FIRS Will Become Sole Collector of Taxes in Nigeria—Oyedele

By Adedapo Adesanya

The Nigerian government revealed that the Federal Inland Revenue Service (FIRS) would become the sole collector of all taxes in the country, eliminating that functionality from other agencies like the Nigerian Customs Service (NCS) and the Nigerian Communications Commission (NCC).

This was disclosed by Mr Taiwo Oyedele, the head of the Presidential Committee on Tax Policy and Fiscal Reforms, in an interview with Channels TV on Wednesday.

He said this means customs can now focus on trade facilitation and border protection, and NCC on regulating telecommunications as they are not set up to collect revenue.

In the interview, Mr Oyedele noted that Nigeria’s revenue from taxes is one of the lowest in the world.

“Ironically, our cost of collection is one of the highest. And the reason for that is that we’ve got all manners of agencies. The Federal Government alone we have 63 MDAs that were given revenue targets last year in the 2023 budget.

“And two things that would come up from that: on the one hand, these agencies are being distracted from doing their primary function, which is to facilitate the economy. Number two, they were not set up to collect revenue, so they won’t be able to collect revenue efficiently.

“So, move those revenue collection functions to the FIRS. It has two advantages: the cost of collection and efficiency will improve, these guys will focus on their work, and the economy will benefit as a result,” he said.

Mr Oyedele noted that this means these agencies will focus on service delivery and less on raising revenue.

“If you are customs, focus on trade facilitation, and border protection, and if you are NCC, just regulate telecommunications. You are not set up to collect revenue.

“It can be your revenue, and someone else can collect it for you. There will be more transparency because you will see what is being collected and is accounted for properly. It is also a way of holding ourselves to account as to how we spend the money we collect from the people,” the tax expert stated.

He added that he expects pushback from stakeholders and others benefitting from the process, but the committees would stick to its sole objective and added the presidential committee would look into excess bank charges.

He also pointed out that Nigeria has a significant tax gap estimated in the region of N20 trillion, urging that we need to focus more on the few major taxes – Value Added Tax, Corporate Income Tax, and Personal Income Tax.

“A lot of people are not (tax) compliant, particularly the middle class and the elite, some of them are in the tax net with one or two fingers, you pay a thousand naira as tax when you should have paid N10 million,” he said.

“In fact, we plan to repeal many of the taxes that currently make doing business difficult without introducing new ones and yet collect more,” he further disclosed.

Last month, President Bola Tinubu approved the establishment of a Presidential Committee on Fiscal Policy and Tax Reforms, and on Tuesday, he inaugurated the team, tasking them to break the cycle of overreliance on borrowing for public spending that results in the burden of debt servicing.

He also said that the Federal Government was moving towards achieving an 18 per cent Tax-to-GDP ratio within three years.

The President directed the committee to achieve its one-year mandate, which is divided into three main areas: fiscal governance, tax reforms, and growth facilitation.