Nigeria
plans to raise N5.2 billion from taxes next year, Federal Inland
Revenue Service (FIRS) Executive Chairman Babatunde Fowler, said
yesterday.
He also said the agency has a target of 10 million new taxpayers to bring the number to 20 million people.
About 700,000 firms that have never paid
taxes are to be brought into the tax net as the country seeks new
revenue sources to offset low oil prices that have pushed the economy
into its first recession.
Fowler, in an interview with Reuters news
agency, said: “We collected a little over N2.3 trillion, so far – from
January to 31 August. It is almost at par with last year but take into
consideration that the economy is going through a little slowdown.”
He said that the revenue from Value
Added Tax (VAT) has increased by 25 per cent year-on-year and corporate
income tax held steady over the same period but petroleum profit tax was
expected to have halved, mainly due to low oil prices.
Fowler, Lagos’ former tax chief, who
increased monthly tax revenues by 70 per cent within four years in the
nation’s commercial capital, said a new unit created early in the year
has deployed inspectors, armed with laptops to update databases,
registering businesses and individuals, who are then tracked to check
whether they have paid taxes.
“From our estimates, we expect that we have 60 million individuals who should pay some form or level of tax,” said Fowler.
He said tougher enforcement would be
combined with a planned waiver on interest and penalties covering the
period from 2012 to 2015 under which people and businesses would only be
asked to pay the principal amount of tax liabilities due.
“We will give them a 45-day window to
come forward and register and that will make them eligible for that
waiver,” said Fowler of the proposal, which was submitted to the finance
minister for approval.
He said: “A lot of people who are not in
the tax net are a bit jittery or afraid to come and register, thinking
that we might go back two or three years and the amounts might be
considerable.”
But he warned that those who failed to
register for the scheme – which he said could be rolled out as soon
as October 3 – would face stiff penalties.
Individuals and businesses who did not
come forward voluntarily would be asked to pay back taxes plus interest
and penalties, he said.
“We will also consider criminal prosecution of chief executive officers or board members,” Fowler said.
He was cautious on the idea of an increase in the VAT rate which, at 5 per cent, is among the lowest in the world.
The government, struggling to fund a
record N6.06 trillion (about $18.6 billion) 2016 Budget that aims to
stimulate growth by tripling capital expenditure, set FIRS a target of
raising N4.95 trillion in taxes, up from N3.73 trillion last year.
International Monetary Fund (IMF)
Managing Director Ms. Christine Lagarde suggested a VAT rate hike when
she visited the country in January and Vice President Yemi Osinbajo
later said the government was considering tax regime changes to raise
funds.
Fowler said it was part of the
government’s remit to “take a decision” on VAT but he thought “the
economy is not ready for a VAT increase right now”.
“The level of compliance was too low so
that if we increased the rate of VAT it would be a punishment and unfair
on those who are collecting and remitting VAT,” the tax chief said.
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