The Chairman of the Federal Inland Revenue Service, Tunde Fowler, in this all-encompassing interview, speaks about the efforts of the agency towards realising its revenue generation target via taxes, move towards digitalisation of tax operations, the MTN fine saga and related issues.
He spoke with Editor-In-Chief, Musikilu Mojeed, and Business Editor, Bassey Udo.
PT: You will have been four years in office by August. How has the journey been so far?
Fowler: It depends on how one looks at it. Some count it from the date the Senate confirms the appointment. If one counts from that date, I will be four years by December. If from the date of resumption, then it will be in August.
PT: Well, whether August or December, what will you consider the highlight of your achievements in office so far?
Fowler: Looking at the revenue growth since I resumed, that will be it. Usually when one talks about revenue agencies, first of all, one looks at the figures. Over the period, we have consistently grown revenue, especially in the non-oil sector.
In 2018, we achieved the highest revenue collection in the history of Nigeria (N5.3 trillion). Out of that, 53.7 per cent came from the non-oil sector.
Also, we look at the new vision of FIRS, which is to be more customer-friendly, more convenient, more transparent in our operations, and deploying technology.
We now have systems where all tax activities can be done online. From registering your company with the Corporate Affairs Commission, to downloading your tax identity, or making any payment online.
In doing that, basically, if FIRS is given the taxpayer’s email address or telephone number, any time a payment is made with that tax identity, the taxpayer gets an alert. He can download his or her payment details. He or she can confirm his or her receipt online.
With technology, the FIRS has uploaded its system with the details of tax transactions from 2012 to date.
So, if anyone has any transaction in the last six years, the history of those transactions will be in the FIRS database for anyone to access.
The taxpayer can also download receipts for those payments from back periods and up to date. That brings about accountability and transparency.
If one looks at what has just been launched under the Joint Tax Board, the FIRS has, for the first time in the country, a unified database. This means a database that has all kinds of details about corporate and individual accounts. At the touch of a button, one can access anyone’s tax history or tax compliance level without leaving your office.
PT: When you say one can access anyone’s tax history, are you saying it is possible for a journalist trying to find information about a person or company to access that information at the touch of the button?
Fowler: Let me clarify that. The access is for people who require that information. Tax information is very sensitive.
So, this information is made available to all State Chairmen of FIRS and some people in government. If one has a contract, or is bidding for a contract, and they want to check for one’s tax compliance level, once the tax identification number is given, one’s tax history will automatically pop up from the system. There is no issue of whether one is bringing a fake tax clearance certificate, or the photocopy of the certificate is not clear enough. They can confirm all that online.
The information will also be made available to ministries, departments and agencies of government.
PT: So, the FIRS has no plan to make such tax information public?
Fowler: The individual can check his own tax information.
PT: What about if the public wants to know whether the company operating around them is tax compliant?
Fowler: One has to be careful. People’s tax history has to do with their wealth. For public liability companies, where their financials are published, we are not bothered about that.
For instance, if A works for B and B pays A about N10 million for the hard work he is doing. If B sees his tax position, that he has paid about N2 million as tax, and B wonders where A got the money to pay so much tax. B might be thinking A stole his money, without knowing A might, probably, have had an inheritance. He may have had another N10 million that he does not want to be B’s business.
Tax history is confidential. It’s private to the taxpayer.
However, (it’s different) for government agencies, like the Nigerian Immigrations Service, where people go to get their international passports, or some Embassies (if they so desire).
If an Embassy wants to confirm an applicant’s tax status, they will write to the State FIRS to request a confirmation of the information.
The FIRS can make the information available to them confidentially. At the touch of the button, the information will be made available to them. The FIRS will know whether what the taxpayer filled in his or her form is accurate, or whether the tax clearance certificate brought is genuine.
Those are possibilities. The FIRS has not decided yet whether such information will be given to the Embassies.
Even if we don’t, if the Embassy writes to the FIRS in Lagos or Kaduna, with the tax identity number, all they will do will be to hit a button on the system to know whether the person is within the tax net, or whether the figures given are accurate, and respond immediately. That should promote our ease of doing business.
Talking about ease of doing business. The FIRS also has World Bank reviews. As a country, there is a section under the ease of doing business which has to do with tax administration.
For the last two years, Nigeria has moved 25 points positively. This means, there have been improvements by the World Bank ranking.
We are waiting for the ranking for 2019, which should be out later this year. We expect to see another improvement, in terms of the ease of doing business, when it comes to the payment of taxes.
PT: If we may take you back to public access to companies’ tax records, the media in particular often finds it difficult to determine whether certain companies are tax-compliant or not. Most times when letters are sent to FIRS, getting the needed information is equally difficult.
Fowler: Like I said before, taxpayers, whether individuals or companies are given some level of privacy. If it’s a case of fraud, and it goes through any anti-corruption agency, then the FIRS deals with the (anti-graft) Commission. But, the FIRS must have a court order before doing that. But, normally the FIRS will not just give out the tax history of any taxpayer because somebody wants to know.
What we have done to a large degree is that we have gone backwards. We have found out that a lot of companies are not registered for tax.
If you notice, the FIRS has come out with new VAT certificates. We have asked taxpayers to display (these) in their places of business. That will show that the company is registered for tax. Once the company is registered for tax, it means one is enabled to collect VAT.
What FIRS has found out is that there are a lot of companies that are not registered for tax, but are collecting a lot of money in VAT and not remitting it.
So, we are trying to sensitise the society on why they must ask anyone they want to do business with if they have registered for tax.
PT: Is this privacy to taxpayers’ records the reason the FIRS has been so quiet over the report by the Office of the Attorney-General of the Federation against MTN Nigeria for allegedly refusing to pay billions of naira in tax revenues to the federal government?
Fowler: Another arm of government took up the issue, either based on petition or information that is available to them. Until the FIRS is called to give that information, it will allow other investigating arm of government to do what is required. At the point it will need verification from the FIRS, then they will do so.
If the FIRS had brought the case up, it will be a different case. The FIRS also has issues concerning tax with MTN, which it is dealing with. But, that is separate from what the other government agencies are talking about.
PT: This shows a bit of dissonance. It appears the FIRS and other arms of government are not working together. Why would another agency of government be doing something about tax, and the FIRS, that is the warehouse of information on tax matters, is not aware of it?
Fowler: From the information I have, which may be different from the information others have, the issue has to do with approval for MTN to repatriate certain profits.
Along the line, there may be tax implications. Usually, these agencies bring the FIRS in when there are tax implications. So, until the FIRS is involved, there is nothing one can do. The FIRS is not involved. The FIRS does not grant approvals.
So, depending on where it starts, there might be tax implications along the line. But, everybody is just talking about under-remittance of tax. They should look at the history of these transactions.
It started off with getting certain government approvals, which will enable them to repatriate their profits.
Along the line, there may be certain tax implications. So, until the FIRS is involved, I am afraid, count us out for now. It’s like any normal investigation. If the corporate organisation is being investigated by another government agency for information they believe they have, or petition given to them, then at the appropriate time they will involve the FIRS.
PT: Are you saying the information they used to even file a case against MTN in court did not come from the FIRS, which is the warehouse of all information on tax issues?
Fowler: No, the information did not come from the FIRS. The FIRS might be the warehouse of all tax information, but not at the beginning stages.
PT: The separate tax issue you said you have with MTN, where are you on that?
Fowler: The issue bordered on penalty and fine that was levied on MTN for non-registration of all their lines. The MTN took a position that the fine or penalty should be tax-deductible.
The FIRS said that does not make sense. One cannot be given a penalty or fine, which is a punitive measure, and the company is saying it is tax-deductible, so that it will get tax credit on that. So, they made a payment on that.
But, what the FIRS is saying is, for them to acknowledge and realise, it will not change its position on that. The fines and penalties cannot be considered as tax-deductible.
PT: So, MTN has already made the payment?
Fowler: Yes. Initially they made payment on account. The FIRS said, no, it is not on account, but it is tax due to government. So, that is the issue the FIRS had with MTN. The other issue MTN had was with the Federal Ministry of Justice.
PT: Can it be said the FIRS has resolved the tax issue with MTN?
Fowler: The issue will be fully resolved when MTN has put in black and white that the penalty or fine is not tax-deductible.
The alternative is for MTN to go to court and let the court (maybe Supreme Court) say the FIRS was wrong, and that such fines or penalties are tax-deductible.
PT: How much is involved? And how much did MTN pay?
Fowler: I am talking about the principles.
PT: Let’s go back to the beginning. The FIRS is seen as a complex institution. What do you consider the toughest challenge you have faced in running FIRS so far?
Fowler: I will talk about the taxpayer base and the attitude of taxpayers. Coming on board, one finds out that a lot of taxpayers are not within the tax net.
We also found out that the audit process the FIRS was engaged in was more of a self-assessment, a lot of which was not correct. The FIRS had to go back and try to bring to date that audit process for a lot of corporate organisations to be brought into the tax net.
During that period, the FIRS granted a tax amnesty in 2016, followed by the VAIDS (Voluntary Assets and Income Assessment Scheme), followed by stakeholder meetings to try and bring everyone in and have them come and declare truthfully what their tax liabilities should be.
The other stage had to do with change management. The FIRS staff, though hardworking, were used to certain conditions of service. We had to change that.
Government used to pay the FIRS staff performance bonuses if they achieve 60 per cent performance of budget. But, we said that was not challenging enough. We moved it up to 80 per cent.
So, in 2015, we started paying performance bonus if we achieve 80 per cent of the budget. That was a bit of a challenge to the staff.
Of recent, we’ve had to take it down to 70 per cent. That is not saying we will not try to achieve 80 per cent to get our performance bonuses. But, I guess, it’s because of the increasing target given to the FIRS, we had to compromise.
So, now we have agreed we have to achieve 70 per cent of non-oil revenue collection, the staff will be entitled to performance bonuses.
We also had to change our mode of operations. Instead of the staff getting involved in administrative issues, like buying diesel, petrol, or doing office repairs, etc. we outsource those.
So, now we have people who supply the FIRS diesel for our stations to be up and running. We get our petrol from Total Nigeria. We don’t encourage staff withdrawing money to buy petrol.
Everybody who has a pool car has a Total Top-up card, so that we can keep track of our expenditures. Those are a few internal changes we made. I think now we are all on the same page.
PT: So, you do not see convincing taxpayers as a challenge?
Fowler: The question is two-fold: What comes first? The chicken or the egg? If you don’t pay, you can’t see service. If you pay, you can hope for service.
In a lot of states in this country, that have started to pay tax, the people can start seeing the service. It’s very easy for me to refer back to Lagos.
When I left Lagos, 75 per cent of all expenditures were from internally generated revenues (taxes collected).
So, people could question the government and expect service. But, first of all, they have to start paying tax. There is no difference at the federal level.
People have to start paying federal government taxes and then they can ask the federal government what it has done with the revenues.
Recently, we had a meeting with the Senate. They asked similar questions as to what the FIRS is doing, and how far we have reached. But, there is something they mentioned that bordered on the non-compliance levels by taxpayers.
We are putting lien on accounts that are not within the tax net. We started off with N1 billion and above. Then, we took it down to N100 million and above.
On that, we had initially 7,793. Those that we have reached an agreement with, meaning they have come forward and made some payments, are 418. Those ones have paid N31.7 billion to date.
Those with N100 million to N1 billion are 34,943. A total of 2,148 have paid N40.8 billion. So, in the last two and a half months, the FIRS has generated N72.5 billion from less than 2,500 people.
PT: And there are lots of people who are yet to come forward?
Fowler: As their accounts are closed, they come forward and we start to discuss why they haven’t paid.
PT: The tax amnesty policy has ended. But, it appears the FIRS has not provided the public with the update on its impact. What happens to those who, despite the amnesty, still refused to come forward to regularise their tax status with the FIRS? Are we expecting some people to be taken to court?
Fowler: In court? For what? I don’t think you need that if you catch a thief red-handed. How many cases can the FIRS have in court? How many prisons can we have?
We are looking at close to 40,000 business accounts that are not doing the right thing. You take them to court? But, how many cases can the FIRS go to court over from the 40,000? Without any attempt to talk negatively about our legal system, if you go to court, you can be there for one year or more.
But, within 75 days, we have collected N72 billion, without going to court, by closing their accounts. If we decided to go to court, I am sure even the courts can’t handle up to 20,000 cases of this nature.
PT: Did you say the lien has already been put on the 40,000 accounts?
Fowler: Yes, we have put the lien on all the accounts.
PT: In a way, it means the amnesty programme is still on.
Fowler: It’s not on.
PT: If the programme is not on, if they come forward, is the FIRS going to fine them for not coming forward within the period?
Fowler: We will subject them to fines and penalties. Under the amnesty programme, the FIRS did not charge interest or penalties.
There is an unwritten policy that if anything is to be forgone, it will not be more than 50 per cent. They are still paying some interest and penalties for not coming forward to get their accounts unfrozen.
PT: People have criticised the decision by the FIRS to place lien on peoples’ accounts as highhanded, and hurting businesses.
Fowler: No, I don’t agree. It’s a law. What the law actually says is that the agency should put lien on the account and based on the amount the FIRS has specified, it should be credited straight to the government’s account in Central Bank of Nigeria.
The FIRS did not even follow that all through. It just said: put a lien and leave the money in their accounts. When they come and show us their records, we now know how much they are owing.
If they want to pay in instalments, they will draw up an instalment payment account. So, it’s not being highhanded at all.
This is why 2,500 or 2,600 can pay over N72 billion within 75 days, and we still have another 40,000 to go. When I was at the state level in Lagos, I saw things at the state or micro level. Under the Joint Tax Board, we see what the government has done with revenue at a macro level.
If N72 billion is shared among the 36 states of the federation, plus FCT, and ask them to buy the Sunday-Sunday malaria medicine (Daraprim) for N2,000 for their hospitals, it will cure every child between one and five years of malaria fever. If you allow children to die of malaria, because tax was not paid and there was no money to buy drugs, that is crime against society.
For people to operate within the society, make money from the services they provide to us through their businesses and refuse to pay tax, is criminal. It’s not highhanded. These people are criminals. You cannot do this anywhere else in the world. You can’t do this even in Ghana and get away with it.
PT: If you were to choose between increasing VAT, from 5 per cent to 7.5 or 10 per cent, and expansion of the tax base, which one would you prefer?
owler: Of course, the first one will be the expansion of the tax base. Tax has to be fair. That’s where we started off. That’s why we have said we have redesigned and issued new tax certificates for VAT. We have given (these) to all registered taxpayers. We believe we should have effectively at least 1.5 million corporate taxpayers. Effectively, because of the nature of our contract awards.
Usually, people are asked to bring at least three quotations, or in some places, six. One will find out that three or four of those are from the same source. Just different names, same office address, directors, but different corporate names. You find out that they have little or no transactions.
So, if we added all those, we could have said we have over two million corporate taxpayers’ accounts. But in reality, effectively it is about 1.5 million. And we are trying to make sure that all those 1.5 million taxpayers start to file returns and pay taxes, regardless of how small. Where they do not make any profit, no tax to be paid.
PT: But, there are companies that do not make profits, but FIRS looks at their turnover and says they must pay something.
Fowler: No, let me explain that better. There are certain taxes, whether you make profit or not, you have to remit VAT, withholding tax. Those are our taxes – third persons’ monies. We have what we call minimum tax.
For example, where you have done business for ten years and made no profit, the question is: If you are not a charity, how do you keep on doing business and every year keep on saying you have made no profit?
It’s something other developed countries have in place. We can easily go to the bank and say: Ade & Sons PLC says he has made no profits for 10 years, but from its bank statements, two banks have given him loans of say N5 million each.
The question is: The report the company gave to the bank must have shown there are potentials to make a profit, or they made profits for the bank to give them a loan.
After that is covered to bring everybody in, so we can visit the issue of VAT. Nigeria’s VAT is the lowest in the world, apart from UAE that has just introduced 5 per cent. And VAT is a consumption tax, meaning that you only pay if you want to.
What that means, if A wants to impress B, and takes B to eat at the Transcorp Hilton, A will pay VAT. This is because of the environment. The cost of the Coca Cola they will drink at Transcorp Hilton at N1,000 could have been bought at N100 in any supermarket without paying any VAT.
A can buy chicken, with all the ingredients in the market, cook it and eat without any VAT. But, instead of spending N5,000 for that meal, A decided to go to the Transcorp Hilton and spend N20,000, then A must pay VAT. It is a choice A has to make.
The other example is on items that everybody requires. There is no VAT on those. Items like education, medical etc. These are things that, regardless of choice, one is expected to have. But, if one decides to buy a brand new car, one will be expected to pay VAT.
The next question is what VAT is used for? About 85 per cent of VAT goes to state governments that cannot pay salaries or provide good roads or primary healthcare, despite being their constitutional responsibilities to do.
If they do not have the funding, either through the pay-as-you-earn (PAYE), personal income tax, or VAT, then they can’t do it. VAT is a personal choice.
The same Nigerians go to Ghana, South Africa, England and pay VAT three times the amount they pay in Nigeria. Or they go to Dubai and pay the same amount collected in Nigeria.
The question is: Why are people making so much fuss about VAT when in reality VAT is subject to choice for those who can afford it?
PT: But, you said it is better to expand the tax base than increase VAT?
Fowler: Yes, that’s what I said. The new VAT certificates the FIRS launched in 2017 are given out free. It is supposed to be displayed in your business premises once you are registered as a taxpayer, so that people can know that you are registered to collect tax.
The FIRS even had a small promotion, to say if one can give 25 names of businesses one has gone to that are not remitting VAT, if one brings it to any FIRS office, one gets a small gift.
PT: For how long will that five per cent VAT remain in place? There have been talks about increment for some time?
Fowler: Talking personally now, the federal government has not made any official pronouncement on VAT. The International Monetary Fund (IMF) came for discussions with the FIRS and spoke about an increase in VAT.
It said Nigeria’s VAT is one of the lowest in the world. We had discussions back and forth on the benefits of the increase. My position is to first expand the tax net.
At the end of 2019, if we can have everybody come under the tax net, sign for VAT, start remitting VAT, let’s look at the volume we can generate. We crossed the N1 trillion mark in VAT last year for the first time.
We are equally improving this year. Then we can discuss the way we are, for government to take a decision as to whether VAT should be increased or not. But we should be mindful of the benefits of this additional revenue to the state governments.
PT: Earlier, you said the FIRS has succeeded in harmonising the tax identification numbers between the federal and state governments. Are the uneducated and non-IT-compliant people in the rural areas covered by this arrangement?
Fowler: There is nothing about uneducated and non-IT-compliant. Everyone is covered. Everyone in the state has a tax identity number. You don’t need to be IT-compliant.
For example, we have a new department in FIRS called FEETTS (the Federal Engagement Enlightenment Tax Teams).
They go round the villages, speak different languages to register taxpayers so that they can have a tax identity. They have adverts in all major languages.
PT: E-commerce is growing in Nigeria. How ready is the FIRS to collect tax from people who do businesses online?
Fowler: There is a global issue that has to do with a digitalised economy. With the existing laws in Nigeria, we can appoint the banks as agents.
First of all, all those who make payments for purchases online, because for one to make a purchase online, one has to use a bank card and instruct one’s banker to pay.
We will address that issue very soon. We will tell banks, going forward, everyone who gives instructions for a serviceor a purchase online, they should deduct five per cent VAT.
But, one can’t eat too many things at one go. One will choke.
On a global basis, I am one of the 25 experts at the United Nations. I also co-chair the committee on digitalised economy. There is no global solution. But, different countries have taken different solutions to address the problem.
Nigeria has not taken a position yet. But, we are meeting to see if we can come up with a global solution that we can all adapt to.
Before we get to that level, we are thinking that maybe early next year we will advise banks to start deducting five per cent VAT for all online purchases done locally.
PT: Can you use this opportunity to clarify the controversy about N20 trillion Stamp Duty. Where is the money? Why is the FIRS not addressing the issue?
Fowler: Let me clarify that issue. First, the FIRS is not the agency collecting the stamp duty on electronic banking. The money resides in the Central Bank of Nigeria.
Secondly, when they say N20 trillion, I don’t know where that is coming from. I honestly don’t know the exact amount. But, the issue is in court. And because it is in court, the issue has to be resolved. So, there is isn’t too much discussion I can make on it.
PT: Who took the matter to court, and why?
FOWLER: I will tell you as much as I know. There are different types of stamp duties. The one you are referring to has to do with electronic bank transfers.
There is stamp duty at the state and federal levels. The NIPOST engaged a consultant to collect the stamp duty. At some point, one of the consultants, maybe the first one, could not deliver, another consultant was engaged.
This was under the former President Jonathan government. The position of government was that any money collected as stamp duty should be deposited in the federation account to be shared among the three tiers of government.
The old position of NIPOST was that the money realised should be for it to use in running their operations. So, the issue is now in court between the consultant and the government. So pending the resolution of the controversy, the money is being warehoused in the CBN.
PT: How come FIRS has always been mentioned each time they talk about the money? But, you have not mentioned its involvement in the matter.
Fowler: I am not a lawyer. But, from our existing laws, they are working on a new bill to take care of this stamp duties. But, under the existing laws, it is the mandate of the FIRS to collect that money on behalf of the Federation Account.
PT: A year or two ago, the FIRS identified some 3,000 undeveloped properties in Abuja that were not paying taxes. At the time, FIRS threatened to take owners of the properties to court. What’s the update on the matter?
Fowler: This what happened. The FIRS looked at all corporate names that owned properties in Abuja, but were not within our tax net. It was found that well over 2,000 properties owners were not in our tax net.
The law says if one has a corporate organisation, one should file returns. The law also says that the FIRS should use turnover as a measure of best of judgment.
Best of judgment means the FIRS official’s personal judgement to look at the property and come to a conclusion based on his independent assessment and judgment.
That’s the law. But, the law cannot address all issues. It is possible that if the official does not like a person, he can ask him to pay a higher tax, against a smaller amount, he will give to another person he likes.
So, when the FIRS saw those numbers of properties owned by corporate organisations, it resolved not to allow them to be left to an individual’s subjective assessment. We said let’s get the value of the property.
If the property is worth N100 million, that means that amount, either through an account or cash, had gone into that property. So, we take the turnover at N100 million.
For tax purposes, the tax rate is 30 per cent. It also says 20 per cent can be assumed as profit. So, on the N100 million, about N20 million will be assumed as profit, and the tax charge 30 per cent. That gives N6.6 million. So, an assessment of N6.6 million will be given to that corporate organisation that owns the property.
So, it’s very clear. Even if there is somebody in FIRS that does not like you, he cannot say your property that is worth N20 million is worth more than N100million, or a property worth N200 million is worth a N100 million.
So, the FIRS uses the best of judgment process, based on turnover and value of the property. But, does the court judgement saying the FIRS cannot use value of property to come up with the best of judgment?
I think it’s wrong. What the judgement says is that the FIRS should go back to what the law says that one can sit down in his one’s room and see a property and say it is valued at N500 million and give the owner X amount to pay.
So, the FIRS is not charging property tax, or anything of the sort. But, the FIRS is going to appeal that judgment for the sake of transparency.
I am not the best of people. But, anybody else who may sit here as FIRS Chairman may decide to take that approach in line with the law and decide the property is worth N1 billion and ask the owner to come and pay Y amount. It’s now left for the owner to come and dispute why it is worth N1 billion.
But, in doing the best of judgment, the FIRS has devised a way that has some level of logic. We are now more objective than subjective.
PT: But, does FIRS publish its guidelines to follow in handling the assessment, rather than follow the law on the best of judgments?
Fowler: No, but the people involved know exactly how the FIRS goes about it. On this particular case, I think they have paid about N5 billion.Then, there was a group of about 34 that said they did not even own the property at all.
So, the FIRS has referred those ones to the ICPC. There is a presidential initiative and the Coordinator is the Chairman of ICPC, who went to court.
So, all those properties have been forfeited to government, because the companies said they weren’t theirs either.
PT: But, there are several houses all over Abuja that still have FIRS warning stickers on them.
Fowler: Those ones we are still discussing with them. More have paid. We have collected N5 billion so far. Out of those, there are about 111 or so. About 34 claimed the properties were not theirs. We told them to put it in writing. Another 84 claimed the properties were not their also. But, when they saw government took the property of those who put in writing, the others said maybe they remembered they owned them.
PT: The issue of daily travel allowance. Since you assumed office, it’s been a lot of controversy. Maybe you want to give an update. Where are you on that?
Fowler: It’s being investigated. I said I won’t talk about it until I have sufficient information. Anytime one goes for an assignment outside the office, one is entitled to a duty tour allowance (DTA). When one comes back, one is supposed to retire the money.
However, there are some officers who were given DTA and they did not go for the number of days they claimed they were going for. In some cases, they did not go at all.
So, this is being investigated. So, it had nothing to do with tax revenue.
Of course, the figure that were being quoted in the news were ridiculous. And EFCC said they did not give such figures.
For the officers, we are waiting for the final report. For the officers who do not refund, or did not come back to say they did not go for the number of days they claimed, they are going to be asked to pay the amount back. So, it was within our approval limit and budget, but was wrongly applied.
But, the question is: How many people, both in the private and public sectors, get paid to go for a trip, and spend the same number of days and come back and give a refund?
This is not supporting what they did. In a year, the FIRS increase revenue by N1.2 trillion, from N4.1 trillion to N5.3 trillion. And the amount they keep going back and forth with is under N1 billion, which is less than one per cent. The distraction is so much.
PT: But, what are you doing to avoid that kind distraction recurring?
Fowler: The FIRS has approval limits for me and the directors. What I have done is to reduce the approval limits of the directors. Anything that is above their approval limits on a monthly basis has to come to my table.
PT: How does the harmonisation of the tax system between the federal and states help reduce double taxation?
Fowler: It will not only reduce, it will be eliminated totally.
Fowler: Because everyone has a tax identity. So, if one is paying tax to either federal or state governments, (it will be obvious). Let me give you two scenarios.
One, Lagos and Ogun states had issues about where to pay tax to. Some people from Ogun States had paid taxes of a N100,000. They came to Lagos and wanted to buy property of N20 million.
When the Tax Office saw a tax of N100,000, that means your total income is less than N1 million. So, how can they buy a N20 million property?
So, we told them, it was either they falsified their tax returns in Ogun, or something is wrong somewhere. We asked them to go back to Ogun and bring the tax equivalent of N20 million, or we open an account for them in Lagos for them to pay the tax based on the N20 million.
At times, they will prefer to pay for the shortfall here. They can pay in Lagos, maybe N2 million, and N100,000 in Ogun, so that they will have tax clearance in two places so that they can consummate the transaction. That’s double taxation. One is not supposed to pay the same tax to two tiers of government.
But, because of the transactions they wanted to do in Lagos, they said they preferred to pay in Lagos to do their transaction and close it.
Now that there is a unified tax data base, the man in Lagos will simply hit the button and say you cannot have two accounts. And because you have a tax identity linked to Ogun State, if payment is made, the money will go straight to Ogun State, and not to Lagos.
PT: What about a situation where the federal government charges a tax and the state government also charges something similar?
Fowler: Once it is different, it is not duplication. For instance, VAT and hotel occupancy charge. Both charge five percent. But, the latter is only applicable to the hospitality industry, while the former is for every transaction that is not VAT exempt. Lagos State followed the case up to the Supreme Court and successfully proved that it was not duplication.
PT: Apart from curbing double taxation, how can the unified tax regime help increase the tax revenue?
Fowler: Except one is not going to do business with government. It is getting to a level where when there are other companies that want to do business with another person, they would want to know if you are tax compliant, either out of the morality of taxation, or by making sure he or she does not do business with another person who is not tax compliant. So, everything is coming together.
PT: The FIRS revenue target this year is N8.8 trillion. Don’t you think that is rather too ambitious?
FOWLER: With all these things we are putting in place? It’s ambitious. But, we are on course. We are getting support from the Presidency and the Finance Minister. There were government agencies also that were not paying tax. The Chief of Staff has written to some of those that were giving us headache asking them to come up with a payment plan, or have the monies deducted from source.
PT: How much effort does the FIRS put in verifying tax submissions by ministerial nominees? The former Minister of Communications, Bayo Shittu, tendered just N5,000 tax clearance document and was cleared by the FIRS.
FOWLER: No, who said he was cleared?
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