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BOLD MOVES FOR A TECHNOGY -DRIVEN FIRS

Muhammad Nami, an unblemished professional , brings purpose, principles, credibility, confidence and astuteness to  FIRS   

The Federal Inland Revenue Service (FIRS],  occupies a  strategic position in this economy ; it is the heart beat  of the nation’s  economy . The reason may not be far to seek . FIRS  , by the Act that established it,  is to control and administer different taxes and laws and to account for all taxes collected ; .  more importantly , various taxes collected by the FIRS are shared among the 3 tiers of government . For this ,  it deserves to be handled by a thoroughbred professional , committed and dedicated leadership like Muhamed Nami ,

While some progress has been made over the years , the tax system continues to face significant challenges while tax authorities operate under sub-optimal conditions. Low ranking on the ease of paying taxes index,  very low Tax to GDP ratio, poor and disjointed adoption of technology , multiplicity of tax audits and revenue agencies , inefficient tax collection process and poor taxpayer service and  poor reporting and accountability ,among others,are all its rough edges or shortcomings.

But the Service since the appointment of Mr. Muhammad Nami as the Executive Chairman is witnessing some respite . Despite certain challenges he met on ground stated above , there is ,no doubt , that a game changer is at work . This belief is confirmed by recent developments authored by the Chairman, Mr. Muhammad Nami   . He has been busy resolving   all the outstanding issues  of  poor  performance and incompetence. Already,  the chairman is squaring up with  like-minded  professionals  to deliver world class performance  

  The current   leadership of the FIRS in order to address the identified challenges and begin the journey towards becoming a world-class tax administration has conducted a comprehensive assessment to determine what is working, what to improve and what to discontinue. He organized the First Annual National Tax Dialogue   with the theme  “Taxation in a post-Covid Economy”. Currently,  FIRS  is undergoing  a world class technology -driven initiative

  With  the technology driven initiative of Nami , the hope for better tax administration is certain  ‘’He is laying the foundation for a future Nigeria without oil..Since last year, oil revenue has progressively dwindled; everything that he is doing now, including the technology that he is  deploying , the reforms that he is implementing  and more, are all geared toward having a country that can survive without oil revenue . For him, to make Nigeria less dependent on oil is a task that must be achieved. At FIRS, all hands are on deck to achieve this ‘’, a stakeholder recently noted in Kano, the economic hub of northern Nigeria, . •

The above remark  is not  baseless. The Federal Inland Revenue Service (FIRS), as part of its efforts at modernizing tax administration in Nigeria, has introduced a Tax Administration Solution (TaxPro-Max) for the ease of Tax compliance.

TaxPro-Max enables seamless registration, filing, payment of taxes and automatic credit of withholding tax as well as other credits to the Taxpayer’s accounts. Among other features, TaxPro-Max also provides a single-view to Taxpayers for all transactions with the Service.

To this end, and effective from 7th June 2021, the TaxPro-Max became the channel for filing Naira-denominated tax returns.

All Naira denominated tax returns are now directed to be filed via the TaxPro-Max Solution in order to generate the obligatory “Document Identity Number (DIN)”;

Taxpayers will not be able to pay without the DIN; as such, taxpayers wanting to submit their tax returns manually must visit the relevant tax office where FIRS personnel will be on hand to assist them to upload the returns and generate the DIN

In view of the time it might take to upload manual returns and generate the DIN, taxpayers are encouraged to bring manual returns for upload at least, two weeks before the due date;

Qualified Personnel of the service are on hand also to assist taxpayers experiencing challenges in filing return on the TaxPro-Max. They may be reached via email (taxpromax@firs.gov.ng).

Taxpayers that are yet get their user credentials are advised to visit the nearest FIRS Tax Office

Nami is now taking the bull by the horns with the poor and disjointed adoption of technology now becoming a thing of the past. In the 21st century ,knowledge creation and information management are issues at the front of managers minds as the potential source of improved competitiveness . Within this wider agenda ,considerations have naturally focused on IT and the extent to which it can transform competitiveness .From   a strategic point of view the issue is the extent to which improvements in information processing capability through IT and information systems can improve and assist the way in which knowledge is created and shared both within and around the organization.

 Since a large part of business activity is concerned with processing and transmitting information within and between organizations and individual customers ,information processing capability can improve an organization’s strategic capability in several ways .These include reducing the direct cost of transactions between an organization and its customers ,suppliers or channels and    improving  the service quality as well as improving business processes in order to reduce cost or increase service quality indirectly .

 Nami is  Leveraging   technology to provide streamlined and friendly taxpayer service, deploying  AI for routine queries ,maintaining  up- to-date  website with relevant laws, regulations, guidelines and other resources. The Service is also  using   social media platforms effectively to connect with and educate taxpayers as well as harmonizing  electronic tax platforms and allowing  API for ease of connectivity with taxpayers’ systems.  It is equally  monitoring   taxpayers and assessing   them  on tax compliance process,  promoting  taxpayer rights, fully automating  TCC collection process, and allowing  banks to register their customers for TIN.

The impact that information processing capability has on competences and business processes as exemplified above is transforming the way in which organizations build their relationships with others in their value network  

IT is impacting in three main ways . By replacing physical or paper based processes with electronic processes and by significantly extending the functions that traditional business models can offer it can significantly reduce  costs or increase revenues .   Some of the most exciting developments are where IT is enabling business models that are not possible without IT. So IT is genuinely transformational in driving strategic changes in and between organizations  . Value chain integration may be made possible through IT if  several activities can be knitted together

Nami’s initiative is in line with the global trend .From a strategic point of view the important considerations of any of e-commerce business models is the extent to which they are able to create better value for money for customers. Tax payers are currently at ease with better value added service the initiative is delivering .   The management  is already  reviewing  and approving  a strategic plan of the Service; reviewing  of the tax regimes and promoting  the application of tax revenues in collaboration with the relevant ministries and agencies to stimulate economic activities and development; ; providing   data on losses arising from tax fraud or evasion and revenue forgone arising from tax waivers; exchanging  information with relevant national and international agencies; collating  , reviewing  and implementing  all federal government’s tax policies; public awareness and enlightenment campaign; and carrying out oversight over all taxes and levies accruable to the government of the Federation .

Building a robust planning process and embarking on critical assessment that covers the core functions of the Service and the Board including providing general policy guidelines relating to the function of the FIRS , the executive chairman ,no doubt , is battle ready to manage and superintend over policies relating to administration of revenue, collection and accounting system  .

It  is  equally   building  capacity and developing  internal capabilities to phase out the use of consultants for the core functions of the FIRS while  eliminating   political interference in the tax administration process.

To achieve this , the service leadership is  promoting   professionalism, decentralizing   decision making, empowering  tax officers and putting  the best foot forward in local and international representations.

It is also  enhancing   the legal and dispute resolution team, revamping  the Policy & Research unit, and ensuring   regular and quality training for all staff.    Proactively  , he is  addressing key issues such as the tax treatment of new accounting standards, Finance Bill   implementing   National Tax Policy; AfCFTA, BEPS, and Exchange of Information and  using  tax intelligence, and risk-based audit methodology.

The service is currently seeking  and engaging collaboration, stakeholder relations and partnerships ,working  with relevant professional bodies without discrimination .  It is already collaborating with relevant MDAs including the Nigeria Customs Service, Nigeria Postal Service, States IRS, Financial Intelligence Units, NBS, NIPC, National Assembly, Ministry of Finance, Budget Office, National Planning Commission, CAC, CBN, Nigeria Governors’ Forum, Economic Advisory Council, EFCC, ICPC, Office of the Attorney-General of the Federation, etc

 Nami led administration is  consciously making efforts to  improve ease of paying taxes with the current technology driven initiative .   There is currently a target to move from the current 159 to  a very  impressive position on the ease of paying taxes ranking within the next few years. It is also embarking on massive taxpayer education and awareness, establish functional call centres, conduct annual taxpayer satisfaction survey to get useful feedback, and ensure timely payment of legitimate tax refunds.

Moreover , he is  also building  sustainable structures, developing  a strategic plan .With carefully outlined role of the FIRS, the Executive Chairman, and the Board and relevant structures set up as contained in the various enabling laws such as the Transfer Pricing Decision Review Panel, Technical Committee of the Board, the leadership is expected to    engage in  a periodic review of the FIRS Establishment act     . it has also expected  to adopt  a  whistle-blowing framework in place to curb corruption ; revenue forecasting and scenario planning   based on GDP growth rate, crude oil price, and exchange rate , developing a plan to progressively raise tax to GDP ratio over the next 4 years from the current 6% to a minimum of 12% with meaningful expansion of the tax net and limiting the erosion of the country’s tax base through arbitrary incentives and waivers as well as transfer mispricing.

Since Nami appointment , the service has registered  improved efficiency while respect for due process has been a new rule of the game .

 Presently ,  the cost of collection considered too high .However , this is   progressively being reduced  to the international benchmark of 1%.  A framework  for  full transparency on how FIRS budget is spent and disclosure regarding FIRS’ own compliance with its tax obligations is currently being put in place .The service expected to use   data to inform administrative policies and consider impact of changes on FIRS and taxpayers in the short, medium and long term ;  adopt a cost-benefit approach to tax audit and ensure to follow due process for tax enforcement including the use of bank substitution order.;  respect taxpayer privacy, confidentiality and data protection in line with applicable laws  ; champion changes to the tax laws and tax law reform ;use the JTB platform for sub-national coordination ;  provide data and intelligence as input to national planning, and render robust and timely audited annual reports.

 His initiatives are getting very strong backing .   President Muhammadu Buhari has mandated ministries, departments, agencies and business enterprises to grant access to the Federal Inland Revenue Service (FIRS) to their systems for the purposes of tax collection nationwide.

President Buhari  issued this   mandate   while delivering his address as the Special Guest of Honour at the First Annual National Tax Dialogue organized by the FIRS .The President also mandated the FIRS to “speedily put all measures in place to fully implement programmes to stamp out Base Erosion and Profit Shifting in all of its ramifications and generally automate its tax processes.”In addition,  he  urged the FIRS to fast-track its digitalization of the tax collection process.

  “I have directed all government agencies and business enterprises to grant FIRS access to their systems for seamless connection. We all are now living in a fast digitalising world. As such, business transactions are continually being migrated from “brick and mortar” locations to digital places or spaces. It is therefore incumbent upon tax authorities to adopt digital means to efficiently track taxable transactions for the purpose of collecting taxes. In order to provide the necessary legislative framework for the adoption of technology in tax administration, we also made necessary amendments to the FIRS Establishment Act in the Finance Act 2020 ,”  the President said

 Moreover,. tax experts, speakers, panelists and government  functionaries the  Federal Government  had  advised to explore data and intelligence in order to ease tax collection and improve its revenue base .  The  President, African Development Bank, Dr. Akinwunmi Adesina, also indicated the importance of technology driven tax administration.    “Digitalization of tax collection and tax administration is critical to ensure greater transparency of the tax system, widening of the tax base, while mitigating compliance risks and encouraging voluntary tax compliance.”, he noted .

Ekiti State Governor, Dr. Kayode Fayemi,  urged participants at the event to “interrogate how Nigeria can further deepen the use of technology to improve tax compliance nationally and across subnationals.” He stressed that this was important because “a significant proportion of our population will soon come into the workforce” which is “a golden opportunity to introduce first-time taxpayers to their civic responsibility, by adopting technology.” to be on board immediatel

Nigeria currently ranks 159 out of 190 economies far behind regional leaders Mauritius 5, Zambia 17, Morocco 24, Rwanda 38, and South Africa 54. This ranking is based on 3 sub-indicators being total tax rate, time to comply, and number of payments. It also measures post-filing index ; it is instructive to note that Nigeria is competitive with respect to total tax rate (ranks 77) being the only sub-indicator not within the control of the tax authorities. So, Nigeria’s poor ranking is largely due to poor tax administration.

— At 6%, Nigeria’s tax revenue profile is one of the lowest in the world, far behind regional leaders — Seychelles 32%, Tunisia 31%, Morocco 28%, South Africa 26%, Africa average 17% and OECD average 34%. The FIRS has underperformed relative to its revenue budget since 2015.— A recent study by the Nigerian Economic Summit Group found that less than one percent of taxpayers who are registered with the FIRS use the online platform for their tax assessment, filing of returns and payment. By contrast the ratio for the South African Revenue Service is over 50%.

— Tax audits are unending with various agencies conducting audits after audits often using external consultants which not only raise the cost of collection but negatively impacts on taxpayer trust.

— the cost of collection is about 4% of non-oil revenue (over 2% for all taxes) compared to about 1% international standard (0.89% in South Africa). Taxpayers are sometimes not treated with courtesy while relevant information to aid voluntary compliance are seldomly provided and request for refunds, rulings, TCCs etc could take an unnecessarily long period of time.

There are no timely audited financial statements available to the public, no data on revenue forgone from tax waivers, no detailed breakdown of tax collected by type of taxpayers, analysis of tax arrears, unpaid refunds and processing time, average time spent to resolve tax audits, etc

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