Senate seeks suspension of tax waivers, as Nigeria loses N17 tn in five years

…urges FIRS to substitute tax waivers with rebate system

The Senate Committee on Finance has frowned at the N17 trillion losses incurred by Nigeria in the last five years due to the alleged abuse of tax waivers.

The committee urged the Federal Inland Revenue Service (FIRS) to suspend the current tax waiver system, which it said is prone to abuse, and replace it with a more controlled and accountable rebate system.

The Senate raised this concern on Monday when Zacch Adedeji, Chairman of FIRS presented the projected target of N19.4 trillion for total tax collection in 2024, an increase from the N11.16 trillion achieved in the previous year.

Despite acknowledging the positive trajectory under Adedeji’s leadership, Senator Sani Musa, Chairman of the Committee, emphasized the need for more aggressive measures to potentially reach a target of N30 trillion.

In his remarks at the budget presentation session, the Chairman of the Committee, Senator Sani Musa ( APC Niger East), told the FIRS Chairman that tax waivers abuse which has cost the country about N17trillion loss within the last five years should be suspended and substituted with the rebating system.

He emphasized the need for more aggressive measures to potentially reach a target of N30 trillion.

” Your projection of N19trillion as total tax collection for 2024 is good when compared to N11.16trillion achieved in 2023 but the Senate believes that you can do more even to the tune of N30trillion if required measures are put in place”, the Chairman said.

” As impressive and encouraging the performance and projections of FIRS are, under your leadership, this committee and by extension, the Senate, on a serious note, urge you to look at the direction of tax waivers largely being abused with attendant and avoidable losses being incurred on yearly basis.

“Available records show that within the last five years, about N17 trillion have been lost by the country to tax waivers. It should be suspended and possibly substituted with a rebating system “, Musa added.

The FIRS Chairman in his presentation, told the committee that ‘to save Nigerians from multiple taxation, FIRS in collaboration with committee set up by President Bola Tinubu, would reduce the 62 different taxes to 8.

“President Bola Tinubu has seen the issue of multiple taxation as a pool of problems that is why he set up the presidential committee on tax reforms and fiscal policy. As of today in Nigeria, we have 62 types of taxes being collected.

“The sad news about that is that less than eight out of the entire 62, accounted for 97 per cent of the collection. We are already consulting and engaging the state government on it. At the end of the day, we won’t have more than eight or nine taxes that the state and federal government would be collecting”, he said.

Speaking further, Adedeji told the Committee that the fresh N2.7 trillion Tax Credit planned for road construction in the country by FIRS should be stopped.

He argued that the N2.59 trillion earlier committed to it must run be fully implemented before thinking of any fresh one, adding that NNPCL must not be spent on road infrastructure.

” Regarding tax credit, what I said was that the programme is laudable but that the N2.5 trillion being spent on it by NNPCL should be exhausted before bringing fresh requests. The N2.7trillion fresh request being made, should not be entertained because all NNPC revenue should not be spent on roads when the Ministry of Works is there ” he said.