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90% of 1.2m registered FCT taxpayers evade tax, says revenue service

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Ninety percent of registered Taxpayers in the Federal Capital Territory do not file tax returns and consequently evade tax, the FCT Inland Revenue Service (IRS) disclosed on Tuesday.

Haruna Abdullahi, acting executive chairman, FCT-IRS disclosed this at a Tax Seminar organised by the Service with the theme “Reviving the Culture of Filing Tax Returns” which held in Abuja.

The executive chairman, informed that the Service have so far registered and issued over 1,200,000 million Taxpayer Identification Numbers (TIN), explaining that this number is an increase from about 10,000 which it inherited when it began operations.

But out of this registered Taxpayers, Abdullahi explained that residents who pay tax include 120,000 residents under the Pay As You Earn (PAYE) Scheme with half the figure comprising staff of federal government Ministries, Departments and Agencies (MDAs) on the Integrated Payroll and Personnel information system (IPPIS) and those working for the FCT Administration and the Area 1; while those remitting outside the Scheme remained in the region of 4,000 with a significant percentage of stop filers.

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“This implies that 90 percent of the FCT residents registered for TAX do not file their tax returns; meaning only 10 percent of the registered Taxpayers file their tax returns. It is instructive to note that residents of the city have continued to file and pay taxes largely when they want to transact business with the authorities,” he said.

The executive chairman further informed when the Service took over tax administration in the FCT from the Federal Inland Revenue Service (FIRS), the highest amount collected was about N48 billion. In 2021, he said the Service collected over N100 billion with an additional N26billion in recoveries of unremitted With-holding Taxes (WHT). Abdullahi said the Service targets 200 billion in 2022, and subsequently, up to N400 billion annually

“This year we intend to increase our collection to N150b and are in good stead to recover some unremitted taxes and levies taking us to a targeted collection figure of N200b. We believe that with enhanced compliance by the remaining residents, we can easily provide a steady annual tax income of N300 billion to N400 billion, making room for high employment, curb low income and provide enhanced services to the residents,” he explained.

The executive chairman further observed with concern what he described as the unethical conduct of some Tax Advisors who “routinely encourage Tax Agents to doctor records or flatly refuse to make available documents that are needed to arrive at a fair assessment of taxes due.”

“The Service has also observed the worrying trend of engagement of unprofessional consultants by Taxpayers to prepare and file returns with seemingly very wealthy individuals being encouraged to file ridiculously low annual income of N1million to N2 million “, he further said.

“We wish to state that Tax Fraud is the same in Nigeria as it is in the UK or the United States of America and would like to establish a strong enforcement regime to discourage the practice of tax evasion through such ridiculous tax returns filings,” Abdullahi warned.

“As the Service strives to map out its enforcement strategies for tax evaders, we are not relenting in our efforts in creating an institutional framework for stability to improve collections at this stage of our journey and beyond. We will capitalize on ‘quick-wins’ that will make tax administrations more effective in addressing our current pressing needs while seeking lasting solutions that will result in the desired outcome of achieving voluntary compliance and increased revenue collection.”

Minister of FCT Muhammed Bello, who declared the Seminar open noted that the move by the FCT-IRS is apt, especially in the face of the dwindling allocations from the federation account. The minister who was represented by Agboola Dabiri
secretary, Economic Planning, Revenue Generation and Public Private Partnership (PPP)expressed concern over the number of residents who pay tax in the nations capital.

“It is worrisome that only 10 percent of registered residents of the FCT are contributing to the maintenance and development of the Territory by paying their taxes. This needs to change, both for fairness and entrenchment of the rule of law. We must begin to treat tax evasion as the rime that it is, ” the minister said.

Bello appealed to all residents of the FCT to take filing of returns as an obligatory and necessary step towards supporting the socio-infrastructural development of FCT. He said, “We must understand that taxation is not just a means of providing funds for services and infrastructure, it is also a means for the high earners to contribute for the upliftment of the quality of life of the low earners.”

The minister stressed that tax should be equitable in a way that amount of tax payable should be proportionate to income; and expressed seminar will chart a way for the FCT-IRS to improve compliance to tax payment and the proper declaration of all income by all residents.

In his keynote address, the Managing Director, JK Consulting, James Naiveju, urged the FCT-IRS to further simplify the process of tax returns by making it accessible by with smart phones and other devices. According to him, if all FCT residents agree to file their tax returns effectively , it would grow the economy and reduce poverty.