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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