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The Executive Chairman, Federal Inland Revenue Service, Dr. Zaach Adedeji has restated the commitment of the organization towards implementing customer-centric approach for ii.mproved tax compliance and improved revenue while emphasizing the importance of tax to the economic growth and development of the country.
According to Dr. Zaach Adedeji who spoke at the LCCI- FIRS organized private sector stakeholders engagement in Lagos on Wednesday maintained that t is crucial to understand the evolving landscape of taxation and its implication for our country’s growth and development.
Adedeji who was represented at the event by Acting Director, Medium Taxpayers Department –South, Mrs Oti Olaniyi, explained hat the FIRS is tasked with the collection, assessment, accounting and enforcement of various taxes, including Corporate Income Tax (CIT), Value Added Tax (VAT), Petroleum Profit Tax (PPT), Capital Gains Tax (CGT), and Education Tax (EDT), among others.
These revenues the FIRS boss further explained are deposited into the Federation Account and are distributed monthly to the three tiers of government according to a set formula.
He noted that the Value Added Tax (VAT) follows a distinct sharing ratio of 15 per cent to the Federal Government, 50 per cent to the States, and 35 per cent to the Local Governments.
Adedeji said; “In line with today’s discourse, let me start by putting forward two significant developments in the taxation landscape:
• The recent organizational restructuring of the Federal Inland Revenue Service (FIRS) and;
• Some of the latest tax reforms.
First, let’s discuss the FIRS restructuring. On the EC’s assumptions of office on 18th of September 2023, he saw the need to unveil a new FIRS which intends to drive the customer focus service delivery based on people, technology and process as well as harmonized tax services.
” This reorganization represents a strategic shift towards attaining a customer-centric organizational structure aiming to systematically address challenges and ensure pragmatic reforms applicable to the Service’s complex realities.
” By streamlining operations and decentralizing key functions, the FIRS aims to address long-standing challenges and improve its responsiveness to taxpayer needs. “This restructuring is not just an administrative change; it’s a step towards creating a more agile and accountable institution that can better support Nigeria’s economic growth and development.
• New Mission and Vision Statements to better align with our goals.
• Creation of three (3) operational groups from the previous GTOG – Small (Emerging Tax), Medium and Large Tax Groups to better cater for taxpayer needs according to their income threshold.
• Creation of One-Stop-Shop: Both Tax Office and Tax Audit functions within an Integrated Department, as well ensuring that matters relating to all taxes are handled in the tax office (no more VAT Coordination, Stamp Duty Office etc) to forestall harassment of taxpayers by multiple function.
” The FIRS is committed to a customer-centric approach aimed at enhancing voluntary compliance and boosting revenue generation. Ensuring tax compliance benefits both businesses and the government. When businesses meet their tax obligations, it translates into increased revenue for the government, which is essential for funding public services and infrastructure development, ultimately driving economic growth and societal well-being.
” Another key area of reform involves leveraging technology to strengthen tax administration. The FIRS has developed a platform called Taxpro Max, which allows taxpayers to file returns and access various tax services online. Our suite of e-services—including e-filing, e-reporting, e-registration, and e-TCC—demonstrates our commitment to facilitating easy and efficient tax management. Additionally, we have established a robust data management division to ensure accurate assessments and strategic planning, leveraging data analytics to enhance our tax administration.
He insisted that Tax education and public awareness were vital for fostering a culture of tax compliance. adding that taxpayer education campaigns help citizens understand their tax obligations and the benefits of tax revenue.
“Initiatives like our monthly Tax Thursdays and sensitization exercises in schools aim to enhance public understanding of tax.
Explaining further, he disclosed that the newly established FIRS contact centre ensures that taxpayer inquiries and complaints are addressed promptly, within 48 hours.
” Nigeria is at a crucial juncture in its economic evolution. Our tax system, a foundational element of economic policy, is undergoing significant reforms. These changes are driven by the need for increased revenue, better compliance, and more equitable economic practices. These reforms are essential to meet with emerging tax issues and also commensurate with the fiscal tax reforms being handled by the Presidential Fiscal Policy and Tax Reforms Committee. Historically, our tax revenue has not kept pace with the needs of our expanding population and infrastructure demands. Our heavy reliance on oil revenues has highlighted the need for diversification. “Thus, modernizing our tax system to address current economic challenges is crucial.
The recent changes in the tax landscape are designed to simplify the tax system, broaden the tax base, and ensure a fairer distribution of tax responsibilities.
Key reforms Adedeji added ,include:
• Finance Acts
The rise of the digital economy presents a significant challenge to traditional tax frameworks. To address this, Nigeria has implemented new tax policies targeting digital platforms, including the Finance Act’s provisions on VAT for digital services. This is a crucial step in ensuring that global tech companies and entities which provide services to remotely contribute fairly to our economy.”, he said.
According to FIRS boss Deduction at Source (Withholding) regulations 2024.
The Withholding Tax (WHT) was designed to provide government with regular revenue flow and serve as a means of cutting tax evasion.
He said however, over the years as the regime expanded with more transactions, various ambiguities and complications crept in and to
address these complexities in the 2024 Regulation, came the introduction of a simplified and business friendly tax regime on advanced payment of tax on specified transaction.
He said ; ” the changes includes exemption of small businesses from withholding tax compliance, reduced rates for businesses with low margin, exemptions for manufacturers and producers in farming and other measures to curb evasions and minimize tax avoidance.
“Tax incentives are crucial for encouraging investment and economic growth. Nigeria has introduced several incentives to attract foreign investment and support local industries. For instance, the Ministry of Finance (MoF) released a Circular on fiscal incentives for the gas sector. This Circular is in line with the Presidential Gas for Growth Initiative which aims to improve the investment climate in Nigeria and to increase the utilisation and supply of gas in the domestic market. To this end, a zero percent VAT rate is now applied on Feed Gas for all processed gas, Compressed Natural Gas (CNG), Imported Liquefied petroleum gas (LPG), LPG and CNG equipment components, conversion and installation services and all equipment relating to the expansion of CNG and LPG, including conversion kits.”.