Nigeria Mulls Merging Customs, FIRS

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The National Tax Policy Review Committee wants the Nigerian government to merge Nigeria Customs Service and The Federal Inland Revenue Service to avoid duplication of services and multiple taxation

By Anayo Ezugwu  |  Oct 10, 2016 @ 01:00 GMT  |

THE National Tax Policy Review Committee setup by the Nigerian government to review tax policies in the country has recommended the merger of the Federal Inland Revenue Service, FIRS, and the Nigeria Customs Service. The committee stated that the merger of both agencies would help improve administrative efficiency, reduce the cost of revenue collection as well as ensure accountability.

The draft of the reviewed National Tax Policy was presented at the committee’s second stakeholders’ engagement on Tuesday, September 27, by Taiwo Oyedele, West Africa Tax Leader at PricewaterhouseCoopers. Oyedele said the committee agreed that the current system was encouraging multiple taxation, tax evasion and wastage.

According to him, the current revenue generation system involving both agencies is inefficient as their functions were duplicative.  “All the structures you have in the FIRS are replicated in the Customs; so, the cost of collection goes up. It also makes it easier for tax evaders to manipulate the system. You can provide information for the Customs and the FIRS is not aware of it.

“So if you have one revenue agency, it will flag all the information about a taxpayer when he or she is paying tax. It will also ensure that leakages in the system are reduced. This is why we are recommending merger of the agencies as part of the policy.”

Oyedele said the committee was also recommending that a tax amnesty programme should be introduced by the federal government to widen the tax net. He said currently, some companies and individuals were not willing to join the tax system for fear of being asked to pay huge accumulated tax liabilities.

He explained that a tax amnesty would assure that past offences would be forgiven, thus assisting the government to generate more revenue. Other key recommendations of the draft policy include establishment of tax committee at the national level as well as administrative framework for amnesty and whistle blowing.

Similarly, Abiola Sanni, head of the committee, said the need to increase the level of revenue generation informed the decision of the committee. “Our ultimate goal is to have a revised document that is slim, simple and concise; a document, which will impose duties and responsibilities on all organs of government. We envision a document that will eventually give a new lease of life to the Nigerian tax system and meet our taxation objective within the context of the peculiar Nigerian environment.”

Sanni said the revised policy draft would be finalised at a retreat and would be submitted to the finance minister for onward transmission to the federal executive council for approval.

Kemi Adeosun, minister of finance, who inaugurated the committee on August 10, stated that the government was determined to simplify the country’s tax code for effective revenue generation. She stated that one of the areas of the tax code and laws in need of review was the simplification of the processes as well as the reduction of the tax burden on small businesses.

She said the country could no longer continue to rely on oil revenue following the volatility in the global market, hence the need to look at effective ways of generating more revenue from taxes. She lamented that despite the fact that revenue from oil accounted for about 70 percent of the nation’s earnings; the sector’s contribution to the Gross Domestic Product was just about 13 percent.

Adeosun noted that time had come for the economy to begin to take advantage of the opportunities of the 87 percent potential in the non-oil sector through the diversification strategy of the federal government. The minister stated that while the review would be a continuous exercise, in line with global best practices and keeping with the domestic socio-economic realities, the government remained committed to the continuous improvement of the tax system as part of a dynamic framework to enhance compliance.

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