FIRS forecloses tax rate increase over proposed 18% tax-to-GDP growth
By Barbara Bako, Abuja
Acting chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, has foreclosed increase in tax rate over it plan to grow the country’s tax-to-GDP ratio.
FIRS had hinted at the federal government’s efforts at achieving tax-to-GDP ratio of 18 per cent from current 10.86 per cent to meet the increasing fiscal obligations.
According to Investopedia, the tax-to-GDP ratio measures a nation’s tax revenue relative to the size of its economy. This ratio is used with other metrics to determine how well a nation’s government directs its economic resources via taxation.
Adedeji said such resolve would not necessarily lead to increase in taxes or introduction of new taxes as the President Bola Tinubu-led administration is determined to create a wholesome environment for businesses to flourish.
A statement signed by Special Adviser on Media and Communication, Dare Adekanmbi the FIRS boss reveal this while addressing representatives of top large tax-paying companies during a get-together at Four Points in Lagos on Wednesday.
He said, “Our belief, understanding and vision as a revenue-generating agency is not to introduce any new tax as we only want to use data to improve compliance.”
The statement quoted the FIRS chairman as saying that the invited companies and those willing to voluntarily carry out their tax obligations have nothing to be afraid of.
Adedeji had said the agency under his leadership would in the next three years achieve an eight per cent raise in tax-to-GDP ratio to surpass Africa’s average of 16.5% without stifling investment or economic growth.
The plan had triggered muffled apprehensions among entities corporate that the decision could cause an increase in tax rates or introduction of new ones.
“Our plan is simple. We want to grow tax revenue and we only want to tax prosperity and not poverty. Therefore, it is not in our interest to kill the trees that bear the fruits. My first ‘love letter’ to you is to appreciate what you have done. So, you don’t have anything to be afraid of.”
“We will not collect what is not due to us. But we don’t want anyone not to pay what is due to us. Fair engagement is our plan. Rest assured that the 18% tax-to-GDP target will not translate to increase in taxes.”
“If you have been listening to Mr Taiwo Oyedele who is the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, you will have known that part of the mandate of the committee is to reduce the number of taxes,” he said.
According to him, the purpose of the engagement with the companies is to factor their inputs into the strategic action plan being mapped out in order to address challenges hampering tax revenue collection.
He lauded the invited companies for their high sense of responsibility, urging them to continue to discharge their tax obligation diligently.
“I must also commend your commitment to upholding high tax compliance standards and responsible corporate citizenship, which sets you apart as the top taxpayers in Nigeria.”
“This aligns perfectly with our vision of making taxation the pivot of national development through voluntary compliance. Your respective industries play a pivotal role in generating substantial tax revenue for government and in shaping economic and fiscal stability of the nation.”
“We are not unmindful of the challenges facing businesses in Nigeria with the ongoing reforms to improve economic performance. These are painful but necessary choices we must make as a nation to attain our full potential,” he stated.
The chairman, while responding to some of the concerns raised by representatives of the companies such as multiplicity of taxes, duplication of tax oversight on corporate entities, promised to address the issues raised.
Some of the companies at the event included Nestlé Nigeria Plc, ExxonMobil, Shell, Guinness, Nigerian Breweries Plc, Flour Mills, Dangote Group, MTN, British American Tobacco company, First Bank, Access Bank, Guaranty Trust Bank, Zenith Bank Plc, KC Gaming Limited (Bet9ja), Airtel, Seplat, BUA Cement, Nigeria Liquified Natural Gas, NNPC Limited and others.
