• Wednesday, February 28, 2024
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BusinessDay

FIRS to leverage new structure, voluntary compliance to ramp up N19trn target – Adedeji

18% tax-to-GDP ratio: We won’t increase taxes, Adedeji assures companies

The Federal Inland Revenue Service (FIRS) hopes to bank on voluntary tax compliance and a new Organisational structure unveiled on Wednesday to ramp up its N19.4 trillion collection target for 2024.

This is as available figures show that the Service, which generates up to 70 per cent of government revenues, recorded some N12.37 trillion as taxes in 2023, indicating an over N2 trillion increase from the N10.17 trillion reported by the service the previous year.

The performance was pushed by non-oil collections, which went up 54 percent in 2023, higher than in 2022. While the oil sector generated N3.17 trillion, which is 25.6 per cent, the non-oil sector contributed N9.2 trillion or about 74.4 per cent.

Zacch Adedeji, FIRS executive chairman, spoke about the new structure and revenue performance at the 2024 strategic management retreat organised by the service in Abuja.

“We want to use the new structure to drive voluntary compliance because the focus cannot be on litigation and investigation. Those will be for, say 10% of all our strategies.

“The real strategy is to drive voluntary compliance, and there will always be consequences for non-compliance, and that is where this structure is going,” Adeyemi stated.

He said the new organizational structure, set to kick off in February 2024, is a critical milestone in revolutionizing tax administration in the country in a modernised and digitised manner.

The new era, he stated, would be driven by a technology-based, customer-centric organizational structure designed to streamline processes and enhance efficiency in tax operations by ensuring that the evolving needs of taxpayers are met.

“The structure advocates for a comprehensive approach to taxpayer services, consolidating our core functions and support under one umbrella. By tailoring our services to specific taxpayer segments, we aim to simplify the taxpayer experience. No more complexities, no more overlaps—just a seamless and user-friendly interaction for every taxpayer,” the tax boss stated.

“In a groundbreaking move, we are shifting away from traditional tax categorization. Instead of maintaining different departments for distinct tax categories, the new structure formulates taxpayer segments based on thresholds. This tailored approach ensures that taxpayers are guided and serviced according to their specific needs, eliminating confusion and redundancy in tax administration,” he added.

While he assured due process would be employed in the reformation, he noted the FIRS’s commitment to fostering a taxpayer-friendly environment that aligns with global best practices and positions Nigeria as a leader in contemporary tax administration.

He also reassured that taxes would not be raised, but that emphasis, as had been previously announced, would focus on “collecting better”, which the new structure seeks to achieve.

Wale Edun, minister of finance and coordinating minister of the economy, who spoke at the event, commended FIRS improved revenue collections but urged a transparent process that earns the service Public trust and citizens’ confidence to abide by tax rules voluntarily.

“You have done well,” he stated, adding, “What the General Public and taxpayers want to see is that their money is faithfully collected, properly spent and accounted for with minimal waste and leakage. They deserve it and I believe you’ll give it to them.”

Edun reiterated that the emphasis of President Tinubu’s administration is to grow the economy, but they will not resort to borrowing given the elevated interest rates at the moment. They will rather drive internally generated revenue, domestic resource mobilisation, and equity than debt.

Justifying the recent move to tap World Bank’s $1.5bn loan, the minister said the financing is concessionary, cheap and is particularly a seal of approval for the government’s policies, and will be deployed into specific projects in agriculture, education, and health.

“It is money that comes straight to the balance of payment to the government to spend in any given area of the economy.

“When you get that, it signals to the rest of the world that what you are doing is right and is to be supported by the international community.

“That is the real reward for seeking such financing,” Edun explained.

While he decried the country’s current tax to GDP at less than 10 percent, he challenged the FIRS to raise it in line with present tax policy which targets up to 18 percent in a few years from.

He, however, raised optimism that the FIRS will surpass the target on the back of current reforms and new collection strategies anticipated from the retreat.

Oluwatoyin Madein, Accountant-General of the Federation (AGF), who spoke at the event, said FIRS has been a stronghold of government revenue generation.

Made in pushed for the effective implementation of tax laws and administrative processes which are all-inclusive and stakeholders-centric and not just taxpayers-centric and driven by accountability.

She said the tax process had been marred in the past by ineffective tax administration and that the tax office must continue to improve on the new direction it has adopted.