What achievements have been made under your watch in the first 100 days as the helmsman at the FIRS?
We have achieved a lot since we came on board. We had the daunting task of piecing together the pieces. This is not an easy task considering the fact that FIRS is a large organisation with about 10,000 staff and I am new to both the environment and the staff. In addition to this, some of the e-platforms on which the operations of the Service depend have one issue or the other which required fixing. So far, we've been able to cobble together the structure and fixed some e-platforms and introduced automation solutions to drive the revenue collection process. Since my appointment, we have been trying to rebuild the system and the confidence of the staff in the operations of the Service. In addition to all these, we have fast tracked the issuance of TCCs through the window we provided in January. We also lifted the lien placed on taxpayers Bank accounts by the erstwhile management. These are all geared towards easing payment of taxes as well as creating conducive environment for ease of doing business. We have also put measures in motion to introduce other e-platforms as a way of ensuring efficient service delivery. In line with this too we have opened new audit offices, segmented tax returns filing, organized stakeholder sensitization programs. So we're doing a lot of groundwork to improve our collections in the coming months.
The Federal Government has set a tax collection target of N8.5tn for the Federal Inland Revenue Service in the 2020 fiscal period. What measures are you carrying out to restructure operations in order to meet this target and reduce the budget deficit?
We are determined to meet this target to help the three tiers of government fund their 2020 budgets. We will scale the huddles by doubling up our efforts to collect all taxes due to the Federal Government even though we are aware that the Purchasing Parity of Nigerians is dwindling right now and that people are generally reluctant to pay taxes. The tax culture in Nigeria at the moment is not encouraging. We are going to work on that too as we move along. We will apply some level of diligence in collecting taxes particularly indirect taxes like VAT and the Stamp Duty which the Finance Act 2019 gives us the right to collect. Through this, we are confident that FIRS would be able to generate enough revenue for the government to fund its 2020 budgetary provisions (particularly the budget deficit) and make good its promise of providing key infrastructures, social amenities, fight insecurity, and stop further borrowing.
The Finance Act 2019 was signed into law and came into operation on February 1, 2020. What benefits does the Finance Act offer to the individual taxpayer and businesses in terms of tariffs or tax palliatives?
The Finance Act is an instrument that is meant to strengthen taxation system in Nigeria and that it is not yet a perfect document. Having said that, the Act contains a number of important palliatives especially for the small businesses. One of these is the exemption of companies whose turnover is less than N25 million from payment of Company Income Tax but they must file tax returns. Also, the Act stipulates a reduced Company Income tax of 20% for companies whose turnover is from N25 million to N100 million. Again, the Act provides that early payment of tax attracts a bonus of 2% of tax payable for medium size companies and 1% for bigger companies. Minimum tax computation has also been amended to 0.5% of gross turnover. And bank transfer of N10000 and above is now to attract stamp duty.
While there has been a certain level of misunderstanding with regards to Stamp Duties in the past, could you provide us with a background and your view on the importance of Stamp Duties to the Nation?
Stamp Duty relates to matters executed between a company and an individual, group or body of individuals. It is a tax on legal documents, deeds of agreements and contracts, electronic transfers, and electronic receipts on transactions in the region of N10,000 and above or transfers in like sum from one Current Account to another Current Account. The position of the law on Stamp Duty as at today is that it is the responsibility of the FIRS to collect Stamp Duty on behalf of the Federal Government. Since 1939 the Federal Board of Inland Revenue (FBIR), which transformed to FIRS in 1958, had been collecting stamp duty. Similarly, the recently gazetted Finance Act 2019 has amended s.4(1) of the Stamp Duty Act contained in S.(8) of the Law of the Federation of Nigeria 2004 to give the FIRS the sole right of collecting Stamp Duty on behalf of the Federal Government. Therefore, the Stamp Duty is one key tax we intend to focus on going forward. We are going to be diligent in collecting Stamp Duty as applicable under extant laws. We are very determined to make sure that all collecting agents of Stamp Duty, that is, the Money Deposit Banks and MDAs, remit it promptly to the FIRS account with the Central Bank. In addition, the collection of Stamp duties is of high importance since we are upbeat that revenue collection from it can rescue the economy from a possible downward slide. It has the potential to yield tax revenue in trillions of naira. Presently, there are claims from many quarters that if the records of stamp duty on chargeable transactions as far back as the year 2000 are revisited as much as N20 trillion unremitted stamp duty revenue are due from agencies charged with collecting it on behalf of the Federal Government. This is more than double the year 2020 budget of the Federal Government. Again, from the initial analysis carried out by us regarding chargeable transactions in the banking sector, we discovered that in 2019 alone the total volume of transactions was over N52 billion. And that the total value of these transactions was over N613 trillion. We are currently carrying out analysis of these transactions to determine the actual chargeable transaction.
Given that the FIRS has the sole right to collect the Stamp Duty, what measures are you carrying out to harness the potential that it has on revenue generation at the FIRS?
We have commenced solid arrangements to make Stamp Duty the goose that lays the golden egg for the Federal Government in order to shore up its revenue base. To achieve this, I recently met with the chief executive officers (CEOs) of banks in Lagos to enlist their support to achieve 100% compliance in stamp duty collection through the use of automation solutions now being rolled out by FIRS. At present, we are working with relevant stakeholders to develop a workable remittance solution that will effectively block leakages and bring in more stamp duty revenue to the government. In due course, we would be deploying cutting-edge technology to drive the process of Stamp Duty collection. Relevant bodies and stakeholders have already been put on notice to support and comply with the process that we have put in place to actualize this objective. Every stakeholder is urged to be fully prepared and ready to adopt the new compliance program we are rolling out. With this, I can say without mincing words that the Federal Government did not make any mistake in entrusting stamp duty collection to the FIRS. In the months and years to come this capacity would be demonstrated in the use of the Stamp Duty as a flagship tax to rescue the economy from the looming downward slide.