Since the assumption of Zacch Adedeji, Ph.D to office as the Executive Chairman of the Federal Inland Revenue Service (FIRS), I have followed keenly his enunciation of his principles of taxation, which, to my mind, can translate to a pathway to Nigeria’s economic growth.

To be sure, Adedeji’s principles of taxation embody some of the normative principles of taxation which are certainty, flexibility, equity, simplicity, and utmost good faith. At every given forum, Adedeji does not fail to reify his wholesome principles of taxation. He is wont to say that, “we will tax the fruit, not the seed; we will tax prosperity, not poverty”. These are statements of certainty, and equity, which are altogether refreshing and reassuring.

It is this veritable connection between taxation and economic growth that Adedeji’s principles of taxation seek to highlight, making them the pathway to Nigeria’s economic growth.

The reassurance in his statements is underlined by his insistence that his tax principles are focused on encouraging taxpayers to grow their investments or income so that they can yield enough taxable dividends or profits. In his most philosophical best, he compares taxpayers to gardeners and the taxman as one who waters the garden. He says it is the duty of the government to create a conducive environment for taxpayers and their businesses to thrive in the hope that once they have a fulsome yield, they will gladly pay their taxes. That is why he says the taxman is not aiming to tax poverty but prosperity.

Adedeji’s principles of taxation anticipate economic boom, and discourage tax hikes in times of economic depression. The flexibility principle provides that the amount of tax charged should not be the same all year round; and, that tax rates should be lowered for other social benefits during economic boom, while during economic depression tax rates may be raised to raise maximum funds for developmental projects. Adedeji’s taxation principle does not support tax hikes that will become a burden on the taxpayers or the citizenry.

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Thus, it is obvious that Adedeji’s taxation principle takes cognizance of the fact that taxation is the lifebuoy of the economy, it is the fecund source of economic development. It follows then that when taxes are collected and properly utilized in grooming businesses, empowering citizens through access to low interest loans and grants, diversification of business activities like the creation of value chains, and provision of critical social amenities, there will be enough income in the pool to tax. In other words, there will be enough fruit from which to pick.

Recently, the Federal Government took the right step in the right direction by establishing the Consumer Credit Scheme which guarantees access to loans facility for the citizenry to grow their business activities. The logic here is that once there is a boom in economic activities in the informal sector of the economy, there will be a corresponding widening of the tax net without complaint from the tax paying community.

It is this veritable connection between taxation and economic growth that Adedeji’s principles of taxation seek to highlight, making them the pathway to Nigeria’s economic growth. In concrete terms, Adedeji’s unwavering commitment to expounding his taxation principles has already raked in more than Three Trillion naira in tax revenue in the first quarter of 2024 for the three tiers of government in aid of the execution of the Renewed Hope Agenda of President Bola Ahmed Tinubu. In addition to raising this much revenue, Adedeji has also reorganised the structure of the Service to reflect his taxation principle of customer-centricity. He believes that taxpayers should form the focal point of the operations of the Service, and that regard, they be treated with due diligence.

He often couches his statements in literal parallelism, metaphor and humour. This rare sagely gift sets him apart as a conscientious taxman.

Presently, the Service is structured based on the category of taxpayers: Large Taxpayers Group, Medium Taxpayers Group, and Small Taxpayers Group; as well as five other services groups, viz, Corporate Services Group, People Services Group, Support Services Group, Compliance and Enforcement Support Group, and the Special Duties. This taxpayers-based operational categorisation is purposely to simplify tax payment processes, which is made moreso by the introduction of the various automation platforms.

And so, it is always both refreshing and reassuring to listen to Adedeji marshals his thoughts around the issue of making taxation the pivot of national development. He often couches his statements in literal parallelism, metaphor and humour. This rare sagely gift sets him apart as a conscientious taxman. Beneath his jocular mien lies a determination to set Nigeria’s fiscal trajectory and tax system on the pathway of sustainable economic growth.

*Abdullahi Ismaila Ahmad, Ph.D is the Director of Communications and Liaison Department, Federal Inland Revenue Service, FIRS, Abuja.

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The NBS said this in its “Sectoral Distribution of Value Added Tax (Q4 2020)” obtained from its website on Wednesday in Abuja.

The bureau said that the figure represented 7.06 per cent increase Quarter-on-Quarter and 47.39 per cent increase Year-on-Year from the N308.48 billion generated in Q4 2019.

The report said that professional services generated the highest amount of VAT with N42.38 billion generated and closely followed by other manufacturing generating N39.45 billion, while commercial and trading generated N21.15 billion.

“Mining generated the least with N58.88 million and closely followed by pioneering and textile which generated N185.72 million, while the garment industry generated N353.75 million.

“Out of the total amount generated in Q4 2020, N212.52 billion was generated as Non-Import VAT locally while N143.35 billion was generated as Non-Import VAT for foreign.

“The balance of N98.81 billion was generated as Nigeria Customs Service-Import VAT,” it added.

Meanwhile, for Company Income Tax, CIT, by Sectors for the period under review, the NBS stated that N295.72 billion was generated as against N416.01 billion generated in third quarter.

It added that the figure represented -28.91 per cent decrease Quarter-on-Quarter and -18.31 per cent decrease Year-on-Year from the N362.01 billion generated in Q4 2019.

According to it, professional services, including telecoms, generated the highest amount of CIT with N32.17 billion generated.

“This was closely followed by other manufacturing generating N25.64 billion, commercial and trading generating N19.41 billion.

“Textile and garment industry generated the least with N104.37 million, closely followed by mining with N136.99 million and Local Government Councils with N298.73 million generated.”

The report said that out of the total amount generated in Q4 2020, N162 billion was generated as CIT locally while N63.52 billion was generated as foreign CIT payment.

It added that the balance of N70.20 billion was generated as CIT from other payments.

Data was provided by the Federal Inland Revenue Service, FIRS, and verified and validated by the NBS.

Source: NAN

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Tax experts, speakers, panelists and government functionaries gave the advice at the recently held First Annual National Tax Dialogue in Abuja, organised by the Federal Inland Revenue Service, FIRS, with the theme “Taxation in a Post-Covid Economy.”

In his keynote address at the event, President, African Development Bank, Dr. Akinwunmi Adesina, highlighted the pandemic’s impact on Africa’s economy and the various interventions by the bank and national governments.

According to him, Nigeria’s economy shrank “by 3% in 2020 on account of falling oil prices and the effects of the lockdowns on economic activities,” adding that “with shrinkage in oil revenues, debt service payments pose the greatest risk to Nigeria.”

He stressed further that for Nigeria to overcome the pandemic, “taxes must form a significant percentage of government revenue. Digitalisation of tax collection and tax administration is critical to ensure greater transparency of the tax system, widening of the tax base, while mitigating compliance risks and encouraging voluntary tax compliance.”

Ekiti State governor, Dr. Kayode Fayemi, who was chairman of the dialogue, lauded the FIRS “for its performance in the 2020 fiscal year, despite operating in the most challenging period many of us have experienced. The Service not only collected N4.9 trillion in taxes, achieving 98% of its target; only 30.6% of this was attributed to Petroleum Profits Tax, from what used to be over 50%”.

However, Governor Fayemi urged participants at the event to “interrogate how Nigeria can further deepen the use of technology to improve tax compliance nationally and across subnationals.”

He stressed that that was important because “a significant proportion of our population would soon come into the workforce” which is “a golden opportunity to introduce first-time taxpayers to their civic responsibility, by adopting technology.”

Similarly, Executive Secretary, African Tax Administration Forum, ATAF, Mr. Logan Wort, harped on the place of technology in generating revenue for the country in a post-Covid economy.

Mr. Wort, who joined the dialogue virtually from South Africa, stated that “Domestic Resource Mobilisation (DRM) is expected to contribute at least 75% to 90% on average per country” in the post-Covid era, adding that Nigeria and other African countries should note that “improved tax revenue will have to take prime position” in the scheme of things.

Wort urged Nigeria to pay serious attention to e-commerce and the digital economy sector where big, transnational digital conglomerates like Google, Netflix and Uber operate and make huge, tax-free profits as a possible way of increasing tax revenue generation.

He said Nigeria should borrow a leaf from Ghana in e-commerce taxation, which is projected to fetch Ghana $450 million in tax revenue.

In his recap of the keynote address as chairman of the first panel session, Lagos State Governor, Mr. Babajide Sanwo-Olu, urged the AfDB president to support Lagos State as it grappled with the challenges of being the former capital city of Nigeria as well as the issues foisted upon it by the pandemic.

Minister for Communications and Digital Economy, Dr. Ali Isa Pantami, who chaired the second panel session, stressed that taxpayers should be treated as kings and canvassed better funding of the FIRS.

Nigeria’s first female professor of taxation, Prof.(Mrs) Teju Somorin; President, Association of National Accountants of Nigeria, ANAN, Prof. Muhammad Mainoma; Member, FIRS Board, Mrs. Adetola Ehile-Aigbangbee; Group Managing Director, GMD, Nigerian National Petroleum Corporation, NNPC, Mr. Mele Kyari; Executive Secretary, African Tax Administration Forum, ATAF, Mr. Logan Wort; Mr. Yomi Olugbenro of Deloitte Nigeria, Taiwo Oyedele, Principal Partner, PWC; and Mr. Tajudeen Akande of PKF served as discussants on the panels of discussion at the dialogue.

Among others, both panels of discussion unanimously agreed and resolved that tax administration should leverage on technology across the entire taxpayer identification, registration and filing process to ease compliance and administration.

Also, discussants made a strong case to link the National Identification Number, NIN, with the taxation processes.

The panelists observed that the funding threshold established for the FIRS in 2007 was no longer adequate for the Service to discharge its functions optimally.

Consequently, they urged the federal government to increase funding support for the FIRS so that the Service can complete work on its 17-Storey Revenue House Headquarters in Abuja where it planned to establish a data centre based on proprietary technology.

While delivering the vote of thanks, Minister of State, Finance, Budget and National Planning, Prince Clement Agba, noted that the theme of the Dialogue “is most appropriate, timely and apt,” stressing that “this national dialogue has understandably witnessed a torrent of ideas, information, statistics, interpretation and vision on how best we can improve on solving the current revenue challenges of the government.”

He added: “The role of the media in strategically communicating our thoughts to the people cannot be over-emphasized. It is therefore very important that the views expressed here today are disseminated to the wider readership and audience and clearly this task has been in the very capable hands of the men and women of the Fourth Estate of the Realm to whom we owe our gratitude.”

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Buhari issued the mandate on Thursday while delivering his address as the Special Guest of Honour at the First Annual National Tax Dialogue organised by the FIRS at the old Banquet Hall, Aso Rock Villa Abuja.

The theme of the dialogue was “Taxation in a post-Covid Economy.”

The president also mandated the FIRS to “speedily put all measures in place to fully implement programmes to stamp out Base Erosion and Profit Shifting in all of its ramifications and generally automate its tax processes.”

In addition, Buhari urged the FIRS to fast-track its digitalisation of the tax collection process.

Buhari said: “I have directed all government agencies and business enterprises to grant FIRS access to their systems for seamless connection. We all are now living in a fast digitalising world. As such, business transactions are continually being migrated from “brick and mortar” locations to digital places or spaces.  It is therefore incumbent upon tax authorities to adopt digital means to efficiently track taxable transactions for the purpose of collecting taxes.  In order to provide the necessary legislative framework for the adoption of technology in tax administration, we also made necessary amendments to the FIRS Establishment Act in the Finance Act 2020.”

Also, President, African Development Bank, AfDB, Mr. Akinwunmi Adesina, who delivered the keynote address at the Tax Dialogue, gave assurances that the AfDB would support the FIRS to modernise the tax collection processes in Nigeria through capacity building.

In her opening remarks at the Dialogue, Minister of Finance, Budget and National Planning, Mrs. Zainab Shamusuna Ahmed, highlighted some provisions of the Finance Act 2020, stating that a number of the provisions were enshrined in the Act in order to help businesses, especially SMEs, recover from the adverse effects of COVID-19.

She said tax compliance was key to national prosperity, stressing that government was determined to minimise the incidence of tax dodging through suck leakages as cross-border transactions through maximum use of technology.

The finance minister urged the audience to generously contribute their ideas during the dialogue in order to improve the nation’s tax system.

In his welcome address at the event, Executive Chairman, FIRS, Mr. Muhammad Nami, underscored the importance of the dialogue, saying: “The universal collapse of traditional government revenue sources and the consequential resort to tax is a testimony.  The well-known arms race among nations is gradually giving way to “tax-race”.  The international struggle for and against digital services tax is just the beginning of the tax race.  It is a race for all nations – developed or developing.  And for Nigeria, it is “a must-win” race.”

Mr. Nami stressed that the FIRS would match on to digitalise the tax process fully and canvassed the cooperation of the three tiers of government, the citizens and corporate organisations in the country for the success of the digitalisation drive.

His words: “The FIRS started the journey to automation several years ago when it launched “Project Fact”.  Several other initiatives were launched to further take advantage of evolving technology in taxpayer registration, online payment platforms, remote filing of returns, etc.  However, there was very limited success with the various initiatives due to inadequate statutory framework.

“A quantum leap was achieved with the 2020 Finance Act which copiously provided legal grounds for deployment of technology in tax administration.  The Service is grateful to the President, the leadership of the National Assembly, the Honourable Minister of Finance, Budget and National Planning and all other stakeholders that worked together to enact the necessary laws.

“The Service is taking advantage of the new law to embark on studies (with the assistance of friendly tax authorities and international tax organisations) with a view to developing a robust digitalisation roadmap.  The roadmap will enable the Service to digitalise its whole operations (end-to-end) in a systematic, coherent and efficient manner.

“There is so much to look forward to in the coming years.  The FIRS is starting this decade with the resolve to leapfrog tax administration into the digital age. Ladies and gentlemen, we are banking on your continued support as we embark on this onerous journey.”

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This is the conclusion reached by panelists and discussants at a webinar organised by a firm, OTISVIP at the weekend.

The Executive Chairman, Federal Inland Revenue Service, FIRS, Mr. Muhammad Nami, also attended the webinar with the theme: “Stamp Duty: The New Black Gold?”

It was hosted by Mr. Jake Effoduh, a Partner at Praxis & Gnosis Law.

Panelists on the online discussion were Dr. Alexander Ezenagu, an assistant professor of taxation at HBKU, Qatar; Managing Partner, Sprout Digital, Mrs. Damilola Anwo-Ade; Director, VoguePay, Malam Mohammed Jega; Managing Director, Trace Anglophone West Africa, Mr. Sam Onyemelukwe; Founder, The Alpha Reach, Mr. J. J. Omojuwa; and Director, Tax Policy, FIRS, Mr. Mathew Gbonjubola.

According to a statement by the Director, Communications and Liaison Department, FIRS, Abdullahi Ismaila Ahmad, other management staff of the FIRS who participated in the webinar included Dr. Asheikh Madugu.

FIRS boss, Nami, set the ball rolling with a detailed clarification on the Stamp Duty Act in Nigeria, which included the types of transactions dutiable under the Act as well as the respective applicable rates.

Thereafter, the panelists set up the discussions, which was enliven by a live chat and simultaneous question and answer session.

While all panelists agreed on the need for taxation to complement government’s revenue flow from natural resources, a lively debate ensued on the timing of the Stamp Duty campaign and the public debate surrounding the application of tax revenue in the nation-building processes, especially in building public infrastructure.

The panelists stressed the need for prudent management of tax revenue even as they enjoined Nigerians to embrace the fact that the tax net needed to get wider to accommodate more citizens for holistic national development.

Mr. Gbonjubola stated that Nigerians must reassess the widespread notion that the country is rich, stressing that “in terms of Gross Domestic Product vis-à-vis our population, Nigeria is not a rich country when compared to a country like Botswana.”

He also stated that that the stamp duty was levied on the instrument of transaction and not on the payment itself.

Mr. Gbonjubola clarified that the 6% stamp duty is for tenancy above 21 years while 7 to 21 years lease or tenancy attracts 3% and less than 7-year tenancy is below 1%.

Dr. Ezenagu urged governments at all levels to focus on expanding economic activities through economic diversification, stressing that that would have the positive effect of increasing the tax base as there would be more economic activities to tax, instead of increasing taxation on the citizenry.

A citizen contributor with the username Yusuf.Nibox said: “Stamp duty is unlike other taxes: It needs rigorous drive through sectoral specialist tax monitoring. Flat rates e-transactions are the low-hanging fruits but the computational ad valorem rated stamp duty on contracts, agreements etc need driving through monitoring or some sort of purity measure to compel compliance.”

Another citizen discussant with the username Cnjoku stated: “I have to disagree partly on the fact that non-stamping of documents doesn’t make it illegal. Transactions do not just occur in a vacuum. It has to be validated. For instance, if you make a land transaction, you must register it with the registry and get C of O to validate the ownership even when you have paid for it. Stamp duty on individuals is collected at state level where it is not fully enforced or even collected. I agree that the threshold on bank deposit is too low such that it affects the poor Nigerians.”

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