•Customs, state revenue agencies to become depts in new FIRS

The presidential fiscal policy and tax reforms committee has proposed the restructuring of the Federal Inland Revenue Service (FIRS) into the Nigeria Revenue Service (NRS) as part of the arrangement to harmonise revenue collection.

The committee also proposes the reduction of the company income tax (CIT) and cost of tax collection by five per cent and one per cent respectively.

Chairman of the Committee, Taiwo Oyedele, who spoke at a meeting in Abuja on Monday, said states’ revenue services will be departments under the proposed NRS after restructuring, thereby harmonising structure and collection of taxes.

Under the new arrangement, he said, the Nigeria Customs Service (NCS) would also become a department under the NRS.

“We want to establish the NRS to replace the FIRS. When you say FIRS, it is a misrepresentation of what they do. The FIRS is not a federal government agency, it is a federation’s agency. All taxes they collect are shared. So let us call it NRS.

“We have very good ambition for where this agency should go in the medium-to-long-term. Number one is that we are hoping that the NCS, in terms of port collection, should be a department under the NRS like we have in Ghana, Kenya, South Africa and the U.K.

“Number two, all the agencies of government collecting taxes and levies will stop collecting them and the revenue collected by the NRS. They will use a single system; governors will still be the ones to appoint the heads of those departments. Everything will still be the same,” he said.

He insisted that the proposal “is good for fiscal federalism because the board of directors of NRS will be dominated by the states because a federation is the coming together of the states to empower the states”.

Oyedele said the committee also proposed the reduction of the company income tax (CIT) by five per cent. The tax rate, he said, should drop from 30 per cent to 25 percent, as it would go a long way to encourage businesses and investors.

He said: “We are proposing that the company’s income tax rate be reduced by about 5 percent over the next two years. Nigeria’s CIT is one of the highest in the world. We are in the top 10.”

The tax expert said the corporate income tax in Nigeria is over 40 per cent, which puts Nigeria in the top 10 globally.

“That is not where we want to be for a country that needs all the investments we can get,” he said. What data shows us is when CIT comes down, investments increase and we have more employment because people will make decisions based on how viable their business is as to where to locate it and everything else follows.”

Oyedele said Nigeria must consider the need to incentivise more companies to operate in the country, create jobs and stimulate economic activity as part of the comprehensive reforms proposed to transform the fiscal space, tax landscape and business environment.

“Currently, Nigeria has about 60 different taxes and levies officially approved and over 200 unofficial levies across the country, which has increased business costs and adversely impacted the economy,” he said, adding that the focus is to streamline them into a single digit, improve compliance and ease of tax payment.