James Emejo in Abuja
The Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami Thursday identified non-discretionary tax waiver grants, illicit financial flows abroad and high overhead costs as major reasons for the failure of the agency to meet its tax revenue targets in recent times.
Speaking during the Senate’s interactive session with revenue generating agencies aimed at improving the internally generated revenue (IGR) of the federal government through non-oil revenue sources, Nami said the country loses a lot of revenue through tax waivers granted to major companies.
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.
“I am new in the FIRS but upon my assumption of office, I have discovered that these, among other factors, contributed to making the FIRS unable to meet its target in recent times.”
The FIRS boss consequently canvassed better official discretion in granting tax waivers, assuring that he is working hard in collaboration with relevant government agencies to stem illicit financial flow, especially via profit shifting by multinationals operating in the country.
In a statement issued by Director, Communications and Liaison Department, FIRS, Mr. Abdullahi Ismaila Ahmad, Nami further urged the National Assembly to assist the agency in this regard in order to increase government revenue towards the modernisation of public infrastructure in the country.
The Senate President, Dr. Ahmad Lawan, who chaired the event, charged the revenue-generating agencies to do better, stressing that “the revenue profile of the country is going down.”
He said: “We believe that revenue generating agencies of government can do better. The National Assembly wants to help you in terms of legislative support and even with some incentives to ensure that your targets are met.
“Revenue agencies must meet their targets. They must aim higher. When they are not able to meet their targets, we ask them questions. There should be no reason why targets should not be met. But if anyone has any reason, we can also listen to him to know how genuine it is.”
Chairman, Senate Committee on Finance, Senator Solomon Adeola, however expressed optimism that going forward, “revenue accruable to the government will increase when we have interactive sessions like this. This interactive session is going to hold quarterly. But subsequently, we will have the sessions in smaller groups to enable better interactions”.
The FIRS had generated a total sum of about N5 trillion in 2019, which fell short of its projected revenue collection of about N8.8 trillion, thus posting a shortfall of about N3.7 trillion for the year.
Figures obtained by THISDAY further indicated that out of a total revenue projection of N45.7 trillion between 2011 and 2019, the service was able to generate N40.5 trillion, leaving a deficit of over N5.1 trillion within the period.
Nami, had at assumption of expressed concern over the dwindling revenue performance despite increase in the service workforce over the period.
At a recent management retreat in Abuja, it announced a revenue target of N 8.5 trillion in 2020, adding that the country is currently losing about $10 billion of tax through illicit profit shifting by multinational corporations, adding that the lost revenue would have helped to address critical infrastructure development by the three tiers of government.