The Executive Chairman, Federal Inland Revenue Service (FIRS) Mr.Tunde Fowler, has projected that at least 80 percent of federally generated revenues would accrue from the non-oil sector of the economy in the next three years.
Fowler, who made the forecast at the Nigeria-Canada Investment Summit in Abuja, disclosed that the non-oil sector’s contribution to the Nigerian economy had risen to 60 percent by November 2019, up from 54 percent in December 2018.
The tax administrator noted further that the continuous drop in the oil prices was a fiscal signal that the nation’s non-oil sector required more attention in order to grow it and improve revenues sourced from it on a predictable and sustainable basis.
According to him, Nigeria is moving from oil dependent to non-oil dependent economy because government believes that in the next three years, the non-oil sector is going to contribute at least 80 percent of the total revenue, with a substantial part of this coming from the agricultural sector.
Fowler explained that the strategies that FIRS was adopting to realise improved revenue collection include “automation of VAT collection in key sectors which facilitates reduction in compliance cost in the long term; system to system integration between banks and FIRS.
He puts the VAT collection in the banking sector, which went live in January 2017, from January to October this year at N25.6 billion so far; VAT collection in the Cable TV sector, which also went live in Dec 2018 , at N5.1 billion from January to October 18. 2019.
The FIRS boss clarified further: “Integrated Tax Administration System (ITAS) project is a suite of programs that enables the automation of FIRS tax processes. As part of the Service’s objectives to bring high-level efficiency to tax revenue collection and provide first class services to taxpayers, ITAS project introduced SIGTAS, a solution that covers all aspects of tax administration in one integrated system.
“Government Information Financial Management Information System (GIFMIS) is an interface linking FIRS to the OAGF for real-time exchange of information and data; State Offices of Accountant General Platform (SAG); Automated the deduction at source and remittance of VAT and WHT from State governments contract payments directly to FIRS’s account and so far collected N13bn”, Fowler adde
He noted that the deployment of online solutions was making tax administration more efficient, transparent and convenient and listed some of the services, which could now be accessed electronically, as taxpayer registration (through e-Registration); payment of Stamp Duties (through e-Stamp Duty); and payment of taxes (through online payment: e-tax pay).
Others are, receiving of electronic receipt after payment of taxes (through e-Receipt); filing tax returns (through e-filing); and online Tax Clearance Certificates (TCC) through electronic Tax Clearance Certificate (e-TCC).
While shedding more light on various tax incentives in the country, Fowler maintained that Nigeria should be commended internationally on the number of reliefs and incentives it is granting to both local and foreign businesses.
He enthused: “Sometimes when I look at these tax incentives and reliefs, I feel that Nigeria is the Father Christmas. But that is necessary for the growth of the economy because they attract investors.”
The tax administrator urged foreign investors to consider Nigeria as their investment haven of first choice because of attractive tax incentives and reliefs and attractive end-price, adding that there are attractive tax incentives and reliefs in Personal Income Tax Act, Companies Income Tax Act, Capital Gains Tax Act, Value Added Tax Act, agriculture and foreign investment.
For instance, under the Personal Income Tax Act (PITA), he listed some of the tax reliefs that business owners and other economic agents can enjoy in their operations.
He explained: “There is Tax Credit Allowance. Tax credit allowable against tax payable on income derived from outside Nigeria if brought into the country through Government approved channels;
“Consolidated Relief Allowance. Section 33 (1) of PITA allows a Relief Allowance of N200,000 subject to a minimum tax of 1% of gross income whichever is higher, with the balance taxable in accordance with the Income table in the Sixth schedule to PITA.
“Returns Not To Be Filed Where Income Is N30,000 or Less. Section 43 PITA provides that no return of income shall be filed by a person whose only source of income in any year of assessment is employment in which he earns N30,000 or less from that source.
“Income Exempted. Section 19(1) PITA specifies several incomes that are exempted from tax, in the Third Schedule to the Act.
“Exemption of Interest on Loan Granted by Banks. Section 19(7) PITA exempts interest on any loan granted by a bank to a person engaged in: (a) agricultural trade or business; and (b) the fabrication of any local plant and machinery.
“Exemption of Dividend from Tax. The Third Schedule to PITA lists incomes exempted from Personal Income. Tax Paragraph 25 of the Third Schedule to PITA exempts some dividends from tax”, Fowler added.