Thread by @firsNigeria

VAT:
FOWLER DID NOT CALL FOR  50 PER CENT INCREASE IN VAT RATE.

Tunde Fowler, the Executive Chairman, Federal Inland Revenue Service, FIRS on Tuesday called for an increase in the number of Nigerians and companies paying VAT and not a 50 per cent increase in VAT rate.

Contrary to reports in the media yesterday and today, the FIRS Executive Chairman called for a reduction in Companies Income Tax (CIT) rate for small businesses so as to improve compliance.

Though he indicated that there should be an increase in VAT rate by the end of the year, he NEVER, for once suggested a 50 per cent hike of any percentage increase at all.

Rather, he promised improved collection in CIT, Petroleum Profits Tax, PPT and VAT in 2019 relative to the collection performance of the Service in 2018.

In 2018, FIRS collected the sum of N1.1 trillion in VAT N1,42 in Companies Income Tax (CIT) and N2.4 trillion in Petroleum Profits Tax (PPT).

Below is a transcript of the interaction between Fowler and committee members of the Senate Finance Committee at the 2019-2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper ((PSP) interactive meeting on Tuesday.

TRANSCRIPT

Senator Yusuf Abubakar Yusuf, (Taraba)

The Companies Income Tax rate has been at 30 per cent over the years. What is your view. Should it be increased or lowered for so many years.

Fowler

Thank you. My personal opinion is that the rate of CIT should remain at 30 per cent, to make sure that we do not reduce the tax rate, without getting others who are not in the tax net into the tax net.

But for small businesses, it’s a discussion we are having with the Ministry of Finance for people who are having a certain turnover. I believe that that can be reduced to may be 20 per cent to promote the small-scale businesses.

But in terms of immediate reduction, I think we should try and stabilize to ensure a 90 per cent compliance of those in the tax net. I’m sure that at the end of the year, we can consider reducing, our corporate income tax rate.

Senator John Owan Enoh, (Cross River) Chairman Senate Committee on Finance

The target for 2018… and the fact that you were able to do 78.8 per cent.  Now suddenly there is about 3 trillion added to that. How challenging will that be for the Service?

Two, you recall when this committee confirmed you as Executive Chairman, there was this issue about the rate of VAT, the issue of VAT being the lowest and whether it should be raised to something higher.

You said and we agreed with you that it wasn’t much about the rate but about compliance. Some years down the line, what do you think your impressions should be on that? Do you think you still stand by that? And how well has the service done in terms of improving on that?

Fowler:

Thank you very much.
In terms of VAT, the Service has increased VAT collection over the last three years by over 25 per cent.

In terms of whether there should be an increase.  I believe there should be an increase.

One issue about taxation is that it should be fair to all. We have discovered after the VAIDS (Volountary Assets and Income Declaration Scheme) that a high percentage of businesses are collecting VAT and not remitting. We’ve also tried to address this issue.

We’ ve issued new VAT certificates. We have appealed to the public that if they are charged VAT and they are not sure it had been remitted they should contact us.

We even gave a small promotion that for every 25 names, that they give to us, we give them a little gift either a power bank or something to show appreciation.

But that aside, we are also on the streets. We have a team called FEETT, Federal Engagement and Enlightenment Tax Teams, going around to confirm that they (businesses) are registered for VAT.

And I believe with the substitution of over 50,000 bank accounts that we just started this week I am sure that those businesses that have been collecting VAT &not remitting the same or not remitting any tax payment, are beginning to ensure that the level of tax compliance improve

And I believe that by the end of this year, government and Nigerian people should be ready for an increase in VAT.

A lot of Nigerians travel to Ghana and other West African countries and they can see that the VAT is much higher and they pay when they go for those trips.

I’m sure that as the economy improves  and as we continue to let them know that there will be an increase in VAT and they should be ready for it.

In terms of the challenge of N3 trillion, it is very challenging.  But I can certainly see an increase in VAT of at least 35 to 50 per cent this year, based on the enforcement activities.

There will certainly be an increase in CIT (Companies Income Tax and also on PPT (Petroleum Profits Tax).

Like I said earlier on, we have received directives that we can now hook on to some government agencies to make sure that the taxes especially in the oil sector, and also the Legacy Debts... that we should come up with an agreement so that the debts are paid over a 10-year period

And I m sure with the arrears and the current taxes, we will certainly give the N3 trillion the best of our abilities.

Enoh

 All we can say is that we wish you goodluck.