President Muhammadu Buhari has directed the Federal Inland Revenue Services (FIRS) and related government agencies to plug all revenue leakages, amongst other measures aimed at ensuring strict compliance of tax payments by foreign companies operating in Nigeria, and several other tax evaders in the country.
Aside from blocking revenue loopholes, the president also ordered all government agencies to automate operations and ensure more synergy in advancing the interest of the nation in revenue generation through deployment of more digital platforms and seamless connections.
Buhari also mandated the FIRS to speedily put all measures in place in fully implementing programmes to stamp out Base Erosion and Profit Shifting in all ramifications and generally automate the federal agency’s tax processes.
Speaking virtually on Thursday at the First National Tax Dialogue held at the Conference Hall of the State House, the president maintained that it had become imperative to end the era where foreign companies and other Nigerians evade tax at will despite profiting from their ventures across the country.
According to him, it is not enough that our citizens and local businesses pay their fair share of taxes. Equally, foreign businesses must also not be allowed to continue to exploit our markets and economy without paying appropriate taxes.
“In line with this, I have directed all government agencies and business enterprises to grant FIRS access to their systems for seamless connection. FIRS must ensure that its deployment of technology for automation is done in line with international best practices. In particular, FIRS can borrow a leaf from other countries which have successfully automated their tax processes ’’ he said.
The president said that Nigeria would continue to work with the Inclusive Framework (on equal footing) to develop internationally acceptable rules for taxation of the digital economy, while hoping that “the Inclusive Framework would have evolved into an acceptable multilateral solution that will comprehensively address the tax challenges of the digitalised economy by the middle of 2021.’’
Buhari assured citizens that the government would continue to pursue its mandate of improving lives through investments in infrastructural projects like railways, roads, electricity, healthcare and education, in spite of dwindling revenues and the challenge of coronavirus.
Continuing, he said, “no nation has ever made progress without having to pay for it or make the necessary sacrifice. I therefore call on all Nigerians to be alive to their tax obligations. This government is strategically restructuring the tax revenue mix in favour of indirect taxes in accordance with our national tax policy document. To this end, FIRS is mandated to do all that is required in order to efficiently collect tax revenue due from transactions carried out using local and foreign online platforms. The government has made relevant statutory amendment to tax laws in the Finance Act 2020.’’
While urging all citizens to play more active roles in nation building by paying their taxes, the president said “the administration is, however, not seeking to increase the tax burden upon the citizens but to plug the existing tax loopholes or leakages and to ensure even and equitable application of the tax laws.’’
In his keynote presentation, President of the African Development Bank (AfDB), Dr Akinwunmi Adesina, projected a rebound of the Nigerian economy from recession, with a 1.5 per cent growth rate in 2021, and 2 per cent growth in 2022.
Dr Adesina said that taxes should be employed as instruments for promoting development by encouraging private sector companies to take up responsibilities in infrastructure, and attracting Foreign Direct Investments, admonishing that prolonged tax holidays could be counterproductive.
He advised that youths should be incentivised to grow businesses with appropriate tax regimes, adding that Africa loses about 60 billion U S dollars annually from taxes.
On her part, Nigeria’s Minister of Finance, Zainab Ahmed, said that the government would improve its template for tax collection, especially in the face of dwindling revenues due to the coronavirus pandemic, describing 2021 as a year of recovery for the economy.
The minister noted that the emphasis on tax collection would be shifted from income to spending and all multinational corporations in the country would be required to fully comply with new directives.
However, the FIRS Chairman, Muhammad Nami, called for a new, comprehensive tax payment culture.