Business

Tax now accounts for 70% of Nigeria’s revenue – FIRS

Published

4 years ago

November 15, 2020

The Federal Inland Revenue Service (FIRS) has said receipts from tax now account for about 70 per cent of Nigeria’s total revenue.
The FIRS said other revenue lines, including oil, accounted for just 30 per cent of the country’s revenue.

Executive Chairman of FIRS, Muhammad Nami, disclosed this recently in Abuja when he made a presentation titled, “Weathering Economic Turbulence,” at an interactive session with stakeholders.

Nami called for the amendment of the country’s tax laws, saying most of them date back to pre-independence times.

He stressed that the country’s revenue situation was very dire, explaining that Nigeria has always relied on oil revenue for its budgetary needs, with little regard for revenue from tax.

He said the fall in oil prices, reduction of production quota, and oil theft had reduced the country’s revenue to critical levels.

The FIRS head revealed that the total Federation Account revenue for June 2020 was just N696 billion (about $2 billion), “which is equivalent to what a county in the United States spends.”

He said, “Nigerian economy is projected to contract by over five per cent in 2020 due to COVID-19 and other disruptions. Oil prices have plummeted (from $97.98 in 2012 to below $50 in 2020).”

He said despite efforts by the FIRS and Nigeria Customs Service (NCS) to drive up Value Added Tax (VAT) receipts, “Collection has indeed gone up, but Nigeria’s VAT gap remained at a pitiable 70 per cent, compared with South Africa at 12 per cent, Morocco at 28 per cent, and Zimbabwe at 38 per cent.”

Nami reiterated that Nigeria’s tax-to-Gross Domestic Product (GDP) ratio was currently about six per cent, compared to Egypt at 15 per cent, Ghana and Kenya at 17 per cent, and South Africa at 28 per cent.

The World Bank recommends a minimum of 15 per cent Tax to GDP ratio for economic growth and poverty reduction, he stated.

Nami stated, “A Debt Management Office (DMO) report indicates that about N1.21 trillion was used to service debt from January to June 2020.

“Over N3 trillion is proposed for debt servicing in 2021. The report further projects that Nigeria’s debt stock will grow significantly by end of 2020.

“God forbid that Nigeria should default in debt repayment obligations. Nigeria’s debt to revenue ratio is worsening – it is estimated at 538 per cent at the end of the fourth quarter, that is 190 per cent increase from 2019 figure (348%).”

Nami identified the problems of tax administration in the country to include the false belief that Nigeria is rich and does not require tax money, resistance to tax payment and tax being seen as an unnecessary burden, and lack of political action to tackle low level of tax payment.

He lamented that Nigeria was a mono-product economy and the whole economy revolved around crude oil. Thus, a slight change in oil price shakes the whole economy and jeopardises welfare, he said.

Nami stated that the widespread destructions that took place when the recent #ENDSARS protests were hijacked by hoodlums would have negative consequences for the country.

He said every effort should be made to improve domestic revenue mobilisation in view of the dwindling oil prices to prevent the country from falling into a debt crisis.

The FIRS boss said a debt crisis would exacerbate insecurity and political unrest in the country, and might also derail the programmes of the federal government.

In order to raise the country’s revenue performance, Nami charged all stakeholders with a clear political mandate to tackle low levels of tax payment and ensure simpler tax systems with limited number of rates and exemptions.

He suggested a reform of indirect taxes on goods and services, and called for the deployment of new technology and large data capabilities, and adoption of risk-based tax audits and examinations.

According to him, in response to the present revenue crunch, the FIRS has improved its administrative processes, carried out proper staff placement, restored staff-management relations, embarked on strategic capacity building for enhanced performance, and employed technology for improved service delivery

Similarly, the agency, Nami said, has disengaged its “Tax Audit Contractors,” decentralised tax audit and tax investigation functions, and enhanced stakeholder collaboration.

He said FIRS had also improved communication with taxpayers, made strategic moves to enhance revenue from indirect taxes, harmonised all tax provisions scattered in different laws, and restructured tax incentives for maximum benefit. He said the agency treated the issue of low tax payment as a national emergency deserving support from all stakeholders through political and legislative interventions.

Nami said FIRS had blocked tax loopholes and made more money available to the government.

-THISDAY

Business

Nigeria’s foreign reserves in marginal increase, now $40.88bn

Published

3 hours ago

November 27, 2024

Trends Admin

Nigeria’s foreign reserves in marginal increase, now $40.88bn

Nigeria’s foreign reserves rose to $40.88 billion as of November 21, the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has said.

Cardoso disclosed this on Tuesday at a press conference after the Monetary Policy Committee’s 298th meeting in Abuja.

He said the external reserves grew from $40.06 billion at the end of October to $40.88 billion in November.

The amount represents an increase of $82 million or 2.05 per cent in 21 days.

“The external reserves rose marginally to 40.88 billion as of 21 November 2024, from 40.06 billion at the end of October 2024, available to finance 17 months of imports,” he said.

However, from the apex bank’s website, the increase in Nigeria’s foreign reserves showed $40.27 billion on November 22.

Cardoso also said, “The process of getting us where we are in terms of reserves has been a long one”.

“It is a clear indication that the policies we have put in place are certainly yielding fruits,” he added.

“However, and it’s very important to make a distinction here and to reiterate the fact that reserves are there for a multiplicity of different purposes, not least of which is to create buffers in the event of unanticipated shocks.

“So they are not there to simply whittle away. They are there to be used to more or less defend yourself where that becomes necessary

“And when we talk about shocks that are not anticipated, I think we can see how the global economies are.”

Cardoso also said the bank would continue to intensify efforts to stabilise the currency and prices.

The CBN governor said, “The currency has been stable compared to what it was in June”.

But he said for the value of the country’s currency to be stable, there must be increased exports and diversification of the economy.

Cardoso said diaspora remittance had increased due to policies put in place.

He commended those in the diaspora for helping the country accomplish over $600 million in remittances.

Business

Naira rises to N1,755/$ in parallel market

Published

3 hours ago

November 27, 2024

Trends Admin

Naira rises to N1,755/$ in parallel market

The Naira yesterday appreciated to N1,755 per dollar in the parallel market from N1,770 per dollar on Monday.

Business

PH refinery to blend 1.4-million litre petrol daily – NNPC

Published

4 hours ago

November 27, 2024

Trends Admin

PH refinery to blend 1.4-million litre petrol daily – NNPC

Rehabilitated old Port Harcourt refinery is currently operating at 70 per cent of its installed capacity, the Nigerian National Petroleum Company Limited has said.

The Port Harcourt Refining Company (PHRC) operates two refineries: the old refinery with a capacity of 60,000 barrels per stream day (bpsd) and a new refinery with an installed capacity of 150,000 bpsd.

The NNPCL in a statement on Tuesday, said it planned to increase the operation to 90 per cent of the refinery’s capacity.

“The Board and Management of the Nigerian National Petroleum Company Limited (NNPC Ltd) express heartfelt appreciation to Nigerians for their support and excitement over the safe and successful restart of the 60,000 barrels-per-day Old Port Harcourt Refinery,” the statement reads.

“This achievement marks a significant step forward after years of operational challenges and underperformance.

“We are, however, aware of unfounded claims by certain individuals suggesting that the refinery is not producing products. For clarity, the Old Port Harcourt Refinery is currently operating at 70% of its installed capacity, with plans to ramp up to 90%.”

According to NNPC, the refinery has commenced production of daily outputs of straight-run petrol (naphtha), which is blended into 1.4 million litres of petrol.

The national oil company said the refinery has also started producing 900,000 litres of kerosene per day and 1.5 million litres per day of diesel.

The NNPC said 2.1 million litres daily volume of low-pour fuel oil (LPFO) would also be produced at the refinery, adding that additional volumes of liquefied petroleum gas (LPG) will be refined at the plant.

“It is worth noting that the refinery incorporates crack C5, a blending component from our sister company, Indorama Petrochemicals (formerly Eleme Petrochemicals), to produce gasoline that meets required specifications,” NNPC said.

“Blending is a standard practice in refineries globally, as no single unit can produce gasoline that fully complies with any country’s standards without such processes.”

Additionally, the NNPC said it has made substantial progress on the new Port Harcourt refinery, “which will begin operations soon without prior announcements”.

“We urge Nigerians to focus on the remarkable achievements being realized under the able and progressive leadership of President Bola Tinubu and to support efforts aimed at delivering more dividends to the nation,” the energy firm said.

According to the statement, malicious attacks on “clear progress” only undermine the “significant strides made by NNPC Ltd and the country”.