The Federal Inland Revenue Services (FIRS) executive chairman, Mr Babatunde Fowler, has given a breakdown of how the tax agency would collect the N4.95trn revenue it is hoping to generate this year.
Speaking at the opening session of its corporate strategy retreat the FIRS boss said a total of N2trn is expected from Value Added Tax (VAT); N1.87trn from Companies Income Tax, N800bn from Petroleum Profit Tax, N180bn from Education Tax and N20bn from the National Information Technology Development Fund.
He said, “We have proposed a revenue target of N4.957trillion for 2016. This target is largely dependent on non-oil collections; in particular, VAT will account for N2trn and CIT is expected to account for N1.87trn.
“Between them, these two taxes are expected to provide almost 80 per cent of our collection in 2016. We therefore have our work cut out and there is no room for complacency.”
On the revenue performance of the service for the 2015 fiscal period, the FIRS boss said the service was able to generate a total of N3.74trn out of its target of N4.57trn.
For VAT, he said the sum of N767.33bn was generated out of a revenue target of N1.28trn.
He said out of a target N1.48trn for PPT, the service was able to generate N1.28trn while in the area of CIT, the service collected N1.29tn from the target of N1.51trn.
He said, “The above performance is clearly unacceptable and is not a reflection of our capacity. I am particularly not pleased with the very poor VAT collection, which, based on my previous experience at the state level in the administration of tax similar to VAT, should be high yielding and easy to collect.
“Even the relative good performance of CIT is buoyed by the fact that an initiative directly overseen by my office in the last three months of 2015 accounted for a collection of over N122bn, without which the performance for CIT would have been less than 85 per cent.”
He said owing to the fact that the level of voluntary tax compliance was still low, the service had introduced a number of initiatives aimed at improving compliance to about 90 per cent.
He said that, as part of efforts to reduce complacency, the service had introduced a performance management strategy to ensure that it meets its target.
He said, “As part of this enhanced performance system, we have increased the threshold for payment of performance bonuses from 60 per cent to 70 per cent.
“It is our expectation that you will not only meet, but surpass this 70 per cent threshold because if we meet only 70 per cent of our target, then government will be unable to fund the 2016 budget.”
In his remarks at the event, the minister of Budget and National Planning, Udo Udoma said the reforms being carried out in agencies of government had provided a platform to generate additional revenue from non-oil sources.
He said the country had yet to take advantage of its size as the largest economy in Africa to generate enough revenue from non-oil sources, as Nigeria’s tax to Gross Domestic Product ratio is still below global average.