FIRS; simplifying tax compliance through ICT initiatives
FIRS’ ICT Outlook
In June 2016, the Federal Government of Nigeria allocated over N500 billion among the three tiers of government. This is the first time this year that such an amount of money has been allocated by the Federation Accounts Allocation Committee (FAAC). The explanation for this increase in Federal Government allocation is that taxes and other non-oil revenue sources contributed about 70% of the total sum allocated. This is an attestation of the several initiatives and modernization activities that have been put in place by the Federal Inland Revenue Service (FIRS), particularly in the area of Information and Communication Technology (ICT) and tax systems automation, for ease of tax compliance and revenue enhancement.
From various antecedents, FIRS recognizes the importance of ICT and systems automation in effective tax administration. Lagos State, for instance, over the past 10 years, has consistently generated the highest internal revenue, much higher than that of many states of the federation combined (2015: N 268bn; 2014: N276bn and 2013: N384.2bn). This was mostly due to automation and reforms of its tax administration systems.
A World Bank report also argues that obvious reforms such as automation and improvement of tax agencies could lead to much higher tax collections. For instance, Rwanda increased its tax revenue by six and half times after automation of the tax collection process. Also, in its desire to step-up its revenue generation capacities, the Malawi Revenue Authority (MRA) has been understudying tax automation processes deployed by the Federal Inland Revenue Service (FIRS) as the MRA’s Deputy Director, Modernisation, Nancy Nyamilandu, not too long ago, led a team of Malawian taxmen on a working visit to FIRS in Nigeria, to gain an overview of FIRS’ Integrated Tax Administration System (ITAS).
On the average, developed countries’ total tax revenue as a percentage of Gross Domestic Product (GDP) ranges from 30% to 49%1 and this can be attributed to automated and efficient tax administration systems. The automation of FIRS’ administration, finances and procurement processes has positioned FIRS as a forward looking 21st century Tax Agency, making great strides towards simplifying the process of tax compliance for the Nigerian taxpayers. More importantly though, providing the much needed buffer, at this time, in funding the budget of the Federal Government from non-oil revenue sources.
Taxpayers are encouraged to avail themselves of the following ICT platforms which FIRS invented to make tax compliance and fulfilment of tax obligations far easier.
Government Integrated Financial Management Information Systems (GIFMIS):
FIRS is collaborating with the Office of the Accountant-General of the Federation and Ministries, Departments and Agencies (MDAs) of government to collect taxes –Value Added Tax (VAT) and Withholding Tax (WHT) from government contractors/suppliers/consultants at the point of payment, through the GIFMIS. These collection processes and channels ensure that there is transparency in the work done by the tax authorities. To this end, all Federal government suppliers/ contractors have been mandated to visit their respective FIRS tax offices to register, update and validate their corporate details.
The requirements for this exercise include; Business Name, RC Number, Business Address, Tax Identification Number (TIN), Line of Business, Business Bank Account Details (maximum of four), Company BVN, Email Address, Phone Number (GSM) and Certificate of Incorporation. Proxies making submissions should produce an authorization letter from the principal officer of the company/ organization and a valid means of identification (driver’s license, international passport and national ID card).
Joint Tax Board- Unique Taxpayer Identification Numbers
The Taxpayer Identification Number (TIN) is a unique number allocated and issued to identify a person (individual or company) as a duly registered taxpayer in Nigeria. It is for use by that taxpayer alone. Registration for tax purposes is a legal obligation of every person who is required to pay tax in Nigeria.
The Joint Tax Board is the umbrella body for the States and Federal Tax Authorities in Nigeria and was established in 1961 to promote uniformity and harmonisation of Personal Income Tax Administration across the country.
The JTB introduced the Unique TIN which will be admissible for Federal, State and Local Government tax payments. Under Section 8 (q) of the Federal Inland Revenue Establishment Act 2007, every taxpayer is expected to be issued a TIN in collaboration with the States Boards of Internal Revenue and Local Governments Councils.
The JTB TIN is an electronic system for taxpayers’ registration nationwide in Nigeria and not for FIRS taxpayers alone. It is unique to an identified taxpayer for life and would be available nationwide. This is different from the current TIN which is issued separately by the different tax authorities of the tiers of government. The JTB TIN will subsequently replace the current separate TIN system and every taxpayer will ultimately be required to possess and use ONLY the JTB TIN. This uniform TIN will ease data sharing and tracking of taxpayers among states.
All categories of taxpayers (individuals, corporate organisations and business names) can easily apply for the TIN via the JTB website- https://otr.jtb.gov.ng/. Currently, however, the JTB is tweaking the TIN to ensure that it is data-laden and meets the intended objective of its introduction.
While the upgrade to the JTB TIN is ongoing, taxpayers who are yet to register for tax can do so by visiting the tax office(s) nearest to the address of the taxpayer and completing /providing the required documentations. TIN is FREE!
To obtain FIRS TIN, companies, enterprises or businesses registered with the Corporate Affairs Commission (CAC) should submit the following:
Duly completed application form for TIN; Certificate of Incorporation (for Companies) or Business Name Registration Certificate (for an enterprise & business) showing clearly the registration number in each case; Documents containing- address of business, principal location of business and date of commencement.
Individuals who (or whose business) is not registered with the CAC should submit the following: Duly completed application form for TIN Valid identification document (International passport, national identity card, staff identity card if employed or national driver’s license).
As at June 2016, FIRS has also successfully captured and harmonized 100% of all registered non-individual entities as obtained from CAC and have generated TIN for 24,496 Limited Liability Companies, 2,371 Incorporated Trustees and 21,231 Registered Business Names (out of 22,731) representing 100%, 100% and 93% of the captured entities, respectively.
Electronic Payment Initiatives
The Federal Inland Revenue Service (FIRS) in its bid to continuously provide real-time tax payment transactions, provided online payment platforms and applicable payment options for taxpayers. The various platforms ensure transparency in tax payment system, boost taxpayer confidence, and trust in the tax system and promotes voluntary compliance by taxpayers. They provide convenience, timeliness and cost savings for taxpayers as they can pay their taxes via self-service channels provided by these platforms within the confine of their offices or homes without going to the banking hall.
To be continued…
Babatunde Fowler is the Executive Chairman of the Federal Inland Revenue Service (FIRS) and this article is part of FIRS’ Tax Discourse series, initiated to enlighten and educate taxpayers on important tax technical topics. It is designed to be an interactive platform where readers are encouraged to send in their comments/enquiries to firstname.lastname@example.org. Vi-M Professional Solutions is the official partner to FIRS on the Tax Discourse series and enquiries can also be sent to email@example.com. Archives of publications are available on www.firs.gov.ng or on www.taxdiscourse.vi-m.com/FIRS
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