Ahead of the 2014 fiscal year, the federal government has said it has contracted the services of an international tax firm to assist the Federal Inland Revenue Service (FIRS) in strengthening tax collection in non-oil sector.
Government with the new arrangement, plans to rake in an additional N75billion into its expected revenue within the 2014 fiscal year with a strategy, which will be targeted at tightening the lapses tax collection.
Briefing journalists at the State House after the weekly Federal Executive Council meeting, which was chaired by President Goodluck Jonathan, the Coordinating Minister for the Economy and Minister of Finance, Ngozi Okonjo- Iweala, who spoke on the revenue drive in the country, lamented the fact that over 75% of small scale business operators in the country are consistently evading tax in Nigeria.
The Finance Minister, who briefed alongside the Minister of Communication Technology Mrs. Mobolaji Johnson and Minister of Information Mr. Labaran Maku, also revealed that the revenue drive will increase the FIRS revenue target for 2014 which is put at N2.2trillion in 2014 by another N75 billion, making it a total of N2.95trillion.
She said government has already contracted McKinsey & Co, a leading consultancy group for the provision of technical support to the FIRS towards non-oil revenue and enhancement and capacity of the organisation in its tax drive.
The minister added that the firm, which will commence operation this year for over the next 12 months, is expected to be paid 1.75 percent as commission which is N470million for the targeted collectible revenue.
“One of the areas of weakness has always been in our tax policy. The new move will see the non- oil sector contribute more to the economy through payment of appropriate taxes by relevant organisations”
“The FIRS has a target of N2.2 trillion under the 2014 budget and Nigeria can increase this by another N75 billion and we hope that in the medium term we can improve further.
“The company will collect 1.75% from the projected revenue which is one of the lowest in the world,” she said.
The minister noted that the Finance Ministry, is seeking to strengthen the non- oil revenue collection, as part of the collective efforts of government to ensure diversification of the economy in the face of the dwindling oil revenue.
According to the CME, the Nigerian tax to Gross Domestic Product, GDP is only 7% adding that government is working to progressively increase it to 22% of GDP by the end of 2015
“FIRS has really worked hard but we feel that there is still room to do better, compared to South Africa, and Angola, Nigeria’s tax to GDP ration is the lowest, McKinsey and company have found out that 75% of our medium scale enterprises are not paying tax, 30% of those enjoying pioneer status are also abusing the privileges, so we want to ensure that we do what is right,” she said.
In order to tackle this, the minister disclosed that McKinsey & Co has suggested five strategies to be adopted by the FIRS which include improve audit, tax filing enforcement, review of tax holidays and exemption, tax arrears and debt enforcement, increased registration of companies and improved external communication.
The Minister of Communication Technology, also brought a memo to Council, on national addressing policy that will standardize communication system in the country.
According to a working document of FEC, this policy will assist government’s ability to plan and implement public policies and services, fight against natural disasters and diseases including emergency management and to reinforce national and international security in line with the UN Universal Postal Union’s Doha Declaration.
Source: Daily Times
