FIRS targets N5 trillion from value-added tax

EU links tax evasion to bad governance
Federal Inland Revenue Service (FIRS) has set a revenue collection target of N5 trillion from Value Added Tax (VAT).

The plan was disclosed as the European Union expressed concern over the high level of tax evasion in Nigeria, blaming the menace on the absence of transparency in the tax management process.

Speaking at a media briefing on the achievements of the Support Programme for Tax Transition in West Africa (PATF), yesterday in Abuja, Head of Policy and Legislation Division, FIRS, Matthew Osanekwu disclosed that the government was undertaking a review of tax exemptions granted to companies operating in Nigeria.

The PATF, a programme funded by the European Union, is geared at improving the management of domestic taxation and ensuring better coordination in ECOWAS and West African Economic and Monetary Union (WAEMU) regions.

On the achievements of the PATF programme, a tax expert and member of the PATF steering committee, Andrew Onyeanakwe, said the project had resulted in the development of regional tax management tools and harmonisation of the methodology for evaluating tax expenditure in ECOWAS member-states.

He said the programme had also led to the establishment of an institutional mechanism for monitoring and evaluating ECOWAS fiscal transition and the harmonisation of laws of the member states of the ECOWAS concerning VAT.

Osanekwu stated that despite Nigeria having the lowest VAT rate in the West African region, the country has been able to improve its tax collection performance.

He, however, hinted at an ongoing discussion between the Presidential Committee on Fiscal Policy and Tax Reforms and the Ministry of Finance on the need to review the current VAT rate.

He pointed out that the agency had broadened the range of tax collections, adding that before 2019, the country didn’t collect VAT from non-resident suppliers, but now does.

Head of Cooperation at the Delegation of the European Union to Nigeria, Massimo De Luca, while expressing satisfaction with the achievements of the PATF programme, tasked the government with the need to entrench transparency in managing tax revenues.

According to him, people tend to evade tax when there are no corresponding benefits from the payment of tax.

He said: “We are happy with this project because we got traction and it got real results. We believe that developing willing citizenry participation in the tax system and how resources are used transparently is fundamental.

“I mean, in Europe, there are countries where citizens are happy to pay up to 55 per cent of their income in taxes. We should ask ourselves why are Nigerians not happy to pay that kind of amount, it’s all about the services you get in return and transparency of the use of the resources that you have. There is no quick fix. In Denmark, the amount is very high not only VAT, but also on direct taxation.”

Deputy Director of tax policy in the Federal Ministry of Fnance, Dalhat Kamal, argued that increasing the VAT rate would not necessarily result in incremental VAT revenue.