FIRS cracks down on 700,000 firms over tax evasion

The Executi2016_09_23_21507ve Chairman of the Federal Inland Reve­nue Service (FIRS), Tunde Fowler has disclosed that the ser­vice has hunted down 700,000 firms that have never paid taxes to the government.

Fowler in an interview with Re­uters said he also expected 10 mil­lion individuals to be discovered by December and made to pay tax­es for the first time.

The Federal Government is in search of additional revenue to fund its record N6.06 trillion ($18.6 billion) 2016 budget that aims to stimulate growth by tri­pling capital expenditure.

The FIRS has a target of raising N4.95 trillion in taxes, up from N3.73 trillion last year.

The country is currently in re­cession with inflation running at 17.6 percent.

Persuading Nigerians to pay tax is no easy task and FIRS does not appear to be on track to meet its target for tax collection so far this year, but experts believe it can do better in future.

“We collected a little over 2.3 trillion, so far – from January to 31 August. It is almost at par with last year but take into consider­ation that the economy is going through a little slowdown,” said Fowler.

He said revenue from value-added tax (VAT) had increased by 25 percent year-on-year and corporate income tax held steady over the same period but petro­leum profit tax was expected to have halved, mainly due to low oil prices.

Fowler, appointed last year after a stint as tax chief in Lagos where monthly tax revenues surged by 70 percent in the four years to De­cember 2012, said FIRS expects to generate N5.2 trillion in 2017.

The tax chief said a new unit created at the start of the year had deployed inspectors armed with laptops to update databases, reg­istering businesses and individu­als who are then tracked to check whether they have paid taxes — business executives say they get “aggressive” visits from tax in­spectors.

“We have been able to add about 700,000 companies and we expect to add about 10 million individu­als across the nation (by Decem­ber),” said Fowler, adding that this would bring the total of registered individuals to 20 million.

John Ashbourne, Africa analyst at Capital Economics, said Fowl­er’s target of doubling the num­ber of tax payers was “ambitious” and would be hard to achieve in a country where “paperwork is of­ten lacking”.

But he said the projections for 2017 were “quite achievable”. “Revenue will almost certainly be much, much higher next year, but this is primarily due to the devalu­ation of the naira, which has boost­ed the local-terms value of each oil barrel that is exported,” he said.

Even a doubling of the number of individuals paying taxes in Af­rica’s most populous nation of 180 million inhabitants, where 80 per­cent of the workforce is employed in the informal sector, leaves FIRS with an uphill struggle.

“From our estimates, we expect that we have 60 million individu­als who should pay some form or level of tax,” said Fowler.

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