to do infrastructure, fund education, healthcare, whereby the citizens don’t need to go out to India or other countries for medical attention, then people would settle down and start paying taxes,” the renowned entrepreneur added.

Meanwhile, other listed companies of Dangote Industries Limited also paid huge taxes to the Federal Government during the said period. Both Dangote Sugar Refinery Plc and NASCON Allied Industries Plc are listed on the Nigeria Exchange Limited.

Analysis of the yearly annual reports of Dangote’s three listed companies indicated that they paid N114.31 billion as tax in 2020; N187.17 billion in 2021 and N172.15 billion in 2022.

During the three years, Dangote Cement paid a total of N412.86 billion as taxes, Dangote Sugar Refinery paid N55.38 billion, and NASCON Allied Industries paid N5.39 billion.

A total of N97.24 billion was paid by Dangote Cement in 2020, N173.93 billion in 2021, and N141.69 billion in 2022. Dangote Sugar Refinery paid N15.85 billion in 2020, N11.97 billion in 2021, and N27.56 billion in 2022. For NASCON Allied Industries, it was N1.22 billion in 2020, N1.27 billion in 2021, and N2.9 billion in 2022.

The analysis indicated that companies from Dangote Group had remained major contributors to the nation’s economy with the volume of taxes paid in the period under review. The group has given Nigeria hope of earning income through economic diversification, implying that the nation can wean itself from dependence on the export of crude oil as major source of government income.

Dangote Industries Limited is a diversified and fully integrated conglomerate as well as a leading brand across Africa in businesses such as cement, sugar, salt, beverages, and real estate, with new multibillion-dollar projects underway in the oil and gas, petrochemical, fertiliser, and agricultural sectors.

Dangote Cement Plc is Sub-Saharan Africa’s largest cement producer with an installed capacity of 51.6Mta capacity across 10 African countries. The company operates a fully integrated ‘quarry-to-customer’ business with activities covering manufacturing, sales, and distribution of cement. It has a production capacity of 35.3Mta in its home market, Nigeria.

The Obajana plant in Kogi State, Nigeria, is the largest in Africa with 16.3Mta of capacity across four lines; the Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta, the Gboko plant in Benue state has 4Mta, while Okpella plant in Edo State has 3Mta.

Dangote Cement Plc has a long-term credit rating of AAA by GCR, AA by Fitch and Aa2.ng by Moody’s due to its market-leading position, significant operational scale, and strong financial profile evidenced by the company’s robust operating and net profit margins relative to regional and global peers, adequate working capital, good cash flow, and low leverage.

The excellent credit ratings are due to its leading market position, significant operational scale, strong financial performance profile demonstrated by its robust financial profile relative to regional and global peers, adequate working capital, strong cash generation, and low leverage.

Dangote Sugar is a leading brand that has made a remarkable impact on the Nigerian sugar sector. Dangote Sugar refining facility at Apapa is the largest in Sub-Saharan Africa, with 1.44MT per annum installed capacity. The company’s sugar backward integration projects located at Numan, in Adamawa State, are focused on cultivation and milling of sugarcane to finished sugar.

Taxation

Hard But Necessary Reforms, Imperative To Ramp Up Tax Revenues — Muhammad Nami, Chairman Joint Tax Board

Published

2 months ago

August 7, 2023

Business Echo Magazine

FIRS: Nigeria’s Tax-To-GDP Ratio, 10.86% As At 2021

Rashidat Okunlade Writes

For Nigeria to attain optimum tax revenue collection capacity across the Federal, State, and Local Government tax authorities, the country must make hard but necessary reforms that would yield long-term benefits.

This was the position stated by the Chairman of the Joint Tax Board (JTB), Mr. Muhammad Nami, who is also the Executive Chairman of the Federal Inland Revenue Service (FIRS) at the 153rd Meeting of the Board which was held today in Abuja with the theme: “Harmonization and codification of taxes at the National and Sub-national levels: Key to achieving a tax-friendly environment in Nigeria.”

Mr. Nami, while delivering his address to the Board stated that for progress to be made in taxation, tax authorities must continue to explore and adopt measures and innovative initiatives that will lead to the optimisation of tax revenue for all levels of government.

“As the new administrations attempt to address the many socioeconomic challenges facing the nation on many fronts, it becomes imperative for all the levers of State to shake off any lethargic antecedents and focus on the goal of a national resurgence.

“The unique and privileged offices we occupy as drivers of the nation’s tax administration processes present us with a rare opportunity to take hard, but necessary decisions that are expected to yield long-term benefits and add immense value to our collective prosperity as a nation.

“In recent years, especially since the dawn of our current democratic dispensation, the importance of taxation has continued to be reiterated and reinforced by all, and the critical role that tax revenue plays in funding government and governance cannot be over-emphasized.

“However, as we continue to make progress in our unique model of taxation, it is appropriate that we continue to explore and adopt measures and innovative initiatives that will lead to the optimization of tax revenue for all the levels of government, in more efficient, more effective, more inclusive, and more sustainable ways.

“It is only by achieving this, that our efforts as tax administrators can trigger the manner of activity required in the productive sectors of our economy, towards achieving the immense economic potentials that we are capable of,” Mr. Nami said.

The Chairman of the Joint Tax Board further assured Executive Chairmen of State Revenue Authorities present that given the thrust of the current administration’s tax policy direction, the country was on the pathway to eradicating multiplicity of taxes as a core of its overall economic regeneration objectives.

Mr. Taiwo Oyedele, Chairman, Presidential Fiscal Policy & Tax Reforms Committee, while delivering a presentation on the theme of the meeting highlighted that multiple taxations were causing low tax morale in the country, as well as discouraging investments while creating room for corruption and making doing business difficult.

The Presidential Fiscal Policy and Tax Reforms Committee Chairman further noted that the solution to the country’s revenue challenges is not to introduce more taxes, but to focus on the few taxes that are high yielding, noting that with these, tax authorities would be able to collect far more than is currently being collected.

Mr. Taiwo stated that for the government to raise more revenue, it needed to get to a point where the total number of taxes collected at the Federal, State, and Local government levels would be at a single digit.

“We also need to clarify taxing rights. We need to integrate tax collection functions—that is, all revenues that are to be collected must be collected by a single revenue agency. Government must also do well to fund our tax agencies well. We also need to harmonise revenue administration and simplify our approach to tax compliance,” Mr. Taiwo stated.

He further advocated for the country’s tax authorities to use more technology, a review of the country’s constitution and tax laws, as well a revisit of Nigeria’s concept of fiscal federalism.

Taxation

FIRS Rakes-in Record N5.5 Trillion In Six Months

Published

2 months ago

July 24, 2023

Business Echo Magazine

Nigeria At 62: Entrepreneurship and Industrial Hubs Hold Key To A Beautiful Nigeria — Nami

Rashidat Okunlade Writes

The Federal Inland Revenue Service (FIRS) has announced a total tax revenue collection of N5.5 trillion for the half-year period of January to June 2023. This is the highest tax revenue collection ever recorded by the Service in any first six months of a fiscal year.

Mr. Muhammad Nami, Executive Chairman of the FIRS stated this while presenting the 2023-2024 tax revenue outlook to the National Economic Council at its meeting held on Thursday 20^th July 2023, at the Presidential Villa, Abuja.

The presentation, which contained FIRS’ 2023 Half-Year Collection Report, showed that the FIRS achieved over one hundred percent of its target for the first half of the year when compared with a mid-year target of N5.3 trillion.

According to the report, tax revenue collected from the oil sector from January to June 2023, stood at N2.03 trillion, as against a target of N2.3 trillion; while non-oil tax collection stood at N3.76 trillion, as against a target of N2.98 trillion.

Mr. Nami, in his presentation, further stated that the Service collected a total of N1.65 trillion in tax revenues in June 2023. This sum is the highest tax revenue collected by the Service in any single month.

Speaking to what he described as “a good head start, despite stubborn headwinds,” Mr. Muhammad Nami, attributed the excellent performance to improved voluntary tax compliance enabled by the automation of FIRS’ tax administrative processes.

“This is a good head start as we work towards meeting our target for the year. And it was achieved despite stubborn headwinds such as the impact of the currency redesign and 2023 General Elections on the economy in the first and second quarters of 2023”, said Mr. Nami.

“This half-year performance was achieved as a result of improved voluntary tax compliance by taxpayers, the continued improvement of automation of our tax administration processes, including the updated VAT filing processes; as well as our dogged engagement with stakeholders in both the formal and informal sectors of the economy.”, he concluded.

Commenting on the outlook for the remainder half of the year, the FIRS Executive Chairman gave assurances that the country should expect “better days ahead” in terms of tax revenue collection.

“We believe that the performance in the second half of the year would be better considering the continuing improvement to our tax administration processes and the positive impact of the current government’s policies on the economy,” said the Executive Chairman.

It would be recalled that the Service achieved a total collection of N10.1 trillion in the year 2022, being the highest tax collection ever made by the FIRS in a single year.