Fowler Denies Calling for 50% Increase in VAT

By Modupe Gbadeyanka

Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, has refuted reports in the media that he called for an increase in the rate charged for Value Added Tax (VAT) by 50 percent.

The tax chief was quoted as informing the Senate Committee on Finance on Tuesday that there would be a hike in the VAT rate before the end of this year.

But in a statement on Wednesday, Mr Fowler said nothing of such ever came out of his mouth, but instead, he supported reduction in the Companies Income Tax (CIT) rate for small businesses operating in the country.

FIRS said in the statement that though the Executive Chairman “indicated that there should be an increase in VAT rate by the end of the year, he NEVER, for once suggested a 50 percent hike of any percentage increase at all.”

“Rather, he promised improved collection in CIT, Petroleum Profits Tax, PPT and VAT in 2019 relative to the collection performance of the Service in 2018.”

In 2018, FIRS collected the sum of N1.1 trillion in VAT N1.42 trillion in Companies Income Tax (CIT) and N2.4 trillion in Petroleum Profits Tax (PPT).

But in a transcript of Mr Fowler’s meeting with the Senate Committee released by FIRS, when asked if he would support an increase in VAT, responded that, “In terms of VAT, the service has increased VAT collection over the last three years by over 25 percent.

“In terms of whether there should be an increase. I believe there should be an increase.

“One issue about taxation is that it should be fair to all. We have discovered after the VAIDS (Voluntary Assets and Income Declaration Scheme) that a high percentage of businesses are collecting VAT and not remitting. We’ve also tried to address this issue.

“We’ve issued new VAT certificates. We have appealed to the public that if they are charged VAT and they are not sure it had been remitted they should contact us. We even gave a small promotion that for every 25 names, that they give to us, we give them a little gift either a power bank or something to show appreciation.

“But that aside, we are also on the streets. We have a team called FEETT, Federal Engagement and Enlightenment Tax Teams, going around to confirm that they (businesses) are registered for VAT. And I believe with the substitution of over 50,000 bank accounts that we just started this week, I am sure that those businesses that have been collecting VAT and not remitting the same or not remitting any tax payment, are beginning to ensure that the level of tax compliance thus improve. And I believe that by the end of this year, government and Nigerian people should be ready for an increase in VAT.

“A lot of Nigerians travel to Ghana and other West African countries and they can see that the VAT is much higher and they pay when they go for those trips. I’m sure that as the economy improves and as we continue to let them know that there will be an increase in VAT and they should be ready for it.

“In terms of the challenge of N3 trillion, it is very challenging. But I can certainly see an increase in VAT of at least 35 to 50 percent this year, based on the enforcement activities. There will certainly be an increase in CIT (Companies Income Tax and also on PPT (Petroleum Profits Tax),

“Like I said earlier on, we have received directives that we can now hook on to some government agencies to make sure that the taxes especially in the oil sector, and also the Legacy Debts… that we should come up with an agreement so that the debts are paid over a 10-year period.

“And I am sure with the arrears and the current taxes, we will certainly give the N3 trillion the best of our abilities.”