Nigeria’s taxman turns attention to digital space

The Federal Inland Revenue Service (FIRS), Nigeria’s tax collection agency, has disclosed plans to focus more on generating revenues from the digital space as the country ramps up efforts to boost its low tax take.

Muhammad Nami, executive chairman, FIRS, said this while speaking as the special guest at the Pedabo 2022 Annual Public Private Sector Engagement.

“In 2022, the Service will give priority to the collection of taxes from the digital economy,” Nami said.

With the amendment of Section 10 of the VAT Act by the Finance Act 2021, Nami said the FIRS will implement the published guidelines on the Simplified Compliance Regime on VAT for Non-Resident Suppliers to collect VAT on digital supply of services and intangibles to Nigeria.

“The Service has deployed a digital service interface, the Digital Economic Compliance (DEC) Tool, to facilitate the implementation of the Regime. The implementation of the DEC Tools will also assist the Service in determining entities that fall within the SEP threshold and relevant turnover generated from Nigeria. This tool will go live shortly,” he said.

As a percentage of GDP, Nigeria only generates 7 percent in tax revenue, less than half of the frontier market average of 15 percent. Only a handful of tax eligible Nigerians are captured in the records thereby costing the government badly-needed non-oil revenue.

Nami however assured that efforts were ongoing to ensure that the Service achieved 100 percent automation of all its tax administration processes with the aim of blocking revenue leakages thereby revolutionising revenue generation in Nigeria.

The Service will also deploy technological tools in assessing entities that fall within the Significant Economic Presence (SEP) threshold and relevant turnover generated from Nigeria.

The FIRS in 2021 leveraged on the amendments to its Establishment Act to embark on a major infrastructure overhaul, focusing on the deployment of technology for the automation of its processes and procedures, thereby deploying its home-grown integrated tax administration system, TaxPro Max, according to Nami.

“The Service will focus on compliance and enforcement strategies in 2022, by leveraging on intelligence, strategic data mining and analysis, to enhance audit and investigation functions and implementing the penalty regimes in accordance with the laws,” he said, adding, “the Service is poised to ensure prosecution of recalcitrant taxpayers in 2022.”

He concluded by urging taxpayers, tax consultants, tax collection agents and other stakeholders in the tax system to partner the FIRS in 2022 to make taxation and tax revenue collection a pivot for economic growth and national development, stating that no society can grow without its citizens paying their taxes.

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Meanwhile, in a statement yesterday by Johannes Wojuola, the special assistant to Nami on media, he said the FIRS executive chairman in an address earlier had noted that in the 2021, the Service had leveraged the amendments to its Establishment Act to embark on “a major infrastructure overhaul, focusing on the deployment of technology for the automation of its processes and procedures,” thereby deploying its home-grown integrated tax administration system, TaxPro Max.

According to Wojuola, the Service “will focus on compliance and enforcement strategies in 2022, by leveraging on intelligence, strategic data mining and analysis, to enhance audit and investigation functions and implement the penalty regimes in accordance with the laws,” noting, “the Service is poised to ensure prosecution of recalcitrant taxpayers in 2022.”