Evidently, Mr Mohammed Nami the current Executive Chairman of the Federal Inland Revenue Service (FIRS), was very tired of the seemingly inefficiency of the Service that he unlesh his prowess to changing the narrative immediately he resumed office.
Today, his apparent reform objectives have tremendously led to efficient service delivery as well as an enviable tax administration in FIRS.
Clearly, the cardinal objectives of his administration are: Rebuilding FIRS institutional framework; Collaboration with stakeholders; Making FIRS a Customer-centric institution and Making FIRS a Data-centric institution.
These however correlate with the three core areas of a tax system, which are, tax laws, tax policy and tax administration.
Stakeholders opined that a tax system works better by having a robust rapprochement with all, a properly nurtured and sustained customer-centric sentiment and a bias for data analysis and utilisation.
The sources added that all of these can blend well within the framework of a properly positioned and structured corporate institution under Mr. Nami.
According to popular opinion, the range of initiatives and reforms Mr.Nami has implemented at the Organisation speak of him as a focused and devoted tax administrator and a team player, who understands how to harness human and financial resources to improve the country’s tax system.
The Management, realising the strategic importance of a tax system to the nation’s economy immediately mapped out strategies on how to reposition the FIRS for greater service delivery.
Obviously, Mr Nami’s leadership of the Service have perfected strategies that are strengthening tax system in Nigeria. These strategies covered the three core areas of a tax system: tax laws, tax policy and tax administration.
On the tax law, as of the date Nami assumed office, the 2019 Finance Bill was already in the works but had only been passed by the House of Representatives. Through concerted efforts by the new Management, the Senate passed the Bill on 11th December 2019 and presidential assent was given on 13th January 2020 and the Finance Act 2019 came into effect, setting the tone for several other reform initiatives by the Nami-led FIRS.
The Finance Act 2019 was a wholesale amendment to seven different tax legislations namely: the Companies Income Tax Act, Value Added Tax Act, Capital Gains Tax Act, Stamp Duties Act, Customs and Excise Tariff Act, Petroleum Profits Tax Act and Personal Income Tax Act.
The beneficiaries of reforms are small and medium businesses due to the Companies Income Tax Act (amendment). Specifically, the amendment divides companies into three categories for taxation. These are small, medium and big companies.
Companies with an annual turnover of less than 25 million naira (small companies) are exempted from payment of corporate tax. Companies with an annual turnover of between ₦25 million and ₦100 million (medium companies) are taxable at 20% of assessable profits. Companies with an annual turnover of ₦100 million and above (big companies) remain taxable at the rate of 30% of assessable profits.
This reform intervention recognises that small and medium businesses are the main drivers of job creation and economic growth. The reform is therefore aimed at reducing operational cost, encouraging recapitalisation and business expansion by small and medium companies.
In addition to clarifying certain ambiguous provisions of the VAT Act, the amendment increased the rate of VAT from 5% to 7.5%. The concomitant reduction in Corporate Tax rates on one hand and an increase in the rate of Value-Added Tax, on the other hand, is consistent with the National Tax Policy which aims at a gradual shift from direct to indirect taxes.
The guiding principle behind this stipulation in the National Tax Policy is that indirect taxes potentially offer higher yield while remaining cheaper to administer than direct taxes.
Within the Year 2020 and as a follow-up measure to strengthening the legal framework, a Committee was constituted to further review all relevant tax laws. As a result of the Committee’s work, Draft Bills with amendments to the Federal Inland Revenue Service Establishment Act, the Value Added Tax Act and the Finance Act 2019 were prepared and submitted to the National Assembly (NASS) for further review.
In addition, within the same year, 13 information Circulars were also developed and released as follows: Taxation of Non-residents in Nigeria, Taxation of seafarers onshore and offshore platform workers, Taxation of companies involved in shipping, air transport and cable undertakings, Taxation of Real Estate Investment companies, Guidelines for filing income tax returns by foreign companies.
Circular on clarification for taxation of insurance companies, Circular on clarification on commencement and cessation of business and business reorganisation, Circular on tax implication of the operation or regulated securities lending transaction, Circular on stamp duties, Circular on value-added tax, Clarification on sundry provisions of the Finance Act 2019 as it relates to CITAGuidelines on the tax treatment of section 27(C) of Companies Income Tax Act (CITA) on the deductibility of Foreign Tax Framework for the implementation of the country-by-country reporting in Nigeria.
On the Squabble among tax bodies in Nigeria, since 2004, some professional bodies in taxation and economy remained at loggerheads over areas of influence. This squabble took its toll on the economy because where there is no peace and unity, there is no progress. In May, 2021, Nami, a pragmatic administrator who has the progress of these bodies at heart put a machinery in motion which finally resolved the issue. The professional bodies are the Institute of Chartered Accountants of Nigeria (ICAN), the Chartered Institute of Taxation of Nigeria (CITN) and the Association of National Accountants of Nigeria (ANAN).
He said: “following the disagreement and various court disputes since 2004 to date, between ICAN, ANAN and CITN on issue of Tax practice, it became necessary that FIRS under my leadership should intervene by inviting the three sister professional bodies for amicable resolution.”
The FIRS facilitated signing of a memorandum of association which was meant to provide an atmosphere in which the bodies could operate seamlessly “to support what FIRS does and also contribute to the improvement of the Country’s position on the ease of doing business index”.
That was the very first time, ICAN, CITN and ANAN came together on one platform to affix their respective hands and seals to a document and affirmed their commitment to the growth and development of tax administration, compliance and practice in Nigeria.
As at 30th November 2021, the Service had collected over 5.03 trillion Naira, being 85% of the national tax target. It projects to meet and even overshoot its target by 31st December 2021.