OGIRS Deploys Electronic Device for 5% Consumption Tax Collection

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Femi Ogbonnikan in Abeokuta

To enhance the collection of its five per cent consumption tax, Ogun State Internal Revenue Service (OGIRS) has pledged to deploy technology to effectively enforce compliance in its operations.

Addressing journalists in Abeokuta, Ogun State capital recently, the Chairman of the service, Mr. Adekunle Adeosun, disclosed that an era whereby the burden of passing the five per cent consumption tax on the final consumers are over, just as the operators of hotels, bars, even centres, restaurants and others operating within the state would henceforth be electronically monitored to pay on every food and drink consumed.

According to him, “we have consumption tax of 5 per cent in Ogun state which is chargeable on hotels, restaurants, bars and event centres for food and drinks that the public consume on their premises. It is not payable by the establishments, but it is paid by the consumers. So, if you go to these places to have drinks, they are supposed to pay 5 per cent consumption tax on it now. The law was passed in 2012 and we started the implementation in 2016. So, the next process for us now is to have electronic monitoring of those sales for those establishments.

“It will also help those establishments because the sales for those establishments, the people that work there, also under-report them.

We have a lot of institutions which say that they see people coming in and going out, and when they are done, we see bottles of drinks and when they look at the sales that they have, they don’t see anything.”

Instead, Adeosun noted that the OGIRS will come in and collaborate with the hotels, bars, restaurants and event centres, in order to allow for the deployment of electronic monitoring of their sales that will aid to determine what their sales are, and also to block leakages on their own part. “Although, we also have leakages on the part, the hotels, restaurants and bars, it is more of a collaboration that allows us monitoring their sales electronically.”

With reference to low compliance level, the OGIRS boss fingered self employed people and high net individuals as defaulters whose compliance level is between 15 and 17 per cent.

Also, he said the informal sector, made up of traders and artisans records low compliance level which is between 12 and 15 per cent.

“As a result, we need to deploy technology in all those people because of the cost of collection. The minimum tax is N3,100 and the cost of collection of N3,100 is very high. But we will deploy appropriate technology to capture them. And once we capture them, then, you know for the rest of their earning life, they will pay tax. But all we need to do is a follow-up to get them paid.

“In summary, this is why we call it fiscalisation. So, we are working on all that. We will also be doing some other things on Pool and Lottery/betting establishments to also electronically monitor their sales, because the sales they are reporting for tax purposes are being under-declared.

“So, there are leakages on our part in our dealings with them. There are also leakages from the agents they also employ to operate the establishments for them. As a result, it is a win-win solution for both of us to electronically monitor revenue, sales and taxes”, averred the OGIRS chairman.

Besides, it was gathered that between 2015 and early 2016, when all states in the federation reported to the Joint Tax Board, the Board carried out an exercise and asked how many tax payers were paying N10 million and above in every state, but only two states have people paying N10 million and above, that is in Ogun and Lagos states respectively.

“We reported our (Ogun) own. We stated that only two people pay N10 million and above in Ogun state. But I can tell you now, that we have over 80 people paying N10 million and above in Ogun state. And when we reported it, we did not even have anybody paying over N10 million and above in direct assessment, meaning high net-worth individuals (HNI), people that are self employed.

“We now have close to 8-10 people on direct assessment, paying N10 million and above in Ogun state without even filing for Voluntary Assets and Income Declaration Scheme (VAIDS). So, you can see the voluntary compliance. Another factor why we now have people paying taxes is that, there are lots of physical developments in Ogun state. More people, investors are living in Ogun state now because there is security, improved infrastructure; there are better schools, hospitals, as government continues to do more”, said Adeosun.