Mohammed Nami, the chairman of Federal Inland Revenue Service, FIRS, on Monday, March 9, 2020, said some ministries, departments, and agencies, MDAs, could not pay the new 7.5 Value Added Tax, VAT.
The reason, he said, was they awarded contracts on the old 5 percent VAT.
Nami made the revelation at a meeting with members of the Finance Committee of the House of Representatives.
He also disclosed that many business premises in the country were resisting the efforts of the Service to install a central server to monitor their transactions.
He, however, said an executive bill was underway to encourage the deployment of appropriate technology to generate government revenues.
The chairman also accused some multinational companies in the country of evading taxes by hiding under the cloak of pioneer status to get tax exemption for a period of five years, as against the lawful three years.
Consequently, Nami appealed for the help of the National Assembly to amend the laws dealing with pioneer status for companies.
Nami, however, stated that one of the reasons for the low percentage of revenue was the poor remuneration of some private companies recruited by FIRS to help collect revenue on its behalf.
He explained that the one percent entitlement may not be enough for them to offset their expenses.
As a result of this, he said, some of the tax consultants resort to underhand dealings, negotiating with taxpayers on reducing their declaration to get more money.
He disclosed that the Service was working on taxing companies with a significant economic presence in the country that are currently not paying taxes, such as Google, Ali Baba, among others, through which internet businesses are being carried out.
Still, on VAT from e-commerce, Nami added that the contention had always been that they don’t have their operational base in the country and so don’t have to pay tax. On account of that, Nami said FIRS is deploying technology to get the e-commerce sector involved in the payment of tax, saying this will take of care tax evasion by some multinationals.
On the stamp duty collections, the chairman lauded the Finance Act, saying it has given FIRS the express power to collect stamp duty.
His words: “When you make a transfer of money above N10,000 to somebody, the 50 kobo stamp duty is deducted. But this money does not drop into government account as it ought to. These monies are being kept by the bank.
“What we are working on right now is to ensure that the stamp duty drops into the government’s account immediately. That is the practice across the world.”
Nami said on assumption of duty, he discovered that about 1,139 staff were recruited and posted to tax offices across the country to administer tax matters without adequate training, adding that “some of these people are graduates of engineering, law, and other disciplines.
“They are not graduates of taxation. But they were posted to administer tax for the government. We have begun the process of training these people in tax administration as a way of improving our operations.”
He said as a result of the clause in the Finance Act, which exempt companies below the threshold from paying Value Added Tax, VAT, some companies have started devising means of evading payment of VAT, by claiming that their capital base is less than N25 million.
He said if FIRS is able to connect businesses in the e-commerce concept, it will be able to generate huge resources for the government through VAT.
Nami disclosed that transfer analysis carried out by FIRS indicates that in 2019 alone, about 613 trillion transactions were carried out by Nigerians, pointing out that they are currently analyzing the transactions to determine the number that qualified for the 50 kobo stamp duty.
He expressed confidence that between 30 to 40 percent of the total transaction will qualify for the payment of the 50 kobo stamp duty, adding that the stamp duty warehoused in the Central Bank stood at about N45 billion.
