The Federal Inland Revenue Service (FIRS) plans to generate about N750 billion from about 55,000 millionaire tax debtors. This target will be achieved with the bank accounts substitution exercise.
Amount collected so far: The FIRS Executive Chairman, Tunde Fowler, said the service has already collected N24 billion from about 500 individuals who approached FIRS to make payment. The target of N750 million is scheduled for the middle of the year.
According to Fowler, the recent substitution exercise carried out by the service had led to the recovery of N23.25 billion.
“From the bank accounts substitution exercise, we used banking information to bring non-compliant taxpayers with N1bn and above turnover to comply. It has so far resulted in the recovery of N23.35bn.
“The exercise has been extended to cover those with a turnover of N100m and above.
“To date about 500 of them have come forward and they have paid and we have collected in the region of about N24bn.
“We believe we should be able to go through the 55,000 before the middle of this year.
“In terms of estimates, which we should be able to generate from this exercise alone, that will be about N750bn.” fowler said.
FIRS broadening VAT collection
During the hearing with the House of Representatives’ committees, Fowler disclosed that the FIRS is looking to widen the scope of its VAT collection. The tax regulator will broaden the scope by adopting States Accountants-General collection platform among other initiatives.
“You look at Africa as a continent, Nigeria still has the lowest VAT rate. When we look at the items that are not VATable, basic food is not VATable, medicals, education.
“But if you decide and you have the ability to go to a restaurant to eat and drink the same thing you can buy in the open market, then you pay VAT.
“So, VAT basically is a consumption tax and those who choose not to go to the open market to buy their food and cook at home are subject to VAT.
“VAT is not a hardship on the low-income earners because, normally, they don’t even go to hotels when their wives can cook at home and they can have something very nice.”
Fowler argues VAT enables completion of projects
In his address, Fowler said the collection of taxes by FIRS go a long way in the execution of Government projects.
“Eighty-five per cent of VAT goes to state governments, which are supposed to be closer to the people.
“They can use that money as approved by their state houses of assembly. We had an increase of about 32 per cent from N4.02tn in 2017 to N5.3tn in 2018.
“At the federal level, clearly we can see all the projects that are being completed, based on the available funds at the federal level,” he said.
Why FIRS initiated income tax on property owners in Abuja and Lagos
The drive to deepen tax revenue collection, expand the tax net and increase the revenue base encouraged the idea of the FIRS to initiate income tax on property owners in Abuja and Lagos.
“This project which initially targeted property owners in Abuja and Lagos has so far yielded N4.3bn and is being extended to other locations.
“In this regard, Oyo and Kaduna states have commenced. It is important to note that this is not a property tax, but the use of the provisions of the law to bring into the tax net companies that own properties but failed to file necessary tax returns and pay appropriate taxes due,’’ Fowler explained.
Meanwhile, the FIRS and the Economic and Financial Crimes Commission (EFCC) Joint Tax Force which was introduced in 2018 to enhance the fight against tax-related economic fraud has recovered N6.94bn and $278,430 as of December 2018.