FIRS Hopes to Raise Tax Revenue by 57% to N19.4trn

By Adedapo Adesanya

The Federal Inland Revenue Service (FIRS) has revealed plans to significantly increase its tax revenue collection by 57 per cent to N19.4 trillion, according to a document quoted by Bloomberg.

The agency said it hopes to increase its oil revenues to N9.96 trillion with non-oil tax revenue at N9.45 trillion.

To achieve this, the FIRS plans to enhance efficiency and tax compliance by restructuring its organizational framework to prioritize taxpayers and implementing additional automation measures for tax collection, as outlined in the document.

It also plans to carry out internal reallocation from oil to non-oil sectors.

The organisation said it intends to “carry out internal reallocation from oil to non-oil, given that the budget oil revenue for 2024 was increased by 214 per cent compared to 2023 actual, while non-oil was increased by only 3 per cent.”

President Bola Tinubu last year instituted reforms aimed at increasing revenues accruing to the government’s coffers.

However, the President has always made it known that he hopes to tax the “seed” but the fruits.

In July, President Tinubu appointed Mr Taiwo Oyedele, the former tax head at PricewaterhouseCooper (PwC) as the chair of the Presidential Committee on Fiscal Policy and Tax Reforms.

The committee comprised representatives from both the public and private sectors, along with civil society groups and students.

The tax reform group was tasked with addressing issues of multiple taxes in the system and enhancing revenue collection efficiency, ensuring transparent reporting, and promoting the effective utilisation of tax and other revenues to boost citizens’ tax morale, foster a healthy tax culture, and drive voluntary compliance.

The Committee in October 2023 produced its Quick-win report which President Tinubu has ordered the implementation across MDAs.

Nigeria has a tax-to-gross domestic product (GDP) ratio of 10.8 per cent; comparatively, the average tax-to-GDP ratio for Africa is about 18 per cent.

The objectives included achieving a commendable tax-to-GDP ratio of 18 per cent in the next three years, reducing multiple taxation and tax evasion, and promoting a robust tax culture.

According to Mr Oyedele, this is the basis for the target of 18 per cent and the estimated tax gap of N20 trillion.

In the first six months of 2023, the FIRS collected tax revenue of N5.5 trillion which was a record for a half year and puts the agency in a position to surpass its N10.1 trillion collection for 2022.