The Federal Inland Revenue Service is responsible for tax administration and collection on behalf of the Federal Government of Nigeria. Since the Emergence of Babatunde Fowler in August 2015 as Executive chairman, the Commission has generated a total of $53.2 Billion equivalent of
N16.3 Trillion naira as actual tax collected till December 2018. In this Exclusive Interview, The Executive Chairman explained strategies and innovations driving the performance of the Commission.
Q: We have followed about four decades of your professional journey, starting from AVON Product Company in 1981. Your 10 years in Lagos from 2004 to 2015 as Chairman Lagos Internal Revenue Service, you increased the Internally Generated Revenue of Lagos from
N3.6 billion to N20.5 billion monthly. You have continued with this streak in Abuja as the Chairman of the Federal Inland Revenue Service (FIRS) generating N3.3 trillion in 2016, N4 trillion in 2017 and N5.3 trillion in 2018 which has never been achieved by any of your predecessors. How did you achieve all of these?
A: For one, whatever I have done, is a team effort. In this particular situation in FIRS, I did get support from the Minister of Finance, I got support also from the Presidency, we did engage with various stakeholders to let them understand the importance of the payment of tax and what’s required, we did carry out some enforcement activities. We had some tax laws on our books that were never utilized. For example, on interim dividends you are expected to pay taxes once you declare interim dividends, it was on our books but never utilized. We made people aware of that such that as they paid dividends to themselves they also paid dividends to government in form of taxes. We also deployed technology whereby you can make any payments anywhere in the world. You can download your receipts, confirm your receipts, pay your stamp duties online. It made it very convenient, very transparent and also accountable. Right now, if you had any transaction since 2012 to date and you query the system, it will share a record of all your payments, all tax payments, you can print out all your information. We’ve just made it a bit more consumer friendly, more transparent and I think that has gingered people to come forward and start to do the right thing. There’re quite a number of people not within the tax network that we are still after. At the same time, we did engage with various stakeholders especially High- Net Worth (HN) individuals. We’ve engaged with businesses that have banking turnover of above 1 billion annually and above. We took it down to those that have banking turnover of 100 million and above annually and were not yet in the tax net. We’re dealing with those but at the same time like you said we have the increase in tax net, we worked as a member of the Joint Tax Board, (JTB) and were able to increase over the last three and half years register of taxpayers both individual and corporate from about a little over 10 million to about 20 million and this is an ongoing process.
Q: What’s your reaction to recent call by the International Monetary Fund (IMF) for the Nigerian government to hike Taxes, in particular Value Added Tax.
A: Response: Let me react in two ways, one as a Tax Administrator and two, as a citizen of Nigeria. Let me also state that Nigeria apart from the United Arab Emirate has the Lowest VAT rates in the world. VAT is a tax and it’s based on consumption so if you don’t have the disposable income to consume then you don’t pay any VAT. VAT is a major source of revenue for all the state governments. Some people might say from an economic point of view that the economy is just coming out of a recession, that’s true. But I think the economy is getting stronger and we should think about embracing an increase, it might not be immediate, but at least we should start talking about it by the year 2020.
Q: What do you say to those who complain about the inconvenience of liens placed by FIRS on their accounts.
A: Well understand that before we put a substitution or what we call a lien on that account that has not been within the tax net, that account had not paid taxes. Therefore, when they talk about an inconvenience, it might be inconvenience but it’s also criminal to operate within a society, obtain benefits from tax expenditure, go on the roads, and enjoy the security provided by governments. Some collect VAT from consumers and don’t remit that money. They deduct Withholding tax from people they gave contracts to and don’t remit the money. They are complaining that they have been put in the position of inconvenience I think it’s not an issue, if they tried that in Europe or try that in North America or try that in even some countries in Africa, they’ll certainly be in jail. It won’t be an issue of whether it’s convenient for them or not.
Q: You have done quite well both in the non-oil tax revenue and in the VAT. In 2016 you generated about N828 billion, in 2017 about
N927 billion, and in 2018, N1 Trillion. What’s the projection for 2019?
A: I still believe that we can hit
N1.5 Trillion in 2019 in VAT if not higher. We’re deploying technology free of charge for those who want to comply. We will install a software, so at real-time while transaction is taking place your VAT is remitted to government. We don’t have a law that will enforce that but in discussing with taxpayers in hospitality sector, in financial sector, a number of them have actually signed-on.
Q. We understand you have introduced what you tagged ICT, Innovation, Convenience and Technology, can you please run us through this?
A. Basically, everyone says ICT and your mind immediately goes to Computer Technology so what we’ve done is to come up with new innovations that provide convenience for all taxpayers and also transparency. What we have in place now is that in your bedroom, in your office anywhere in the world you can use your banking application and pay your taxes and once you have provided us with your email address and your phone number, once the payment is done on your tax ID you get an alert. You can download your receipts anywhere, confirm that receipt also, so the issue of convenience is no longer a bother.
Q. We also got fantastic reports coming from e-stamp duty, that there are some plug-ins you have created to some third-party data base, such as the Corporate Affairs Commission (CAC).
A: Well, the whole idea about taxation is to get everybody into the tax net because one thing about taxation is fairness. You can’t have some organizations paying tax and others not paying tax, same as individuals. For example, with CAC for companies that are being incorporated, opening up account for the first time, you can actually incorporate that company online. Part of the process is for you to pay the stamp duty online and get the tax ID online. Basically, you can do everything remotely in terms of stamp duties, you can also pay your stamp duties online. In terms of a plug-in with the office of the Accountant-General, we know that government also gives out a sizeable number and value of contracts. The whole idea is to make sure that as you’re getting government contracts all the taxes that are due are deducted and remitted immediately. The next stage is to make sure that your declared income on those contracts also tally with the amount of tax you pay.