By Abdallah el-Kurebe  

It is no longer in doubt that Nigeria’s revenue generation has been on the rise ever since the appointment of Muhammad Nami as the Executive Chairman of the Federal Inland Revenue Service (FIRS).

Undoubtable too is that the growth of the revenue generation in the country is reliant on the strategies introduced by the man adjudged as one of the global best income-generators, Muhammad Nami.

Identifying reasons for low revenue was the first task Nami undertook, and during a Senate interactive session with revenue-generating agencies, Nami said, “Nigeria loses a lot of revenue through tax waivers granted to big companies which otherwise would have been taxed to buoy up government revenue.

“Also, illicit financial flow is a major cause of revenue loss to Nigeria. Coupled with this is the operational cost of the FIRS which is also high compared to the statutory provisions for the running of the organization.” He identified much more reasons.

And, to make the FIRS more effective across Nigerian states, Nami saw the use of technology as a veritable tool. He developed a digital platform that are now used to file and pay taxes. This platform are integrated with the databases of other government agencies, such as the Corporate Affairs Commission, which makes it easier for taxpayers to comply with tax regulations.

Nami also introduced electronic tax clearance certificates (e-TCCs) that has made it easier for taxpayers to obtain TCCs, and reduce the incidence of fake or forged TCCs.

Additionally, Nami strategically ensured FIRS’ use of data analytics, which enables the Service to identify non-compliant taxpayers and to track tax payments. The data analytics tool is used to monitor tax compliance in real-time, and to identify areas where compliance is low.

The FIRS boss also strategically implemented a tax education program to educate taxpayers about their tax obligations and the benefits of paying taxes. This program is being delivered through various channels, including social media, radio, and television, across the country.

Since states also have internal revenue platforms, Nami has ensured partnership with State Internal Revenue Services in order to improve tax collection. The partnership has not only helped in sharing of information and best practices, as well as joint tax enforcement operation, but also helped in avoiding double taxation.

Nami, who took over from Babatunde Fowler in December 2019, strategically made it happen that by 2021, Nigeria’s Tax-To-GDP Ratio rose to 10.86%, as against the previously ratio of between 5 and 6 percent. This is because, previously the country’s Tax-to-GDP ratio did not consider tax revenue accruing to other government agencies in their computation. He has however ensured that all relevant tax revenues are included in the computation of the Tax-to-GDP ratio.

Nami recently said, “In order to correctly state the Tax-to-GDP ratio, the FIRS initiated a review and re-computation of the ratio for 2010 to 2021. In recomputing the ratio, key indicators that were previously left out were taken into account. This resulted into a revised Tax-to-GDP ratio of 10.86% for 2021 as against 6% hitherto reported.”

He disclosed that although Nigeria’s Tax-to-GDP ratio should be higher than the 10.86%, tax waivers and leakages occasioned by the country’s fragmented tax system, are some economic and fiscal policy factors that have slowed that.

“It is important to note that the Tax-to-GDP ratio for Nigeria should be higher, but for the impact of tax waivers contained in our various tax laws (including exemptions to Micro, Small and Medium Enterprises brought-in by Finance Act, 2019), low tax morale, leakages occasioned by the country’s fragmented tax system and the impact of the rebasing of the GDP in 2014.”

Nigeria’s Tax-to-GDP ratio which, in the last 12 years, hovered between 5% to 6% rose to 10.86% by the end of 2021.

The new ratio was communicated to the Federal Inland Revenue Service (FIRS), via a letter signed by the Statistician-General of the Federation, Prince Adeyemi Adeniran, on the 25th of May 2023, following a joint review by the Nigerian Bureau of Statistics (NBS), in collaboration with the Federal Ministry of Finance and the FIRS, using data from 2010 to 2021.

The revision took into account revenue items hitherto not previously included in the computations; particularly, relevant revenue collected by other agencies of government.

Tax-to-GDP ratio is a measure of a nation’s tax revenue relative to the size of her economy as measured by Gross Domestic Product (GDP). The ratio is a useful tool for assessing the “health” of a country’s tax system, and highlighting its tax potentials relative to the size of the economy. It is the ultimate measure of the effectiveness of a nation’s tax system compared to other countries.

In a statement announcing the new Tax-to-GDP ratio, the Executive Chairman of FIRS, Mr. Muhammad Nami, explained that sources which previously put the country’s Tax-to-GDP ratio at between 5% and 6% did not consider tax revenue accruing to other government agencies in their computation. Particularly, revenues collected by agencies other than the FIRS, Customs and States Internal Revenue Service were excluded. This situation was peculiar to Nigeria as most other countries operate harmonised tax system (all or most tax revenues are collected by one agency of government) with single-point tax revenue reporting.  As such, all relevant tax revenues are included in the computation of the Tax-to-GDP ratio.

“In order to correctly state the Tax-to-GDP ratio, the FIRS initiated a review and re-computation of the ratio for 2010 to 2021. In recomputing the ratio, key indicators that were previously left out were taken into account. This resulted into a revised Tax-to-GDP ratio of 10.86% for 2021 as against 6% hitherto reported,” the statement noted.

Mr. Nami further noted that Nigeria’s Tax-to-GDP ratio should ordinarily be higher than 10.86% but for certain economic and fiscal policy factors, including tax waivers and leakages occasioned by the country’s fragmented tax system.

“It is important to note that the Tax-to-GDP ratio for Nigeria should be higher, but for the impact of tax waivers contained in our various tax laws (including exemptions to Micro, Small and Medium Enterprises brought-in by Finance Act, 2019), low tax morale, leakages occasioned by the country’s fragmented tax system and the impact of the rebasing of the GDP in 2014”, he explained.

The FIRS boss implored the government to consider reviewing its policies on tax waivers thereby guarantying increased revenue to prosecute its programmes and positively move the needle of the country’s tax-to-GDP ratio.

The Statistician-General of the Federation, Prince Adeyemi Adeniran, in his letter to the Executive Chairman of FIRS, described the revision as a facelift to the Tax-to-GDP ratio for Nigeria in comparison with other countries.

He further noted that the NBS had “carefully and diligently reviewed the methodology used for computing the revised estimates, as well as the various items that have been included in the new computation,” and that the NBS as an outcome of its review and meetings with FIRS has adopted the new Tax-to-GDP computation.

Johannes Oluwatobi Wojuola

Special Assistant to the Executive Chairman, FIRS

(Media & Communication)

May 31, 2023

The Management of Maryam Abacha American University of Nigeria (MAAUN), Kano, on Wednesday, 17th May 2023, paid a condolence visit to a traditional title holder in Lagos, Sarki Over Roll Alimosho, Alhaji Ahmad Haruna Kuraja, who lost his wife, Halimatus Sadiya.

The team, which was led by the Founder and Chairman Governing Council of MAAUN, Prof. Adamu Abubakar Gwarzo, was in Lagos to condole the traditional ruler over the demise of Halimatus Sadiya.

Prof. Gwarzo and his entourage was received on arrival at Murtala Muhammed International Airport, Ikeja, Lagos by Alhaji Ibrahim Iro Tafida (Sarkin Samarin Agege, Lagos State), who later led them to the palace of the traditional ruler.

While condoling the traditional ruler, Prof. Gwarzo described the death of Halimatus Sadiya as a monumental loss and prayed to Almighty Allah to forgive the deceased and admit her in Jannatul Firdaus.

He also prayed to God to give the monarch and his family members the emotional strength to bear the huge loss adding that every soul shall taste death as it’s an inevitable end of all mortals.

During the condolence visit, a special prayer was offered for the deceased by Dr. Sada Jibia where he read some verses from the Holy Quaran.

Responding on behalf of the bereaved family, the Sarkin Samarin Agege, Lagos State, Alhaji Ibrahim Iro Tafida thanked Prof. Gwarzo for taking the pain to travel from far away Kano so as to pay the condolence visit.

He prayed God to reward him abundantly and return them home safely.

Other members of the team that paid the condolence visit include Dr. Kabiru Zamfara and Alhaji Abubakar Bello, among others.