President Muhammadu Buhari has raised concerns over the nation’s huge revenue losses due to leakages arising from activities of revenue-generating agencies and has mandated the Federal Inland Revenue Service (FIRS) and other revenue-generating agencies to forthwith block such leakages.
He has also directed strict compliance with regulations on tax payment by both local and foreign companies, stressing that no firm should be exempted from tax payment.
Besides, the president also pledged to continue the federal government’s diversification of the economy through the efficient use of revenues from oil and gas resources.
Buhari, in a speech yesterday at the First National Tax Dialogue in Abuja, directed the FIRS and related government agencies to plug all revenue leakages by ensuring strict compliance with tax payments by foreign companies operating in Nigeria and the deployment of more digital platforms and seamless connections.
Buhari, in a statement by his media adviser, Mr. Femi Adesina, ordered all government agencies to automate their operations and ensure more synergy in advancing the interest of the nation in revenue generation.
He said: “It is not enough that our citizens and local businesses pay their fair share of taxes. Equally, foreign businesses must also not be allowed to continue to exploit our markets and economy without paying appropriate taxes.
“Accordingly, the FIRS has my mandate to speedily put all measures in place to fully implement programmes to stamp out base erosion and profit shifting in all their ramifications and generally, automate its tax processes.
“In line with this, I have directed all government agencies and business enterprises to grant FIRS access to their systems for a seamless connection. FIRS must ensure that its deployment of technology for automation is done in line with international best practices. In particular, FIRS can borrow a leaf from other countries which have successfully automated their tax processes.’’
He said Nigeria will continue to work with the inclusive framework to develop internationally acceptable rules for taxation of the digital economy, while hoping that “the inclusive framework would have evolved into an acceptable multilateral solution that will comprehensively address the tax challenges of the digitalised economy by the middle of 2021.’’
The president assured citizens that the federal government will continue to pursue its mandate of improving lives through investments in infrastructural projects like railways, roads, electricity, healthcare and education, in spite of dwindling revenues and the challenge of coronavirus.
“Our government has continued to pursue all those projects despite the massive decline in government revenues occasioned by a combination of factors among which is the COVID-19 pandemic.
“The devastating effect of COVID-19 on the health and economy of the world is evident across every stratum of our society. It is obvious to every citizen of this country that our economy is not immune to the global economic downturn. As such, we have had to confront the conflicting situations of reflating the economy and at the same time raising revenue to meet our budgetary needs. It is within this context that the government undertook an expansive budgetary projection of over N13 trillion for 2021,’’ Buhari said.
He stated that the government has “inevitably resorted to deficit budgeting as a result of declining revenues for some years,’’ resulting in an increase in Nigeria’s debt profile.
“As we might expect, this has led to an increase in Nigeria’s debt profile which stood at about N32 trillion in September 2020. This funding gap created by the dwindling government revenue, therefore, underscores the importance of the national tax dialogue we are holding today.”
Buhari added that no nation has ever made progress without having to pay for it or make the necessary sacrifice and called on all Nigerians to be alive to their tax obligations.
He mandated the FIRS to do all that is required in order to efficiently collect tax revenue due from transactions carried out using local and foreign online platforms, adding that the government has made relevant statutory amendments to tax laws in the Finance Act 2020.
He also urged all citizens to play more active roles in nation-building by paying their taxes, adding that “the administration is, however, not seeking to increase the tax burden upon the citizens but to plug the existing tax loopholes or leakages and to ensure even and equitable application of the tax laws.’’
According to him, this is clearly demonstrated by the provisions in the Finance Act 2019 whereby the government exempted small companies from tax and reduced the income tax rate for the medium companies from 30 per cent to 20 per cent.
Buhari noted that in the Finance Act 2020 which he signed into law at the tail end of 2020, his administration had cushioned the burden of tax on the low-wage workers by exempting minimum wage from personal income tax.
He said amendments had been made to the FIRS Establishment Act in the Finance Act 2020 to provide the legislative framework for the adoption of technology in tax administration.
“Every Nigerian must see tax payment in its proper context, which is, as a solemn and patriotic obligation that is necessary for building a better society,’’ he said.
In his keynote address, President of the African Development Bank (AfDB), Dr. Akinwunmi Adesina, called for urgent tax reforms and projected a rebound of the Nigerian economy from recession, with a 1.5 per cent growth in 2021 and two per cent growth in 2022.
Adesina said taxes should be employed as instruments for promoting development by encouraging private sector companies to take up responsibilities in infrastructure and attracting foreign direct investments.
He also warned against prolonged tax holidays, which he said could be counterproductive.
He said youth should be incentivised to grow businesses with appropriate tax regimes, adding that Africa loses about $60 billion annually from taxes.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, gave an assurance that the government will improve its template for tax collection, especially in the face of dwindling revenues due to the COVID-19 pandemic, describing 2021 as a year of recovery for the economy.
She noted that emphasis on tax collection will be shifted from income to spending and all multinational corporations in the country will be required to fully comply with new directives.
Source: This Day
