By Abdallah el-Kurebe
It is no longer in doubt that Nigeria’s revenue generation has been on the rise ever since the appointment of Muhammad Nami as the Executive Chairman of the Federal Inland Revenue Service (FIRS).
Undoubtable too is that the growth of the revenue generation in the country is reliant on the strategies introduced by the man adjudged as one of the global best income-generators, Muhammad Nami.
Identifying reasons for low revenue was the first task Nami undertook, and during a Senate interactive session with revenue-generating agencies, Nami said, “Nigeria loses a lot of revenue through tax waivers granted to big companies which otherwise would have been taxed to buoy up government revenue.
“Also, illicit financial flow is a major cause of revenue loss to Nigeria. Coupled with this is the operational cost of the FIRS which is also high compared to the statutory provisions for the running of the organization.” He identified much more reasons.
And, to make the FIRS more effective across Nigerian states, Nami saw the use of technology as a veritable tool. He developed a digital platform that are now used to file and pay taxes. This platform are integrated with the databases of other government agencies, such as the Corporate Affairs Commission, which makes it easier for taxpayers to comply with tax regulations.
Nami also introduced electronic tax clearance certificates (e-TCCs) that has made it easier for taxpayers to obtain TCCs, and reduce the incidence of fake or forged TCCs.
Additionally, Nami strategically ensured FIRS’ use of data analytics, which enables the Service to identify non-compliant taxpayers and to track tax payments. The data analytics tool is used to monitor tax compliance in real-time, and to identify areas where compliance is low.
The FIRS boss also strategically implemented a tax education program to educate taxpayers about their tax obligations and the benefits of paying taxes. This program is being delivered through various channels, including social media, radio, and television, across the country.
Since states also have internal revenue platforms, Nami has ensured partnership with State Internal Revenue Services in order to improve tax collection. The partnership has not only helped in sharing of information and best practices, as well as joint tax enforcement operation, but also helped in avoiding double taxation.
Nami, who took over from Babatunde Fowler in December 2019, strategically made it happen that by 2021, Nigeria’s Tax-To-GDP Ratio rose to 10.86%, as against the previously ratio of between 5 and 6 percent. This is because, previously the country’s Tax-to-GDP ratio did not consider tax revenue accruing to other government agencies in their computation. He has however ensured that all relevant tax revenues are included in the computation of the Tax-to-GDP ratio.
Nami recently said, “In order to correctly state the Tax-to-GDP ratio, the FIRS initiated a review and re-computation of the ratio for 2010 to 2021. In recomputing the ratio, key indicators that were previously left out were taken into account. This resulted into a revised Tax-to-GDP ratio of 10.86% for 2021 as against 6% hitherto reported.”
He disclosed that although Nigeria’s Tax-to-GDP ratio should be higher than the 10.86%, tax waivers and leakages occasioned by the country’s fragmented tax system, are some economic and fiscal policy factors that have slowed that.
“It is important to note that the Tax-to-GDP ratio for Nigeria should be higher, but for the impact of tax waivers contained in our various tax laws (including exemptions to Micro, Small and Medium Enterprises brought-in by Finance Act, 2019), low tax morale, leakages occasioned by the country’s fragmented tax system and the impact of the rebasing of the GDP in 2014.”
