Yet On The Meaning, Import Of Stamp Duty Administration By The FIRS, By Ayuba Ahmad

June 30, 2020, the Federal Capital city of Abuja witnessed the formal inauguration of the Inter-Ministerial Committee on Audit and Recovery of Back Years Stamp Duties as well as,  the Launch of Federal Inland Revenue  Service Adhesive Stamp. The theme of the event was:” Stamp Duties Act: Repositioning Nigeria Towards Greater Revenue Generation.”

Before that event,  a huge smog of haze had somewhat, blighted a clear understanding of the meaning and the essence or, significance of the campaign by the FIRS for a reinvigorated regime of  Stamp duty in the country.

In retrospect, some of the grey areas would now seem as a web of obfuscations deliberately woven by those who, ordinarily, should know better, but  who, for pecuniary reasons, refused to do so. There were of course, some of the controversies that arose from genuine misconception by some key players and the general public thereby, resulting in  different prisms of perceptions and attendant misgivings and innuendos.

The calibre of the guests that attended and spoke at the event was the first bust of light over the had shrouded the subject all along. There were, for instance,  the Senate President, Ahmad Lawan and the House Speaker, Femi Gbajabiamila who, as leaders of the nation’s highest legislative houses, demonstrated by their presence and speeches,  the support of the lawmakers to the FIRS in its bid to take control,  nurture and midwife the new focus on Stamp duty collection.  The presence of the duo also shattered talks that had been making rounds in the rumour mills to the effect  that, the leadership of the National Assembly were not attuned to the program and would as such,   stay  away from the event.

From the Executive arm of government, the presence and address of Abubakar Malami, Attorney General and Minister of Justice,  explicitly highlighted the legality of the 2019 Finance Act, its provisions  on Stamp duty and, the legal status of the FIRS as the sole statutory agency charged with the supervision and collection of all revenues derivable from Stamp duty. Malami pointedly clarified:”It follows therefore that on the strength of the provision of FIRS Act, it is conferred with powers to administer (including perform audit exercise) and collect all taxes and levies due to the federal government”.

Still from executive arm,   the Secretary to the Government of the Federation, SGF,  Boss Mustapha and the Minister of Finance, Zainab Shamsuna Ahmed, also, variously buttressed the legal status of the FIRS in the administration of stamp duties. The two as well, stressed on the significance of Stamp Duty as, ” a tax type that serves to open untapped revenue sources for increased revenue collection.”

In a summary of all the enlightenment he had done in media interviews and other public fora on the FIRS and the reinvigorated regime of Stamp Duty administration, Mr Muhammad Nami, the Executive Chairman of the FIRS,  used the occasion to further elucidate on the philosophy, logic, essence and benefits of the commitment of his agency on stamp duty as the latest thrust  in delivering on  its mandate of gingering up the nation’s revenue profile through robust tax administration and collection mechanisms.

At the end of the day, all the grey areas were cleared, with stakeholders, key industry players and the general public much better informed on all the shades of  the Stamp Duty. Just what is stamp duty?  

In a layman’s language, it is the token of levy or tax paid for certain commercial services, exchange or transactions between persons, groups or corporate entities.  In spite of similarities on.the surface, stamp duty is however, fundamentally different from postal stamps or signage which universally  is the responsibility of postal agencies. Therefore, the controversy between the Postal service agency and the FIRS,  should never have arisen in the first place.

The FIRS Executive Chairman defined stamp duty  as, “essentially a duty chargeable on instruments physically or electronically.” The Stamp Duty Act defines “duty”, to mean, “any stamp duty for the time being chargeable under any other Act and also includes any fee chargeable hereunder. “Stamp”, according to the Act, is ” an impressed pattern or mark by means of an engraved or inked block die as an adhesive stamp or an electronic stamp or electronic acknowledgment for denoting duty fee”

Pointing out that Stamp Duty in Nigeria dated back to 1939,  Mr Nami said the 2019 Finance Act was merely, the latest in the series of amendments the Stamp Duty Act had gone through over the years. In tune with contemporary trends, he said,  the Finance Act appropriately, “recognizes technology, economic realities, e-commerce and cross border transactions” in the administration of tax collection from stamp duties.

While pointing out that dutiable items under the 2019 Finance Act have been expanded to include bank deposits or transfers, Mr Muhammad Nami also drew attention to the upward review from N4.00 to N50.00 in bank customers’ deposits of N10,000.00 and above per transaction.

Giving a window into the potentials of the new drive on Stamp Duty administration, the FIRS helmsman told the gathering that about 66 Billion Naira had been netted by his agency between January and May this year.  The figure is against the total sum of 18 Billion Naira collected for the entire year 2019! He attributed the “significant leap” to the “dynamism triggered by the Finance Act 2019, sums warehoused by the CBN in respect of prior years, deployment of technology and, stakeholders collaboration” among other mechanisms now in use by the FIRS.

At the of the day, the public is much more enlightened on what Duty Stamp is and what it is not. We now know for instance that, it is not as such,  a newly invented  concept but,  one that goes back to  colonial days. Stamp Duty is also a universal taxational standard found in most economies of the world. What now seems to appear unsettling about stamp duty is the reinvigorated buoyance given to it by the 2019 Finance Act and, the manifest diligence and single-minded commitment to its administration by the new management at the Federal Inland Revenue Service, FIRS.

People all over the world pay taxes to the public treasury on  rent or,  over sales of properties just as, bank transactions on certain sums are dutiable. Under the new regime of Stamp Duty in the country, citizens are being demanded to do that which is done in other countries by paying taxes. Understandably,  this cannot be a piece of good news to a people who  are not used to paying taxes and what they pay in the few areas that they pay, amount to one of the lowest in the world. The strident message is: buckle up, the long holiday is over.

Yes,  the payment of tax by citizens is a civic responsibility that has  been a component of human civilisation from time. According to the Christian scripture, while citizens should of duty,  “give unto God what is God’s,” they should also obligatorily, ” give unto Ceaser , what is Ceaser’s,” through  payment of tax even as they fulfill their spiritual obligations. Mr Muhammed Nami at the occasion put it another way by quoting an American President, Benjamin Franklin “In this world nothing can be said to be certain except death and taxes”.

In her remarks, the Minister of Finance, succinctly summarised it all: ” The significance of Stamp Duty as a tax type is that it serves to open untapped revenue sources for increased revenue collection. The adhesive stamps make voluntary compliance by tax payers a lot easier since they can now have easy access to the stamps…. In many jurisdictions, just as the Executive Chairman of the FIRS observed, Stamp Duties have become a major revenue.”

Against the backdrop of receding earnings from oil and the havoc of  the corona virus pandemic on global economies,  the Minister rationalized that, ” due to the precarious funding situation we are experiencing,” the government must put in place, “innovative and efficient tax administration in order to reverse the dwindling revenue trend”. In other words, hard and discomforting as it is, the resort to the panacea of the Stamp Duty is a therapy that we critically need to survive as a nation.

The Federal  Inland Revenue Service has, since the coming on board Muhammed  Nami as it’s Chief Executive,  come under the searchlight and scrutiny of the general public and, of course, several interest groups. Aside the additional tasks thrust on it by the 2019 Finance Act, including administration of the Stamp Duty, Mr Nami has initiated a number of innovations  in tax administration. He has as well, been talking of many lofty ideals which on the surface, are capable of taking the nation from her present economic doldrums.  He owes it  to himself,  to go beyond rhetorics by walking his talk.

While at it however, fact is, not a few believe that Nigerians are already over burdened with multiple taxations.  That is, in spite of the palliatives or reliefs contained in the 2019 Finance Act on a number of bank charges on transactions as well as,  reduction in taxes paid by new and small scale entrepreneurs. Thus, while digging deep and wide into the Stamp Duty as, “a gold mine”,  the people who literally, are the goose that lay the golden eggs must not be over tasked through excessive taxations. It is a “Catch 22” situation of sorts because, only the living pay taxes.

By: AYUBA AHMAD, A Kaduna-based Public Commentator.

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FIRS’ Muhammad Nami, To Deliver Keynote Address On Stamp Duty Webinar

The Executive Chairman of the Federal  Inland Revenue Service, Muhammad Nami would deliver a keynote address at a webinar on the potentials of Stamp Duties in Nigeria on the 25th of July, 2020.

The webinar, tagged: Stamp Duty: The New Black Gold? would commence at 2pm, Nigerian time. It is organized by OTISVIP, a private members’ club for aspirational African professionals across the globe.

The webinar would have among its attendees renowned tax specialist, Dr. Alex Ezenagu, business mogul, Sam Onyemelukwe, MD of TRACE Anglophone West Africa, Japheth Omojuwa, a digital media and communications expert and entrepreneur, Angela Damilola, the head of the Abuja Technology Village and Mohammad Jega, a techpreneur and founder of StartUpArewa. 

The webinar, will provide a platform for these stellar entrepreneurs, leaders and professionals to discuss the different perspectives, dimensions and potentials of the Stamp Duty Act among other tax related matters.

Muhammad Nami, a seasoned tax consultant and administrator would be expected to set the stage for the conversations that would rigorously dissect this trending issue.

Also present will be senior Directors and officials of the Federal Inland Revenue Service who will be available to provide answers to some of the posers that would be asked during the webinar. 

This conversation has become critical especially now that government revenues from its mainstay of oil is reducing drastically. The government is compelled to look for an alternative source of funding to carry out its expenditure; a source that is found in Stamp Duty taxes.

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Six Top Quotes From Muhammad Nami’s Speech At The 2020 FIRS Corporate Retreat

The Chairman of the Federal Inland Revenue Service (FIRS) Alh. Muhammad Nami is presiding over the 2020 FIRS Corporate Plan Retreat at the Transcorp Hilton Abuja with participants and guests from all works of the Nigerian society.

The discussions here will weigh on the importance and role of the FIRS in fulfilling their mandate and achieving a prosperous Nigeria.

While speaking at the retreat, Muhammad Nami highlighted the plans of the FIRS in the coming year, the new administration and its commitment to the service and also how it intends to reach its N8.5Trillion target

Here are 6 quotes from the points made by the FIRS Executive Chairman, Muhammad Nami:

1 – “Since I assumed office as the Executive Chairman, we have revised the organizational structure of the Service to reflect Management aspirations, reviewed TCC’s administration process and issuance programme to general public, reviewed and redesigned tax audit and investigation functions. Currently, we are reviewing all lien cases with a view to closing them and introducing new enforcement strategies.”

2 – “ “FIRS plays a strategic role in the nation’s political economy, including supporting the actualization of President Muhammadu Buhari’s administration’s commitment of moving the country up on the Ease of Doing Business Ranking, taking 100 million Nigerians out of poverty over the next 10 years and rebuilding Nigeria’s critical infrastructure by generating sufficient revenue through expanding the tax net and efficient service delivery.”

3 – “The repositioning of the Service would be anchored on four cardinal pillars:
– Rebuilding FIRS’ Institutional Framework
– Robust Collaboration with Stakeholders
– Building a Customer (Taxpayer)-Centric Institution
– Data-Centric Institution.”

4 – “We have initiated several reform projects with a view to reversing our current under- performance level to a more acceptable one. We have agreed with my team that in the next four years we will improve our performance on a long term and sustainable basis. We have given ourselves a minimum target of $5million staff-to-revenue ratio and 10% tax-to-GDP ratio over the next four years.”

5 – “For the year 2020, we have a target of =N=8.5trillion which is slightly lower than the 2019 target by =N=300billion. … Looking at our performance in the recent past, one may look at the 2020 target as ambitious, but I can assure you that it is achievable especially with the ongoing reforms and business process re-engineering that are taking place in the Service.”

6 – “… if we are able to detect and block tax avoidance schemes by Multinational Corporations, that will also go a long way to improve our tax revenue collection..”

Many who are attending the 3 Day retreat – from policy makers, journalists, legislators, Finance sector experts among others – have described both Nami and the new FIRS as apt, delivery focused, vibrant, and dependable.

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Two Takeaways From Nami’s ATAF Speech, By Muhammad Gulani

Muhammad Nami, a well-trained Tax, Accounting and Management professional with three decades of practical working experience in Auditing and Tax Management was appointed months ago to head Nigeria’s tax collection unit: The Federal Inland Revenue Service.

Mr. Nami’s vast experience brought him onboard working with the Presidential Committee on Audit of Recovered Stolen Assets in November, 2017 as inaugurated by President Muhammadu Buhari.

Here are Two Takeaways from his speech today where he spoke on the theme: “The Taxation of the Informal Sector in Africa” during the 9th African Tax Administration Forum (ATAF) Country Correspondents Conference:

1 – That while the Informal sector is driving about 21 to 70 percent of the GDP of African countries and also accounts for between 30 to 90 percent of employment in the region, it is one of the most difficult sectors to tax.

“… the sector remains one of the most difficult sectors to tax, with most of the businesses operating in the sector concealing their activities from the Tax Authorities. Such businesses also operate on a cash basis and maintain poor or no accounting records. Most of the businesses in the sector are also small and fragmented making it inefficient for the revenue administrations to enforce compliance. “

2 – That while it is not politically popular to tax the informal sector, this must be done if Africa is to reduce its budget deficit

“Taxing the informal sector is viewed as politically unpopular and politicians are unwilling to risk losing the high number of votes represented in the sector. This is because politicians usually promise informal workers protection from taxation in exchange for their votes…If Africa is to reduce its budget deficits and increase revenue mobilization, it must widen its tax base and the informal sector provides an opportunity to do so”

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If Africa Is To Reduce Budget Deficits, We Must Increase Revenue Mobilization – Nami, Executive Chairman FIRS

For African countries to reduce their budget deficits, they must work on widening their tax bases, the Executive Chairman of the FIRS, Muhammad Nami has stated.

In a speech delivered during the opening ceremony of the 9th Country Correspondents Meeting and ATAF 1st Experts Meeting on Taxation of the Informal Sector, the Executive Chairman of the FIRS who also doubles as the African Tax Administration Forum’s Chairman,  explained that African countries must find ways to expand their tax base to fund budget deficits. 

In his remarks, he noted that the informal sector in Africa today constitutes between 21 to 70 percent of the GDP of African countries and accounts for between 30 to 90 percent of employment in the region.

He went further to state that despite the large size of the informal sector, it remains one of the most difficult sectors to tax.

“… the sector remains one of the most difficult sectors to tax, with most of the businesses operating in the sector concealing their activities from the Tax Authorities. Such businesses also operate on a cash basis and maintain poor or no accounting records. Most of the businesses in the sector are also small and fragmented making it inefficient for the revenue administrations to enforce compliance. “ he stated. 

He also noted that it was not politically popular to tax the informal sector.

“Taxing the informal sector is viewed as politically unpopular and politicians are unwilling to risk losing the high number of votes represented in the sector. This is because politicians usually promise informal workers protection from taxation in exchange for their votes.” The Executive Chairman noted. 

Nami also noted that though it may be argued that the informal sector may yield low returns in the short run, the benefits were worth the effort. He further noted that taxing the informal sector may also be a way of promoting good governance and accountability of the State.

“Taxing the informal sector may also be a way of promoting good governance and political accountability of the State because tax strengthens the social contract between the citizens and the government. Thus, informal businesses that contribute to tax revenues are likely to assert their rights to receive certain services from government, thereby ensuring national development and  accountability. The chairman noted. 

Read the full excerpt of his speech here: 

BEING  AN ADDRESS BY THE CHAIRMAN, ATAF, Mr. Muhammed Nami, AT THE OPENING OF THE 9th COUNTRY CORRESPONDENTS MEETING AND ATAF 1ST EXPERTS MEETING ON TAXATION OF THE INFORMAL SECTOR

ON 4th FEBRUARY 2020 IN ABUJA, NIGERIA

PROTOCOL

  • Board Members of the Federal Inland Revenue Service
  • The Executive Secretary of ATAF, Mr Logan Wort,
  • Coordinating Directors, Directors and Staff of FIRS
  • Directors and Members of staff of ATAF 
  • ATAF Country Correspondents and Experts in Taxation of the Informal sector 
  • Distinguished Guest Speakers
  • Our development partners, the African Development Bank
  • Distinguished guests
  • Ladies and gentlemen,

1. I warmly welcome you to this important meeting between the ATAF country correspondents and experts on taxation of the informal sector. I am highly delighted to receive you all to Abuja, the serene capital city of Nigeria. Indeed, this is important to me as it is my very first official assignment as the new Chairman of the African Tax Administration Forum (ATAF).I therefore thank you all for responding positively to the invitation to share your time and expertise with us to help solve one of the major challenges facing revenue mobilization on the continent. Your presence is invaluable to us. 

2. The theme of this year’s Country Correspondents Conference is “The Taxation of the Informal Sector in Africa”. This annual gathering of ATAF’s focal persons in members administration affords participants the opportunity to reflect, and exchange views, on the year that has passed and to discuss the activities that form part of the ATAF Workplan for 2020. As a link between Revenue authorities and the Secretariat, ATAF’s Country Correspondents play a crucial role in ensuring that ATAF’s programmes continue to respond to members’ needs. During this meeting, ATAF, in partnership with the Africa Development Bank (AfDB), will jointly hold the 1st ATAF Experts Meeting on Taxation of the Informal Sector in Africa. 

3. The meeting is expected to bring together officials from Treasury and Revenue Authorities as well as experts from across Africa to share experiences on practical and effective ways of taxing the informal sector. The objective of the meeting is to assist the ATAF Secretariat to develop, among other products, a comprehensive handbook with practical guidelines to ATAF member countries on how to tax the informal sector. 

5. As at 2017, Africa’s Tax to GDP ratio averaged around 17%. This marks an improvement over time. However this ratio is the lowest in the world and it has resulted in budgetary deficits in most countries in Africa.  It is therefore necessary to reduce and eventually eliminate these deficits if Africa is to meet its development needs.  The low tax to GDP ratio has been attributed to, among other things, low tax capacities and tax inefficiencies. This is made worse by tax avoidance, tax evasion and a large informal sector. 

6. It is estimated that the informal sector in Africa constitutes between 21% – 70% of the GDP of African countries and accounts for between 30-90% of employment in the region. Yet despite its large size, the sector remains one of the most difficult sectors to tax, with most of the businesses operating in the sector concealing their activities from the Tax Authorities. Such businesses also operate on a cash basis and maintain poor or no accounting records. Most of the businesses in the sector are also small and fragmented making it inefficient for the revenue administrations to enforce compliance. Taxing the informal sector is viewed as politically unpopular and politicians are unwilling to risk losing the high number of votes represented in the sector. This is because politicians usually promise informal workers protection from taxation in exchange for their votes.  In Malawi, for instance, the law provides for withholding tax on imported goods at a rate of 3% but the tax is yet to be implemented due to perceived political consequences (AfDB, 2018).

7. Distinguished guests, ladies and gentlemen, it may be argued that taxing the informal sector may yield low returns in the short run. However, the benefits are worth the effort. Bringing the businesses into the tax net will instil a tax- paying culture in the businesses, thereby ensuring tax compliance when the businesses expand. Taxing the informal sector is also critical because it will ensure that there is a perception of fairness in the tax system. Those who operate in the formal sector deem it unfair to have to pay taxes while those in the informal sector do not. This impacts their tax morale and can result in low tax compliance among those in the formal sector. Furthermore, in some instances, enterprises within the informal sector create unfair competition for those operating in the formal sector. As a result, this reduces the income generated by the formal firms and also reduces the taxes paid.

8. Taxing the informal sector may also be a way of promoting good governance and political accountability of the State because tax strengthens the social contract between the citizens and the government. Thus, informal businesses that contribute to tax revenues are likely to assert their rights to receive certain services from government, thereby ensuring national development and  accountability. Paying taxes is likely to promote responsiveness by the state to the needs of the informal sector in a bid to encourage voluntary compliance. It is also likely to encourage collective action, collective political engagement and bargaining by the informal sector.

If Africa is to reduce its budget deficits and increase revenue mobilization, it must widen its tax base and the informal sector provides an opportunity to do so. That is why recently, the President of Nigeria, Muhammed Buhari, signed the 2019  Finance Act.  The 2019 Finance Act seeks to create an environment for ease of doing business in Nigeria especially for the small scale businesses in the country. The Act exempts businesses with annual turnover of 25 million naira and below from charging Value Added Tax (VAT) which has now been increased from 5% to 7.5%. However, these businesses would eventually enter the tax net through continuous assessments. This Act is expected to impact positively on the small businesses as well as the  Nigeria economy, in the long run.

9. Distinguished guests, ladies and gentlemen, it is from this background that ATAF seeks to use this event to create a platform for discussion across Africa, as we seek effective ways of taxing the informal sector.Given the diverse skills and experiences represented in this room I cannot imagine a better audience to come up with solutions to the challenges. I am therefore, confident that the discussions that would be held during this workshop will result in solutions as to tax the informal sector in order to build an African model of informal sector taxation.   

10.As you brainstorm over this important tax matter, I will not neglect to urge you all to also make out time to visit the several places of interest which Abuja offers and enjoy the warm hospitality for which Nigeria is renowned. It is now my privilege to declare the 2020 ATAF Country Correspondents Conference and the Informal Sector Workshop open.   I wish you all successful and fruitful discussions. 

11. God bless you all.

Muhammad Nami

Executive Chairman FIRS, Nigeria

ATAF Chairman.

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Finance Act Would Create An Environment For Ease Of Doing Business In Nigeria – Nami, Executive Chairman FIRS

The Executive Chairman of the FIRS, Muhammad Nami has said that the recently signed 2019 Finance Act would create an environment for ease of doing business in Nigeria.

He said this in his opening address of the 9th Country Correspondents Meeting And ATAF 1st Experts Meeting On Taxation of the Informal Sector today in Abuja.

Nami explained that the Finance Act would help the ease of doing business especially for small businesses, noting that “the Act exempts businesses with annual turnover of 25 million Naira and below from charging Valued Added Tax …”

He went further to add that “However, these businesses would eventually enter the tax net through continuous assessments. This Act is expected to impact positively on the small businesses as well as the Nigerian economy, in the long run.”

Read the full speech of the Executive Chairman below: 

BEING  AN ADDRESS BY THE CHAIRMAN, ATAF, Mr. Muhammed Nami, AT THE OPENING OF THE 9th COUNTRY CORRESPONDENTS MEETING AND ATAF 1ST EXPERTS MEETING ON TAXATION OF THE INFORMAL SECTOR

ON 4th FEBRUARY 2020 IN ABUJA, NIGERIA

PROTOCOL

  • Board Members of the Federal Inland Revenue Service
  • The Executive Secretary of ATAF, Mr Logan Wort,
  • Coordinating Directors, Directors and Staff of FIRS
  • Directors and Members of staff of ATAF 
  • ATAF Country Correspondents and Experts in Taxation of the Informal sector 
  • Distinguished Guest Speakers
  • Our development partners, the African Development Bank
  • Distinguished guests
  • Ladies and gentlemen,

1. I warmly welcome you to this important meeting between the ATAF country correspondents and experts on taxation of the informal sector. I am highly delighted to receive you all to Abuja, the serene capital city of Nigeria. Indeed, this is important to me as it is my very first official assignment as the new Chairman of the African Tax Administration Forum (ATAF).I therefore thank you all for responding positively to the invitation to share your time and expertise with us to help solve one of the major challenges facing revenue mobilization on the continent. Your presence is invaluable to us. 

2. The theme of this year’s Country Correspondents Conference is “The Taxation of the Informal Sector in Africa”. This annual gathering of ATAF’s focal persons in members administration affords participants the opportunity to reflect, and exchange views, on the year that has passed and to discuss the activities that form part of the ATAF Workplan for 2020. As a link between Revenue authorities and the Secretariat, ATAF’s Country Correspondents play a crucial role in ensuring that ATAF’s programmes continue to respond to members’ needs. During this meeting, ATAF, in partnership with the Africa Development Bank (AfDB), will jointly hold the 1st ATAF Experts Meeting on Taxation of the Informal Sector in Africa. 

3. The meeting is expected to bring together officials from Treasury and Revenue Authorities as well as experts from across Africa to share experiences on practical and effective ways of taxing the informal sector. The objective of the meeting is to assist the ATAF Secretariat to develop, among other products, a comprehensive handbook with practical guidelines to ATAF member countries on how to tax the informal sector. 

5. As at 2017, Africa’s Tax to GDP ratio averaged around 17%. This marks an improvement over time. However this ratio is the lowest in the world and it has resulted in budgetary deficits in most countries in Africa.  It is therefore necessary to reduce and eventually eliminate these deficits if Africa is to meet its development needs.  The low tax to GDP ratio has been attributed to, among other things, low tax capacities and tax inefficiencies. This is made worse by tax avoidance, tax evasion and a large informal sector. 

6. It is estimated that the informal sector in Africa constitutes between 21% – 70% of the GDP of African countries and accounts for between 30-90% of employment in the region. Yet despite its large size, the sector remains one of the most difficult sectors to tax, with most of the businesses operating in the sector concealing their activities from the Tax Authorities. Such businesses also operate on a cash basis and maintain poor or no accounting records. Most of the businesses in the sector are also small and fragmented making it inefficient for the revenue administrations to enforce compliance. Taxing the informal sector is viewed as politically unpopular and politicians are unwilling to risk losing the high number of votes represented in the sector. This is because politicians usually promise informal workers protection from taxation in exchange for their votes.  In Malawi, for instance, the law provides for withholding tax on imported goods at a rate of 3% but the tax is yet to be implemented due to perceived political consequences (AfDB, 2018).

7. Distinguished guests, ladies and gentlemen, it may be argued that taxing the informal sector may yield low returns in the short run. However, the benefits are worth the effort. Bringing the businesses into the tax net will instil a tax- paying culture in the businesses, thereby ensuring tax compliance when the businesses expand. Taxing the informal sector is also critical because it will ensure that there is a perception of fairness in the tax system. Those who operate in the formal sector deem it unfair to have to pay taxes while those in the informal sector do not. This impacts their tax morale and can result in low tax compliance among those in the formal sector. Furthermore, in some instances, enterprises within the informal sector create unfair competition for those operating in the formal sector. As a result, this reduces the income generated by the formal firms and also reduces the taxes paid.

8. Taxing the informal sector may also be a way of promoting good governance and political accountability of the State because tax strengthens the social contract between the citizens and the government. Thus, informal businesses that contribute to tax revenues are likely to assert their rights to receive certain services from government, thereby ensuring national development and  accountability. Paying taxes is likely to promote responsiveness by the state to the needs of the informal sector in a bid to encourage voluntary compliance. It is also likely to encourage collective action, collective political engagement and bargaining by the informal sector.

If Africa is to reduce its budget deficits and increase revenue mobilization, it must widen its tax base and the informal sector provides an opportunity to do so. That is why recently, the President of Nigeria, Muhammed Buhari, signed the 2019  Finance Act.  The 2019 Finance Act seeks to create an environment for ease of doing business in Nigeria especially for the small scale businesses in the country. The Act exempts businesses with annual turnover of 25 million naira and below from charging Value Added Tax (VAT) which has now been increased from 5% to 7.5%. However, these businesses would eventually enter the tax net through continuous assessments. This Act is expected to impact positively on the small businesses as well as the  Nigeria economy, in the long run.

9. Distinguished guests, ladies and gentlemen, it is from this background that ATAF seeks to use this event to create a platform for discussion across Africa, as we seek effective ways of taxing the informal sector.Given the diverse skills and experiences represented in this room I cannot imagine a better audience to come up with solutions to the challenges. I am therefore, confident that the discussions that would be held during this workshop will result in solutions as to tax the informal sector in order to build an African model of informal sector taxation.   

10.As you brainstorm over this important tax matter, I will not neglect to urge you all to also make out time to visit the several places of interest which Abuja offers and enjoy the warm hospitality for which Nigeria is renowned. It is now my privilege to declare the 2020 ATAF Country Correspondents Conference and the Informal Sector Workshop open.   I wish you all successful and fruitful discussions. 

11. God bless you all.

Muhammad Nami

Executive Chairman FIRS, Nigeria

ATAF Chairman.

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Cleaning the Augean stable at FIRS, By Kayode Rahman Ogunlana

In the recent change of leadership at the Federal Inland Revenue Service, FIRS,  the present and the more rational question that should occupy our minds in the aftermath of Babatunde Fowler’s exit is, the antecedents and thereby, the capacity of Malam Muhammadu M. Nami, the Executive Chairman to deliver on the job. In other words, is President Buhari putting a square peg in a square hole in picking Malam Muhammadu Nami from among the horde that jostled and lobbied for the coveted office? From a cursory look at his curricular vitae and what transpired as he resumed recently, the picture depicted is that of a man eminently capable.

Born in April 1968, Muhamnad Nami is clearly coming on the job with much more than the vivacity, energy and drive required to cope with the rigors of the tasks of his new assignment. With a childhood rooted and wrought in the agrarian village of Nami in Agaie local government area of Niger state,  it tells much  of his innate sturdy and Spartan character traits of intelligence, perseverance, determination and vision to have gone the mileage to the point that he was found suitable for his latest  appointment. He is widely reckoned with as a renowned, thoroughbred consultant in matters of auditing and taxation.

While announcing his appointment, the Presidential Spokesman, Garba Shehu crisply  encapsulated Muhammad Nami as a man with highly rated qualifications and licenses from reputable professional bodies with, “practical work experience in auditing, tax management and advisory management services to clients in the banking, manufacturing and services in the private and public sectors as well as nonprofit organisations.” By virtue of his educational qualifications and professional practice, Muhammad Nami is today, either a fellow or a member of several professional bodies. For instance, he is a Fellow of the prestigious Chartered Institute of Taxation of Nigeria, CITN; the Chartered Institute of Forensic and Investigation Professionals of Nigeria, CIFIPN and, the Institute of Debt Recovery Practitioners of Nigeria, DRPN. He is as well, an Associate Member of the Nigeria Institute of Management and the Association of National Accountants of Nigeria, ANAN.

Beginning from 1993 when he  embarked on his chosen career in taxation and auditing as a trainee, Muhammad Nami has largely worked in the private sector, progressively as an employee, a partner in joint ventures, CEO of his own firms and as a consultant to individuals, corporate entities,  nongovernmental, local and international organizations as well as government Ministries and several public sector departments and  agencies.

In obvious recognition of his towering professional stature and reputation as a diligent Auditor of impeccable moral rectitude, the administration of President Muhammadu Buhari appointed him between 2017 and 2018, to serve as a member of the adhoc Presidential Committee on Audit of Recoveries made by government Agencies pursuant to the anti corruption campaign. Among others, the committee was mandated to carry out an audit of all recoveries made by the MDAs, provide a data base and inventory for all recoveries; establish a viable template or, an enduring framework to make for accountability in respect of future recoveries. The nearest that he came to formally working in the public sector,  Nami was said to have made very critical contributions to  the success of the presidential committee’s assignment.  His outstanding performance in that one year stint may have further highlighted the latent and untapped capacity of the self effacing professional and, as it has turned out, recommending him for the latest national assignment.

As it is, Mohammed  Nami is coming on the saddle at the FIRS at a time that the agency is, practically, in the eye of the storm. There is for instance, the widespread allegations of gross acts of financial improprieties by members of its previous management with  the attendant negative public perception of the place as a cesspool of heist.  This may of course appear as the least of the tasks at hand, but it is yet one that must be given urgent  and particular attention. It may well turn out that he will have to first and foremost begin his assignment at the FIRS by engaging in the odious task of cleansing the Augean stable.

The recent changes at the nation’s foremost tax collection institution and which resulted in the appointment of Nami arose from its ever declining quantum of revenue generation to the national coffers. At a time the government embarked on a vicarious, spirited and frenzied policy of diversification of its sources of revenue away from oil, much is understandably expected from the FIRS. Unfortunately, the revenue generation through the Agency has been cascading downward, consistently failing to deliver on set targets in recent years.

The displeasure of the government was manifested in the query issued Mr.Fowler in April this year by the President’s Chief of Staff and of course non-renewal of his tenure.

In the light of the above, the salient but pertinent ingredient in the mandate being given to  Muhammad Nami is that he is expected to turn the fortunes of FIRS around by urgently reinvigorating its revenue generating profile. With an unprecedented federal budget of N10.59 trillion Naira and an ambitious policy of funding it substantially from revenues generated from non oil revenue sources, which translates in other words,  into increased taxation,  the assignment of  Nami cannot be regarded as a tea party.

Various prognoses, remedial measures and suggestions have been advanced for enhancing revenue generation. There has been for example, the view that the country needs to enthrone a more robust regime of taxation based on the fact that a great number of taxable individuals and corporate citizens are currently either being under taxed or, are completely outside the tax net. Those with this view, go on comparative peer group analyses of taxation in Nigeria and other countries in Africa often with the conclusion that we have a very lax, or liberal tax administration.

We can therefore foresee the Federal Inland  Revenue Service under Muhammad Nami having to engage in the expansion of the tax net. A logical, sensible and inevitable panacea in the superior and long-term social and economic wellbeing of the country as it has been argued by exponents of such a paradigm shift, there is yet on the other hand, the strong imperative of taking cognizance of counter opinions. This, in a nutshell is the demand that caution should be exercised to guard against increased taxation giving rise to increased pauperization of the mass of citizens. Related, is the opinion that an unbridled taxation drive has the potential of scarring away prospective investors and of crippling existing industries, ventures and services.

As he steps into his new station, Muhammad Nami is being challenged to unleash the entire gamut of his experience, expertise and management skills. Unlike the usual trend in such high profile appointments, Nami is not known to be coming either on the crest of partisan political considerations and interest groups or, under the wings of a god father. He is expected therefore, to go about his assignment as a thoroughbred professional without the inhibitions and digressions of extraneous forces and interests. History beckons on Muhammad Nami, the otherwise village boy from Nami.

Kayode Rahman Ogunlana is a Lagos based public affairs analyst.

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FIRS Generates N12.6trn Revenue In 3 Years

The Federal Inland Revenue Service (FIRS), has said it generated N12.62 trillion revenue from taxes  in the last three years.

This was revealed in a document on its achievements, a copy of which was made available to newsmen in Abuja by its  Head, Communications and Servicom Department, Mr Wahab Gbadamosi.

A breakdown of the amount showed that N3.3 trillion was generated in 2016, N4.02 trillion in 2017 and N5.32 trillion was realised in 2018, making it the highest revenue generated in the last three years .

According to the document, the FIRS under the leadership of Babatunde Fowler, designed initiatives to ensure a robust tax administration that is beneficial to all stakeholders.

The organisation explained for instance that non-oil tax revenue increased to N2.149 trillion in 2016, N2.5 trillion in 2017 and N2.852 trillion in 2018.

The document quoted Fowler as saying that “the achievements mentioned above also demonstrate the diversification of the Nigerian economy by the Federal Government.

“This does not mean that we have left behind the oil tax revenues. It grew from N1.15 trillion in 2016 to N1.52 trillion in 2017 and N2.52trillion in 2018. Non-oil tax revenue is still over in excess of the oil tax revenue.

“We also do collect four per cent in terms of cost of collection but only for non-oil revenue collected. On oil revenue collection, we do not get any commission and we have been able to make sure that our services are more efficient and convenient to taxpayers.

“This has brought about a considerable reduction in the cost of collection of actual taxes.

“In 2016, it was 2.6 per cent, 2017, 2.49 per cent and 2018, 2.14 per cent, meaning that our actual cost of collection is heading downwards based on the efficiency and technology that we are deploying to tax collection.

“Some of the ICT initiatives that we have continued to build on are the e-payment channels which make it convenient and easy to pay taxes anywhere in the world and to also download receipts of payment from any point one so desires,” he said.

SUN

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FIRS Seals HFP, Costain, Others Over Tax Defaults

The Federal Inland Revenue Service (FIRS), yesterday sealed the premises of Costain West Africa Limited and HFP Engineering Limited over N223.5 million and N87.6 million tax liabilities.

FIRS team, led by Aisha Duze, also sealed the premises of Prest Cruise Waterfront Hotel, Lekki Phase 1, over a N20 million tax liability. Also sealed was I-Fitness Centre Limited, Lekki Phase 1, which owes N15 million in taxes.

In the Surulere area, the team sealed the premises of Swiftalk Limited, which has a tax liability of N50.5 million; and Logic Science, which owes N53 million.

The team had on Tuesday shut down activities at CEDDI Corporation in Apapa over a tax debt of N385 million, HJ Heinz Nigeria Limited in Mushin, over N81.4 million unpaid tax and Temple Preparatory School on 213, Ikorodu Road, for N22 million outstanding taxes.

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FIRS Generates N4.3trn Tax Revenue From Jan To Oct – Fowler

The Federal Inland Revenue Service (FIRS) on Friday said it generated N4.3 trillion as tax revenue between January and October this year.

FIRS Executive Chairman, Babatunde Fowler, disclosed this during the “Federal Inland Revenue Service Special Day” at the ongoing Lagos International Trade Fair held at Tafawa Balewa Square.

Represented by Mrs Angel Fadahunsi, FIRS South West Head, Federal Engagement and Enlightenment Tax Team, Fowler expressed optimism that the service would meet up with its 2018 revenue target before the end of the year.

“I am pleased to inform you today that the FIRS has recorded remarkable performance in terms of revenue collection this year.

“For instance, as at October 31st, our collection was N4.3 trillion and we believe we have the potential to meet our assigned target at the end of the year.

“We realised that this performance would not have been possible but for the present administration’s policy of expanding the nation’s tax base and blocking revenue leakages,” he said.

Fowler said that the agency focused its attention on businesses with over a billion naira in annual turnover without any record of commensurate payment of tax obligations to boost its revenue performance.

He noted that about 6000 of such companies had been identified and contacted by the service leveraging on various data sources.

” We will continue to focus on recovering all such revenues due to the Federal Government and the people of Nigeria.

” We encourage the business community and all well-meaning citizens to continue to partner with us to ensure that defaulters are traced and face the consequences while compliant businesses receive all the support they require,” he said.

Fowler said the agency was working assiduously in ensuring that it aligned with all efforts to grow national revenue from taxation while easing the inherent administrative burdens.

“We place emphasis on human resources as one of several tools to achieve our aim of expanding the tax net.

” This is why we recently recruited young Nigerians to support our bid to effectively provide adequate services to all the nooks and crannies of the country,” Fowler said.

The FIRS boss said the service had undertaken some actions to further reduce the burden of taxation, including the  review and approval of National Tax Policy by the Federal Executive Council.

“This provides strategic direction on tax administration and national focus.

“Another thing is working under the auspices of the Joint Tax Board, we continue to advocate for the simplification, harmonization and streamlining of processes, levies and taxes at the state and local government levels,” he said.

Earlier, Babatunde Ruwase, President, Lagos Chamber of Commerce and Industry (LCCI), urged FIRS to expedite action to address issues of multiple taxes toward easing the business environment.

The News Agency of Nigeria (NAN) reports that the Lagos International Trade Fair, organised by LCCI, started on Nov.2 and will end on Nov 11.

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FIRS Rakes About N13bn From Defaulters

The Federal Inland Revenue Service (FIRS), says it has collected N12.66 billion in tax revenue, in less than a month from defaulting taxpayers.

The Executive Chairman, FIRS, Mr Tunde Fowler, disclosed this at the weekend when he received the new Minister of Finance, Zainab Ahmed at the FIRS headquarters in Abuja.

Mr Fowler said the initiative was aimed at ascertaining those companies that are compliant with the Tax Laws and those that are not compliant.

Responding, Mrs Zainab Ahmed who is overseeing the ministry of Finance, said the ministry would continue to collaborate with FIRS to increase tax revenue.

She noted that FIRS should do more on revenue drive and collection to support the government’s projects.

The Minister encouraged government agencies to work together to fish out all corrupt persons in the country, as directed by President Muhammadu Buhari.

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FIRS To Commence Audit Of Taxpayers Nationwide – Fowler

Executive Chairman, Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, Thursday, said that the Service would soon commence an audit of taxpayers across the country.

Fowler stated this in Lagos while delivering a keynote address at a stakeholders’ meeting on “Tax Administration and National Revenue”.

The stakeholders’ meeting was aimed at charting the way forward for the country’s tax administration and proffering solutions to the challenges hindering a robust tax regime.

He said that the nationwide audit would ensure improved tax revenue collection, better service delivery to taxpayers and enhanced voluntary compliance, while urging stakeholders to support efforts at repositioning the country’s tax administration system.

Fowler, who is also the Chairman of the Joint Tax Board (JTB), said that the board was determined to improve services to taxpayers at all levels.

According to him, a consolidated Taxpayer Identification Number (TIN) database was already in place under the JTB, adding that all tax laws that were not in the interest of the taxpayers were already undergoing a review process.

The FIRS boss added that taxpayers and stakeholders should support tax authorities in the interest of national development.

“The greatest challenge facing any tax administration is achieving and maintaining a high degree of self- assessment and voluntary compliance by taxpayers.

Studies, however, show that the extent to which an economy is able to grow sustainably and develop depends to a large extent on its ability to generate tax revenue to finance its expenditure and the efficiency of tax system.

“The questions that arise from these simple statements include how to identify areas of non-compliance; how to measure the level of non-compliance; and how to address non-compliance,’’ Fowler said. He further explained that FIRS had put in place various strategies to curtail non-compliance to improve tax revenue collection on a sustainable basis.

“Well-designed taxpayer services, education programmes, and creative measures can facilitate self-assessment and compliance,’’ Fowler said.

According to him, the major determinants of tax compliance include changes in law, taxpayers’ attitudes to payment of right taxes and tax consultants’ offering the right advice to the taxpaying public.

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