Leading experts in Tax, Fiscal Policy, and Economics have commended the Federal Government on its recent indication to suspend the proposed increases in excise duty rates on tobacco, alcoholic and non-alcoholic beverages as part of the 2023 Fiscal Policy Measures and Tariff Amendments.
A leading Tax & Fiscal Policy expert and Head, Tax and Fiscal Policy at PricewaterhouseCoopers (PwC) Nigeria, Mr. Taiwo Oyedele lauded the federal government for engaging with and listening to the legitimate concerns raised by industry players and suspending the proposed increases in excise duty rates, which has generated a lot of interest among key stakeholders and the organised private sector groups.
“Glad to hear that the government is no longer going ahead with the proposed increases, it is great that the government, through the Federal Ministry of Finance and the Fiscal Policy Reform Committee (FPRC), is yielding to the clamour of experts and industry stakeholders. I recommend a more collaborative and evidence-driven approach going forward for future changes,” he said.
Oyedele, noted that given that the government had earlier 2022 approved excise duty rates for 2022 to 2024, with various increases up to 95% in some instances, further increasing the rates outside the established roadmap would have adverse effects not only on the manufacturing sector but impact the economy negatively.
Speaking on the same issue during an interview on Arise Xchange, a business program on Arise TV, Oyedele stated that FG could not afford to implement an excise rate hike as doing so would not only worsen the current ailing condition of the manufacturing sector but inflict more economic hardship on the people.
A development economist, Kunle Oshobi, advised the federal government against the proposed increases in excise duty rates for 2023-2024 as the measure could amount to policy inconsistency capable of causing distrust in the economy, investors’ wariness, and upend planned private investment. He specifically cited the fragile outlook of the beer sector in Nigeria despite the longstanding investments in the value chain as a cause for great concern.
Oshobi stated that it was wrong for the government to add additional pain to a burdened sector striving for a rebound. According to him, the proposal, if implemented on assumptions without recourse to data, could precipitate further challenges in an already volatile business environment.
Another economist and policy analyst, Mr. Osas Akinbo, in the same train of thought, said increasing excise duty on beverages in this prevailing economic condition would undoubtedly put severe strain on consumers and manufacturers of beverages. According to him, data from the industry has proven that demand for beverage products is not inelastic.
Akinbo stated that a further increase in excise duty would most likely have a net negative effect on sustainable government revenue, national GDP, and the corporate image of Nigeria, thus leading to erosion of investor confidence in a market already marred by volatility.
He recommended that rather than impose taxes that would further strain businesses, the government should encourage backward integration efforts through agro-allied investments already embarked on by the beverage industry, especially the beer sector, and reinforce local sourcing initiatives that promote import substitution.
The Federal Inland Revenue Service (FIRS) has announced that it collected over N10 trillion in tax revenue in the year 2022, the highest tax collection ever recorded in its history.
The Service made this known in its “FIRS 2022 Performance Update,” report signed by its Executive Chairman, Mr. Muhammad Nami, and released to the public on Monday, after his briefing with President Muhammadu Buhari.
“The FIRS, in the year 2022 collected a total of N10.1 trillion in both oil (N4.09 trillion) and non-oil (N5.96 trillion) revenues as against a target of N10.44 trillion.
“Companies Income Tax contributed N2.83 trillion; Value Added Tax N2.51 trillion; Electronic Money Transfer Levy N125.67 billion and Earmarked Taxes N353.69 billion.
“Non-oil taxes contributed 59% of the total collection in the year, while oil tax collection stood at 41% of the total collection,” the report noted.
It is the first time that the FIRS will cross the 10-trillion Naira mark in tax revenue collection.
Mr. Muhammad Nami, Executive Chairman, Federal Inland Revenue Service (FIRS) addressing members of the press at the FIRS HQ, Abuja. January 23, 2023.
The Performance Update Report further clarified that included in the total revenue sum is the sum of N146.27 billion which is the total value of certificates issued by the Service to private investors and NNPC for road infrastructure under the Road Infrastructure Development Refurbishment Investment Tax Credit Scheme created by Executive Order No. 007 of 2019.
The report also stated that the N10.1 trillion is exclusive of tax waived on account of various tax incentives granted under the respective laws, which amounted to N1,805,040,163,008.
Providing perspective to this unprecedented tax collection, the FIRS noted in the Performance Update that the Muhammad Nami-led management upon assumption of office came up with a four-point focus, namely: administrative and operational restructuring; making the service customer-focused; creating a data-centric institution; and automation of administrative and operational processes.
It further noted that over the period of 2020 to 2022, the management had introduced reforms bordering around this four-point focus which were producing results.
“The reforms introduced at different times in 2020 are gradually yielding fruits. By the close of 2022, the Service had fully restructured the administration of the Service for maximum efficiency and achieved internal cohesion such that all functional units are working in unison towards the achievement of set goals.
“As a result of the conducive environment created for staff, officers of the Service are pulling their weight on the global stage with international recognitions and awards;
“The Service had also automated most of the administrative and operational processes. A major leap was the full deployment of the TaxPro Max for end-to-end administration of taxes in June 2021. The module for the automated TCC went live 1st January 2023 while taxpayers had already downloaded over 1,000 TCCs this year without having to visit FIRS office,” the report read.
It also noted that the Service had operationalised its data mining and analysis system thereby allowing for data-backed taxpayer profiling.
Other reforms the Service introduced in this period focused on the detoxification of the tax environment by ridding it of mutual mistrust, negative tax morale, and tax evasion, through effective taxpayer education, open engagement with stakeholders, and improved services.
It noted that it is courtesy of these reforms, framed around the four-focus points that the Service was able to achieve this collection.
Mr. Muhammad Nami, Executive Chairman of the FIRS, commenting on the N10.1 trillion record tax collection achieved under his leadership stated that this was made possible through “dogged implementation of strategic reforms over the past two years; a renewed commitment by officers of the Service, accompanied with a boosted morale; as well as the innovative deployment of technology for automation of both tax administration and operational processes.
“This collection was possible through collaboration with our stakeholders, from our colleagues at the Executive branch of government, to the members of the judiciary, to our brothers and sisters at the National Assembly, as well as the tax advisory committee, professional bodies, unions, and most crucially our taxpayers.”
Speaking on the outlook for 2023, Mr. Nami stated that the Service would build on the current reforms, achieve full automation and continue to establish a resilient Service that would continue to provide sustainable tax revenue to fund the government.
“We intend to maintain, and even improve on the momentum in 2023,” he stated.
“We have peaked, but this is not certainly our peak. In fact, my hope is that this would be the least sum the Service would ever collect going forward.
“Our goal is to identify more areas where we can improve the delivery and efficiency of our collection; and plug loopholes, while deploying innovative reforms in data and artificial intelligence.
“Ultimately, we believe that the FIRS can shoulder the responsibility of providing revenue for the governments across the Federation to cater to the needs of the Nigerian people through taxes.
“This is feasible once we get the much-desired support from the three tiers and arms of government, as well as all stakeholders.”
The FIRS appreciated President Muhammadu Buhari for his support, as well as the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, and the Minister of State, Mr. Clem Agba.
“FIRS Management uses this medium to commend all patriotic taxpayers who paid their taxes correctly, stakeholders for their support, and officers of the Service for their dedication to duty.
“The Service equally owes its achievements in 2022 to the effective leadership of the Honourable Minister of Finance, Budget and National Planning – Mrs. Zainab Ahmed, her brother, the Minister of State – Mr. Clem Agba, members of the National Assembly, and the fatherly support of the President and Commander-in-chief of the Armed Forces of Nigeria – Muhammadu Buhari.”
This is the second consecutive year that the Service will record unprecedented tax collection.
In 2021, the Service achieved a record tax collection of N6.405 trillion, being over hundred percent of its collection target for the year, as well as the first time that the Service will cross the six trillion mark.
In 2022, building on the success of the preceding year, the Service achieved a record collection of N10.1 trillion, being over 96% of its collection target for the year, and the first time the Service will cross the ten trillion mark.
This collection represents an over one hundred percent leap from the tax collected by the Service in 2020—the first year of the current management of the Service.
The Federal Inland Revenue Service (FIRS) has announced that taxpayers can get their Tax Clearance Certificate in a single click via its flagship Taxpro Max solution.
The TaxPro Max, a tax administration solution introduced by the apex tax authority in June 2021 is a one-stop-shop for taxpayer registration, tax returns filing, tax payment, and tax clearance certificate requesting, among other functionalities.
The Service made this announcement on Tuesday via its social media pages on Twitter, Facebook, and Instagram where it stated that the generation of Tax Clearance Certificates, which used to be issued within a period of two weeks would now be available on a single click by the taxpayer.
This innovation is coming on the heels of wide-scale technological reforms that the Service has embarked on in its bid to achieve hundred percent automation of its tax administration functions.
Commenting on this development, the Executive Chairman of the FIRS, Mr. Muhammad Nami explained that this functionality was in line with the objectives of the Service to make the lives of taxpayers easier and ensure the ease of doing business in the country.
“One of our objectives as a Service is to build a Customer-Centric institution,” he stated.
“That means an institution with the customer at the heart of its innovations and solutions. It is for this reason that we have tuned the operations of our TaxPro Max solution to be able to deliver Tax Clearance Certificates in the shortest possible time to taxpayers. At the click of a button, a taxpayer will get their Tax Clearance Certificates, as long as they have no outstanding liabilities.
“This would impact in no small measure on the Ease of Doing Business in Nigeria,” Mr. Nami stated.
Explaining further Mr. Nami stated that the taxpayer could only generate their Tax Clearance Certificates on the TaxPro Max platform when they did not owe any liabilities among other conditions set out for use of the platform.
The FIRS boss noted that this innovation was aimed at appreciating taxpayers for their trust and contributions to national development, stating that the Service would continue to come up with innovative solutions that would make the taxpayers’ life easier.
He also used the opportunity to wish all taxpayers in the country a happy and prosperous new year, urging them to continue to trust the government to serve their interests, as the taxes paid by them, directly and indirectly, are what the Government at the three tiers continue to use to fund social amenities, secure life and properties of the citizenries and provide critical national infrastructures including schools, hospitals, roads, among others.
Mr. Nami also implored governments at all levels to continue to give taxpayers value for their money.
The Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami has joined members of the Board, management, and staff in felicitating with two members of the FIRS management team for receiving global recognition awards in tax and technology respectively.
While Mr. Mathew Olusanya Gbonjubola, the Group Lead Special Tax Operations Group at the FIRS is listed among the World’s Top 50 Tax Persons for the year 2022, Mrs. Chiaka Ben-Obi, the Group Lead, Digital, and Innovation Support Group, FIRS emerged as the winner of the 2023 ISACA Technology for Humanity Award, for championing efforts to transform Nigeria’s Federal Inland Revenue Service to a digitised organisation.
ISACA, the awarding institution is an international professional association focused on IT governance.
Mrs. Chiaka Ben-Obi, Group Lead, Digital Innovation Support Group, FIRS
In a congratulatory message to the duo, Mr. Nami stated that they were deserving of these awards as it was a testament to their hard work and contributions to the successes of the Service.
“Indeed you are deserving of this wonderful achievement which is a testament to your hard work, analytical insight into tax issues, and immense contributions to the success of my administration.
“I appreciate every effort you put in to make tax administration in the country richly beneficial to the citizens of this potentially great country.”
Mr. Mathew Gbonjubola, Group Lead, Special Tax Operations Group, FIRS
The Executive Chairman, FIRS further stated that the qualities of Mr. Gbonjubola and Mrs. Ben-Obi were the kind needed for Nigeria’s progress and development.
He urged them to continue to dedicate themselves to the service of the nation as they worked to build a robust tax system for the country.
“I dare say that this country is in dire need of committed and selfless people like you who are passionate about its progress and development.
“Let us continue to forge the necessary synergy that will lead to the actualisation of our collective vision of a robust tax system for the country. I strongly believe that this is the only way we can leave an indelible mark on the sand of time,” he noted.
Mr. Gbonjubola, who is a chartered accountant, is a Co-Chair of the United Nations Committee of Experts on International Cooperation in Tax Matters. He has vast experience in auditing, finance, and taxation with over 25 years’ of experience in the FIRS.
Mrs. Chiaka Ben-Obi, who holds both a Bachelor of Science in Political Science and Public Administration, as well as an MBA, oversees the departments of the FIRS saddled with the responsibility of transforming FIRS into a digitalised organisation.
She was before her appointment as Group Lead Digital Innovation Support Group the Director of the Modernisation Department where she took on the assignment of delivering on modernisation agenda projects aimed at transforming the Service into a modern, efficient and effective tax administration agency.