Introduction
Tax Policy is a key resource allocation between the public and private sectors in a country. The draft National Tax Policy basically outlines the rules and regulations that will guide all parties involved in the Tax System in Nigerian; namely, the Regulators, the Legislators and the Taxpayers. The National Tax Policy provides a set of rules, modus operandi and guidance to which all stakeholders in the tax system will subscribe.
The draft National Tax Policy was part of the current reform programme of the tax system in Nigeria, which commenced in 2002 when the Federal Ministry of Finance inaugurated a study group to examine the tax system in Nigeria and make appropriate recommendations to entrench a better tax policy and improve tax administration in Nigeria.[1]
The enactment of Federal Inland Revenue (Establishment) Service Act (FIRS Act) 2007 was a response to several calls[2] and attempts towards ensuring an efficient tax administration and taxation in Nigeria.
The FIRS Act 2007 as was expected came with a lot of reforms and innovations aimed at strengthening the policy of taxation as well as its administration. While some of these innovations are a modification, re-codification or reenactment of existing laws, others are radically different from the existing law.
The Federal Inland Revenue Service (Establishment) Act, 2007 was therefore a follow-up action by government in continuation of the tax reforms in Nigeria which was commenced in the year 2002.[3]
The combined effects of the National Tax Policy and the subsequent enactment of the Federal Inland Revenue Service (Establishment) Act, 2007 have become a watershed in the annals of tax administration in Nigeria. The National Tax Policy which gave birth to the Act have together brought about, the needed Legal and Administrative framework that has revolutionized the tax systems in Nigeria.
This article discusses the reforms introduced by the draft National Tax Policy and the Federal Inland Revenue Service Establishment Act 2007 as well as the effectiveness of the allocation sharing formula. When the total revenue is collected by tax authorities and paid into the federation account, the body responsible for advising the President as to the allocation of the fund between the three tiers of Government is the Revenue Mobilization Allocation and Fiscal Commission.
The Federal Inland Revenue Service is a creation of Federal Inland Revenue Service (Establishment) Act (FIRS Act) 2007. This enactment was a response to several calls[4] and attempts towards ensuring an efficient tax administration and taxation in Nigeria.
The FIRS Act 2007 as was expected came with a lot of reforms and innovations aimed at strengthening the policy of taxation as well as its administration. While some of these innovations are a modification, re-codification or reenactment of existing laws, others are radically different from the existing law.
The reforms introduced by the draft National Tax Policy as well as the innovations introduced by the Federal Inland Revenue Service Establishment Act 2007 cannot be underestimated when considering the roles of stakeholders.
Prior to the enactment of the Act, several legislations provided for the regulation and administration of different classes of taxation. Although these legislations are still in force as the enabling legislations of those branches of taxation, some of their provisions (especially those that have bearing with the administration of tax) have been repealed by the provisions of the Act.[5] The principal legislations in this respect are:
(a) Personal Income Tax Act[6] (PITA). PITA which came into existence in 1993. It is an Act which imposes income tax on individuals, communities, families, executors and trustees[7] and also provides for the assessment[8] collection[9] and administration[10] of the tax.
(b) Companies Income Tax Act[11] (CITA). CITA came into existence on 1st April, 1977 and consolidated the provisions of Companies Income Tax Act 1961. It imposes tax on the profits[12] of companies and also provides for the administration of the tax.[13]
(c) The Petroleum Profit Tax Act[14] (PPTA) imposes tax on the profits from the mining of petroleum in Nigeria. It also provides for assessment, collection and administration of the tax. The PPTA came into effect on 1st January, 1958.
(d) Value Added Tax Act[15] (VATA) came into effect on the 1st December, 1993 and it imposes tax on the value added on certain goods and services and also provides for the administration of the tax.
(e) Capital Gains Tax Act[16] (CGTA) imposes tax on the gains made on property. CGTA came into effect in 1967 as the Capital Gain Decree No. 44 of 1967.
These legislations each provide for the administration, operation (i.e. assessment and collection) and enforcement of tax. The administration of the various taxes created by the respective legislations is principally placed on the FIRS[17] for taxes accruing to the Federal Government while the State Boards of Internal Revenue of 36 various State Governments[18] except the Federal Capital Territory collect from individuals resident in those states.
The Federal Inland Revenue Service (Establishment) Act came into force on the 16th April, 2007.[19] The Act was enacted as a part of the reform processes aimed at correcting the lapses in the tax systems in Nigeria. The Act incorporated some of the recommendations of the Study Group set up for Tax reforms in Nigeria.
Prior to the enactment of the Act in 2007, the legal frame work for the regulation and administration of the numerous types of taxes were contained in different tax laws to wit;
(i) The Companies Income Tax Act (CITA)[20]
(ii) The Personal Income Tax Act (PITA)[21]
(iii) The Petroleum Profit Tax Act (PPTA)[22]
(iv) The Value Added Tax Act (VATA)[23]
(v) The Capital Gain Act (CGTA)[24]
The enactment of Federal Inland Revenue Service (Enactment) Act, 2007 was a remarkable landmark in the development of Tax Administration in Nigeria. The Act has the effect of harnessing and consolidating administrative procedures in the various Acts.
It is important to note the provision of S. 68 of the Act which provides that “Notwithstanding the provisions of this Act the relevant provisions of all existing tax enactments shall be read with such modifications as to bring them into conformity with the provisions of this Act.” Any existing provision which is inconsistent with the FIRS Act shall be void.
The Act also provided for the Establishment of the Federal Inland Revenue Service[25]with juristic personality to sue and be sued by virtue of Section 1 (3) of the Act shall have such powers and duties as are conferred on it by the Act or any other enactment or law on such matters on which the National Assembly has power to make law.
S. 2 empowers the Service to control and administer the different taxes and laws as specified in the First Schedule (The laws specified in the First Schedule includes PITA, CITA, PPTA, CGTA, VATA, Stamps Duty Act) or other laws made or to be made, from time to time, by the National Assembly or other regulations made there under by the Government of the Federation.
The Section also empowers the Service to account for all taxes collected.
The functions of the service are specifically set out in S. 8(1) (a-t) inter alia as follows:
(a) Assess persons including Companies, enterprises chargeable with tax;
(b) Assess, collect, account and enforce payment of taxes as may be due to the government or any of its agencies;
(c) Collect, recover and pay to the designated account any tax under any provisions of the Act or any other enactment or law;
(d) In collaboration with the relevant ministries and agencies, review the tax regimes and promote the application of tax revenues to stimulate economic activities and development;
(e) In collaboration with the relevant law enforcement agencies, carry out the examination and investigation with a view to enforcing compliance with the provisions of the Act, etc.
Effect of the Federal Inland Revenue Service Act, 2007
The Federal Board of Inland Revenue (FBIR) which was created via section 1 of the Companies Income Tax Act CAP 60, 1990 Laws of the Federation of Nigeria now known as the Federal Inland Revenue Service (FIRS)[26] is charged with the administration of the following Federal Tax Statutes:-
The Companies Income Tax (CITA),
a. Withholding Tax Act,
b. Petroleum Profit Tax,
c. VAT Act
d. The Personal Income Tax of members of the Armed Forces of the Federation, members of the Nigerian Police Force, residents of the Federal Capital Territory, Abuja and Staff of the Ministry of Foreign Affairs and non-resident individuals.[27]
e. Capital Gains Tax
f. Stamp Duties
g. Taxes and Levies (Approved for Collection)
h. All regulations, proclamations, government notices or rules issued in terms of these legislation.
The Federal Government with the desire to bring about uniformity in the taxation of personal income enacted a comprehensive Personal Income Tax law for the whole country in 1993 so as to avoid multiplicity of tax legislations for various states. Another vital regime of taxation started with the coming into force of FIRS (Estab) Act, as earlier stated which has given the FIRS the powers to prosecute anyone who offends any provision of the Act. It is now an autonomous body like other statutory bodies such as the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) with power to sue and be sued in its own name.[28]
The combined reading of sections 2, 25 and 68 FIRS Act show that it is the intention of the legislation to unify of tax laws in Nigeria. Sections 2 and 25 of the Act give the service the power to control and administer the different taxes and laws specified in the First Schedule or other laws made or to be made from time to time by the National Assembly or other regulations made there under by the Government of the Federation and to account for all taxes collected. Section 68 of the Act states the relevance of other laws by providing that, the relevant provisions of all existing enactments including, but not limited to the laws in the First Schedule shall be read with such modifications as to bring them into conformity with the provisions of the FIRS Act[29] The Act went further to state that if the provisions of any other law including the enactments in the First Schedule are inconsistent with the provisions of the Act the Provisions of the Act shall prevail and the provisions of that other law shall to the extent of the inconsistency be void.[30] The laws as stated in the First Schedule are:- Company Income Tax Act, Petroleum Profits Tax Act, Value Added Tax Act, Capital Gain Tax Act, Minerals and Mining Act, Stamp Duties Act, Taxes and Levies (Approved List for Collection) Act and enactment or Laws imposing Taxes and Levies within the Federal Capital Territory.
It is important to consider the provisions of the previous law vis-Ã -vis that of the FIRS so as to understand clearly that the Act has wiped out completely the division of tax administration which hitherto existed between the then Federal Board of Inland Revenue (FBIR) now Federal Inland Revenue Services (FIRS) and State Board of Internal Revenue (SBIR) now State Internal Revenue Service (SIRS). Section 47 of PITA gives relevant Tax Authorities the power to call for returns, books, documents and information in respect of income or gain of a taxable person. The provision of this section is similar to the provision of section 49 of PITA which makes it mandatory for bankers to deliver information to tax authority of the area where the bank operates. The words tax authority of the area where the bank operates, presupposes the State Board of Internal Revenue. However, the provisions of Sections 46, 47 and 49 of PITA are virtually the same with the provisions in Sections 26, 27 and 28 of FIRS Act with the exception of the words ‘tax authority of the area where the bank operates which has been substituted with the Service i.e. FIRS and since any other law that is inconsistent with the provision of the Act shall be null and void, it clearly shows that the powers given to FIRS in sections 26, 27 and 28 supercedes the powers in sections 46, 47 and 49 of PITA. Also the Personal Income Tax Act of 1993[31] establishes for each State of the Federation a State Board of Internal Revenue (SBIR) which is saddled with the responsibilities of the administration of taxes such as:-
a. Personal Income Tax which is a Federal Legislation,
b. Other States Tax Laws and
c. Collection of VAT on behalf of the Federal Government.
The above statutory role given to SBIR seems to have been extinguished by the coming into existence of Sections 2 and 8 FIRS Act of 2007. One then wonders where states now derive their power to administer tax from. The fact still remains that those PITA provisions have not been repealed and by virtue of Section 68 FIRS Act provisions those legislations will be read with such modifications as to give them meaning since the Act has not also created offices for the 36 states of the Federation, it would appear that they will still deal with the SBIRS.
Tax Reforms in Federal Inland Revenue Service
As earlier mentioned, the FIRS Act came with some novel innovations which shall be broadly categorized into administration and operation/enforcement.
A. ADMINISTRATION
Administration of tax in Nigeria is the responsibility of the three tiers of government namely: the Federal, State and Local Government respectively. To this end section 1 of the Act established the Federal Inland Revenue Service as the tax authority of the Federal Government, while Section 85(A)(1) now 87 of PITA established the State Board of Internal Revenue (SBIR) as the tax authority for each of the State of the Federation, Section 85(D)now 90 of PITA established the Local Government Revenue Committee (LGRC) as the tax authority for each Local Government Area of a State.
The creation of the Federal Inland Revenue Service as the highest government agency of taxation in Nigeria implies that all other such authorities of equal standing must give way. Consequently, the Act in Section 62(1) repealed Sections (1) – (7) of CITA wherein the Federal Board of Inland Revenue (FBIR) was created. Section 62(2) of the Act went further to dissolve the FBIR and under Section 62(3) the Act as a transitional measure, transferred all the rights, interest and obligations of the dissolved FBIR to the FIRS.
In addition to assigning the rights, interest and obligation of the defunct FBIR to the FIRS, the Act, further in Section 8 assigned specific functions to the FIRS. It is however important to state that the statutory functions of the FIRS are anchored on two statutory objects as provided in Section 2 of the Act. The objects are:
(i) To control and administer all existing tax laws or such other laws as may be enacted by the National assembly, and
(ii) To account for all taxes.
It therefore follows from object (i) above that all tax laws and taxes mentioned above are to be administered by the FIRS. The Act specifies the laws to be administered in the first schedule to the FIRS Act as follows;
(a) CITA Cap. 60 LFN 1990 (Now Cap. C21, LFN 2004)
(b) PPTA Cap. 354 LFN (Now Cap. P13, LFN, 2004)
(c) PITA No. 104, 1993 (Now Cap. P8, LFN, 2004)
(d) CGTA Cap. 42, LFN 1990 (Now Cap. C1, LFN, 2004)
(e) VATA No. 102, 1993 (Now Cap. VI, LFN, 2004)
(f) Taxes and Levies (Approved list of collection) Act No. 21, 1998.
(g) All regulations, proclamation, government notices or rules issued in terms of these legislation.
Other Laws to be administered include;
(i) Any other law for the assessment, collection and accounting of revenue accruable to the Government of the Federation as may be made by the National Assembly from time to time or regulation incidental to those laws, conferring any power, duty and obligation on the service.
(ii) Laws imposing taxes and levies within the Federal Capital Territory.
(iii) Laws imposing Collection of Taxes, Fees and Levies collected by other government agency and companies including signature bonus, pipeline fees, penalty for gas flares, depot, levies and License, fees for Oil Exploration License (OEL), Oil Mining License (OML), Oil Production License (OPL), Royalties, Rents (productive and non-productive) fees for license to operate drilling rigs etc.
The import of this object viz a viz the content of the first schedule (as highlighted above) is that the FIRS can control and administer any collectible tax or taxes. It is noteworthy that this object further gives reinforcement and validity to the administrative functions conferred on the FIRS in Section 8(d), (e), (l).
(d) To collaborate with other relevant government ministries, agencies and promote the application of tax revenue to stimulate economic activities.
(e) To ensure compliance with tax law.
(1) Provide and maintain access to up to date and adequate data and information on all taxable persons – individuals, corporate bodies or all agencies of government involved in the collection of revenue for the purpose of efficient, effective and correct tax administration and to prevent tax evasion or fraud.
By virtue of the provisions of Section 62(3) of the Act, the FIRS vide its Chairman is the chairperson of the Joint Board created by Section 86 of PITA. It therefore means that the FIRS remains a veritable organization in the administration of tax in Nigeria.
For the FIRS to be able to perform all its functions as specified in Section 8 (1) (a) – (t) the Act confers on it (FIRS) the status of an artificial person recognized in law, when it provides in Section 2 that the FIRS is an organization capable of suing and being sued. This is novel considering the fact that under the repealed Section 1 – 7 of CITA, the then FIRS was the operational arm of the FBIR. Simply put, under the Act, the FIRS is no longer an appendage of any other regulatory authority but is autonomous.
The Act by virtue of S. 3 (1) established The Federal Inland Revenue Service Board with the mandate to exercise overall supervision on the service as stipulated under the Act. The Composition of the Board[32] is as specified in S. 3(2) of the Act as follows:
(a) Chief Executive Chairman of the Service who shall be experienced in taxation. The Appointment of the Chairman is by the President of Nigeria and subject to confirmation by the Senate;
(b) Six members with relevant qualifications and expertise who shall be appointed by the President to represent the six Geo-Political Zones;
(c) Representative of the Attorney General of the Federation;
(d) The Governor of Central Bank of Nigeria or his representative;
(e) A representative of the Minister of Finance not below the rank of a Director;
(f) The Chairman of the Revenue Mobilization, Allocation and Fiscal Commission or his representative who shall be any of the Commissioners representing the 36 states of the federation;
(g) The Group Managing Director of the Nigerian National Petroleum Corporation NNPC or his representative who shall not be below the rank of a Group Executive Director of the Corporation or its equivalent;
(h) The Comptroller General of the Nigerian Customs Service or his representative not below the rank of Deputy Comptroller-General;
(i) Registrar-General of the Corporate Affairs Commission or his representative not below the rank of a Director, and
(j) The Chief Executive Officer of the National Planning Commission or his representative not below the rank of a Director.
The Powers and Functions of the Board have been broadly spelt out in S. 7 of the Act.
The Board shall:
a. Provide general guidelines relating to the functions of the service;
b. Manage and superintend the polices of the service on matters relating to the administration of the revenue assessment, collection, and accounting system under the Act or any enactment or law;
c. Review and approve the strategic plan of the service;
d. Employ and determine the conditions of service including disciplinary measures of the employees of the service;
e. Stipulate remuneration, allowances, benefits and pensions of staff and employees in consultation with the National Salaries, Income and Wages Commission and
f. Do such other things which in its opinion are necessary to ensure the efficient performance of the functions of the service under this Act.
By the wording of Section 3(2)(a) appointing the Executive Chairman of FIRS as a member of the Board and the provision of S. 69 FIRS Act, the Executive Chairman of FIRS also doubles as Chairman of the Board. This strengthens the submission that the FIRS is not an appendage of any other regulatory agency.
The Act also stipulates in S. 89(1) PITA that there shall be a Technical Committee of the Board composed of:
a. The Executive Chairman of the Service as Chairman;
b. All Directors and Heads of Department of the Service;
c. The Legal Adviser of the Service; and
d. The Secretary to the Board.
The functions of the Technical Committee as provided by S. 89(2) PITA shall be to:
a. Consider all tax matters that require professional and technical expertise and make recommendations to the Board;
b. Advise the Board on any aspect of the functions and powers of the Service under this Act; and
c. Attend to such other matters as may from time to time be referred to it by the Board.
d. Co opt additional staff from the State Service in the discharge of its duties.
The National Tax Policy and the Act have undoubtedly introduced a number of far reaching innovations into tax administration in Nigeria that are in line with the reform programmes of the Government.
The Act has laid the appropriate legal frame work for proper tax administration of tax in the country through the harmonization of all existing taxes and empowering the Board and the Service with power of implementation of the laws. The administrative frame work for proper tax administration has also been put in place. The establishments of the Board and the Service as well as other Administrative Bodies/Stakeholders in Tax Administration in Nigeria are major contributions to tax administration. The powers and functions of these Administrative Bodies and Stakeholders which are well spelt out, have not only helped in the reduction of conflicts and multiplicity of taxes, but it have also provided ways and means of resolving these conflicts among stakeholders.
Other contributions of the National Tax Policy and those of the FIRS, (Establishment) Act, 2007such as the following have helped the growth and administration of taxation and are worthy of mention in the areas listed below:
1. Consolidation:
The consolidation of the Board of Appeal Commissioners[33](previously responsible for determining the appeals from the operation of the PITA) and the VAT Tribunal[34](previously responsible for determining the appeals from the operation of the Value Added Tax Act) into a Tax Appeal Tribunal with jurisdiction to entertain litigations of all tax types.[35]
2. Changes in Organisational Structure:
Major changes in organizational structure was created by the integration of offices (CIT, VAT, PIT, and STAMP DUTY) into a “One Stop Shop”.[36] This is in contrast with the structure that existed previously whereby the various taxes were paid in different offices. Under theInternal Restructuring, FIRS whichpreviously, had six departments, now has four groups with several departments under each group. FIRS now have large Tax Offices and Integrated Tax Offices (no more Area & VAT Offices). The effect of this is that all tax issues can now be tackled in any of the Integrated Tax Office nearest to the taxpayers.All tax payments can now be made in one place depending on the category. For instance:
a. Large Tax Offices (LTO): Large companies that have a yearly turnover of One Billion Naira and above for three (3) consecutive years are to make all Tax payment in this office. Also, Ministries and Parastatals in FCT that have a budget of over One Billion Naira will also make payments in this office.[37]
b. Integrated Tax Offices (ITO): Medium and Small companies that have turnover of less than One Billion usually make payments in this office.[38]
3. Transition:
Section 63 of the Act provides for a transition Programme from the old FIRS to the new FIRS, so that the staff of the FBIR can be deemed to be transferred to FIRS. There is therefore no need for fresh applications for the transmission to take place. In the same way, all previous liabilities and assets are automatically taken over.
4. Change of name and juristic personality under the FIRS Act:
The Federal Board of Inland Revenue is now to be known as the Federal Inland Revenue Service. But there is now what is known as the FIRS Board as a juristic body[39], which is capable of suing and being sued.
5. Membership:
The membership of the board has been enlarged to include representatives of Corporate Affairs Commission, Nigerian National Petroleum Corporation, Revenue Mobilization, Allocation And Fiscal Commission, National Planning Commission, Nigeria Customs Service, Central Bank of Nigeria and Representatives of all six geo-political zones.[40]
6. Autonomy of the FIRS
Under the FIRS Act, certain percentage of tax revenue is now to be retained for smooth running of FIRS.[41]Prior to the enactment of the Act, funding remained a major impediment to tax administration in Nigeria. The funds were irregular and inadequate. This invariably bred corruption which affected efficiency of the Personnel and effective service delivery. The situation has now improved tremendously since the Service is now entitled to 4% of its total collection as cost of collection. Section 15 of the Act provides for the financial autonomy of the FIRS subject to appropriation by the National Assembly. The FIRS retains a certain percentage (as may be determined by the National Assembly) of the total of all non oil and gas revenue and such other grants as it may receive from any tier of the government of the Federation of grants – in – aid and gifts, testamentary dispositions, endowments and contributions received from any other source. Section 15(a) requires the FIRS to take its estimates for capital and recurrent expenditure to the National Assembly for approval.
7. Budget:
It does appear from the wordings of Section 15, that the budget office does not handle the budget of the FIRS. This, in addition to the allowance from the non-oil and gas revenue which will allow the FIRS easy access to funds needed to adequately equip and staff the FIRS and therefore ease the problem of tax administration. By virtue of S.17 FIRS Act, the FIRS can now cause to be prepared not later than 30th September of each year an estimate of its income and expenditure for the succeeding year for the purpose of appropriation by the National Assembly. This will to a large extent buttress their financial autonomy.
8. Reforms under CITA:
Before the 2007 amendment to Companies Income Tax Act CITA, company losses could only be carried over for a period of 3 to 4 years. But, now a company can carry over losses forever.[42] Section 14 of CITA on insurance stipulates separatetax liabilities for life insurance and non-life insurance and on computation.
9. Draft National Tax Policy:
The Prof. Dotun Phillip’s Study Group recommended that there should be a National Tax Policy.[43] Hence, a Presidential Committee on National Tax Policy was constituted by the Administration of President Olusegun Obasanjo with the mandate to develop a National Tax Policy for Nigeria.
The committee submitted a 48 paged Draft National Tax Policy to the Federal Government in 2008. The Draft was publicized calling for suggestions and communiqué from stakeholders and the public.[44] It is worthy to note at this juncture that thisis the first attempt at having a holistic National Tax Policy.
10. Collaboration: The FIRS Act[45] also empowers FIRS to collaborate with law enforcement agencies i.e. Nigeria Police Force, Independent and Corrupt Practices Commission ICPC, Economic and Financial Crimes Commission EFCC, and Nigeria Customs Service.The “Tax Policy and Administration Thematic Group” of the World Bank has developed a useful diagnostic framework for tax administration reform which includes a description of quantitative indicators for effectiveness and efficiency that might be used to get a general ideal of the physical dimension of the revenue administration and how effectively and efficiently it is currently performing its functions and where performance problems might be acute.[46]
The regular stakeholders consultations or collaborations and the numerous public enlightenment campaigns as well as the institutionalized measures to curb bribery and corruption among tax officials by the Service is gradually instilling public confidence in the integrity of the tax system. In Lagos State for example, the masses are beginning to associate payment of taxes with the development of Lagos. The slogan ‘Eko oni baje’ meaning Lagos will not be destroyed is a direct undertaking by each person that in performing his part of the bargain by paying his taxes, Lagos will be developed. This tax awareness is what is needed for the development of a tax regime. It is also imperative that the Government has a lot of role to play in this expectation of the masses. The current uprising over the removal of fuel subsidy in Nigeria is an indication of total lack of distrust over the government’s use of public funds.[47]
For all reform efforts to significantly improve the effectiveness of tax administration, government must be politically committed to reform, the major obstacles to an effective tax administration have to be identified, and there has to be well designed strategies for addressing them.
11. Tenure of Office:
While Chairman’s tenure of office was indefinite under the old regime, S.4 FIRS Act fixes for him a term of 4 years renewable once only.
B. OPERATIONS/ENFORCEMENT MACHINERY
Operations, for our purpose refers to the various acts under the Act which ensure that collectible taxes are duly collected while enforcement refers to the provisions which seek to compel tax-payers to comply with the tax law. Under this heading, the following shall be considered:
1. POWERS OF FIRS TO COLLECT TAX
The Act empowers the FIRS under Section 8 to the following:
i. To assess persons (companies and enterprises) chargeable with tax
ii. Collect, account and enforce payment of taxes
iii. To pay taxes collected to designated account
iv. To collaborate with other relevant government ministries, agencies and promote the application of tax revenue to stimulate economic activities.
Notwithstanding the provision of Section 2 that the FIRS is to control and administer all taxes and tax laws, it is our humble submission that by virtue of the above provision of Section 8(1) (a) – (d) of the Act, the FIRS is directly involved in the assessment and collection of all personal income taxes including those collectible by State Governments under PITA. Although the Act did not repeal or in whatsoever way interfere with the provision of Section 87 of PITA wherein the State Board of Internal Revenue were created and empowered to collect Personal Income Tax accruable to State Government, the combined effect of the said Sections 2 and 8 (1)(a)-(d) would appear, to sweep away the powers of States Boards of Internal Revenue under the State Governments. It is considered that Section 68(1) which gives superiority to the provisions of FIRSA presupposes that all other existing enactments (PITA inclusive) shall be read with such modifications as to bring them into conformity with the provisions of the FIRSA. That is a saving provision which ensures the continued existence of the States Board of Internal Revenue alongside other creations of PITA that are not expressly repealed by the provisions of FIRSA. Further to this is the fact that FIRS does not have all it takes to be in thirty six States and probably all the Local Governments of the Federal Republic of Nigeria.
2. ENFORCEMENT
Prior to the enactment of the FIRS Act, the under-mentioned enforcement provisions existed under the various tax laws viz:[48]
(1) Section 96 of PITA and Section 66 of CITA, which empowers tax officials to distrain the goods or property of defaulting persons,
(2) Section 59 of PITA, which established the Body of Appeal Commissioners,
(3) Section 45A of CITA, which empowers tax officials to forcefully enter and search any premises for offences of non-disclosure or partial disclosure,
(4) Section 65 of CITA which prescribes penalty for non-payment and enforcement of payment and
(5) Section 71 of CITA which creates tax offences and prescribes penalty for same.
The above provisions notwithstanding, enforcement remains a problem in the administration of tax. The often cited factors for these are weak legislation, slow pace or overwork of Tax Appeal Commissioner and the seemingly slow pace at which tax cases in court were handled.[49] It is this vein that Awosan E.A. called for the setting up of special courts to specifically handle tax cases.[50]
The enactment of the FIRS Act takes care of the lapses or inadequacies in the above mentioned provisions. By virtue of S.68 FIRSEA, the provisions of the FIRS relating to enforcement shall take precedence over the other existing legislations.
3.BROADENED POWERS OF DISTRAINT AND ENFORCEMENT
Aside from the provision of Section 8(1) (b) which empowers the FIRS to enforce payment of taxes, Section 36(1) &(2) specifically provide for the use or assistance of law enforcement officials in the execution or levying of any warrant of distraint. Section 8(1) (g) mandates FIRS to adopt measures to identify, trace, freeze, confiscate or seize proceeds derived from tax fraud or evasion while Section 8(1)(e) mandates the FIRS to collaborate with relevant law enforcement agencies to ensure compliance with tax laws. The phrase ‘to adopt measures’ used in Paragraph (g) mentioned above is intended to widen the powers and/or duties of the FIRS beyond the scope of the Act itself provided such measures are not unconstitutional or illegal.
Enforcement Provisions in Sections 33-36 of the FIRS Act empowerFIRS to embark on rigorous enforcement drive. This has led to the recovery of over N16.8 billion tax liabilities in one month from defaulting taxpayers including MDAs and corporate bodies.[51] The FIRS announced that its collection in 2010 has hit 2.83 trillion naira thereby over shooting its 2.5 trillion targets by 300 billion naira[52].
4. TAX APPEAL TRIBUNAL
The FIRS Act established the Tax Appeal Tribunal which is an amalgam of the defunct Body of Appeal Commissioners and the Value Added Tax Tribunal.[53] Appeals from TAT lie to the Federal High Court. Although this would seem to have rectified the anomaly in the practice at the defunct VAT Tribunal wherein appeals from that tribunal go to the Court of Appeal, there are still arguments as to whether or not it is usurping the jurisdiction of a constitutionally created court i.e. the Federal High Court. Compliance has always been a problem in Nigeria’s tax system, during the military era; the Tax Force Unit was used to enforce tax compliance. However, with democratic rule, this is not allowed and the use of the traditional court system is not only too cumbersome but is also time consuming. To this effect, the FIRS Act by S. 59 has prompted the creation of Tax Appeal Tribunals so as to make room for quick dispensation of justice.
Section 59 of the FIRS Act established the Tax Appeal Tribunal (TAT) to adjudicate on disputes arising from tax laws.[54] The Tribunal which is empowered to make its own rules[55] is precluded from applying any of the provisions of the statute of limitation.[56] Each party to the dispute bears its cost.[57] An award or judgment of the tribunal shall, after registration with the Chief Registrar of the Federal High Court be enforced as a judgment of the High Court by the person seeking to enforce the award or judgment.[58] Appeal against the decision of the tribunal lies to the Federal High Court.[59] By virtue of paragraph 13(1) and 14(1) of the Fifth Schedule to the Act, an aggrieved person or the FIRS, if aggrieved over tax issues can appeal to the Tax Appeal Tribunal, in case the matter can be heard and probably decided timeously. It does however appear from the provisions of paragraphs 13(1) and 14(1) mentioned above that the body of appeal commissioners has gone into extinction.[60] One wonders if the Tax Appeal Tribunal can bring about the much desired expectation especially as it has no criminal jurisdiction.[61] Another issue is that the appeal against the decisions of the Tribunal is based on points of law and not facts.[62] This may create hardship and injustice for any of the parties at any given time especially if issues of law need to be canvassed all over again at the Federal High Court. A litigant under such a situation may need to spend money twice and that would defeat the intention of cost reduction.
Furthermore, failure of the constitution of the Federal Republic of Nigeria and FIRSA to strictly locate the tribunal within the judiciary or place it within the hierarchy of courts is likely to spark off controversies as to judicial interpretation of the status/nature of the tribunal and this can in turn lead to cases challenging the jurisdiction of the tribunal. It would be a shame to have the Tax Appeal Tribunal go the way of the earlier Body of Appeal Commissioners in stabilinus case (Supra).
An aggrieved party on any tax matter can appeal to the Tribunal instead of the regular courts. It is important to note that taxation being a matter of revenue can also go to the Federal High Court under S.251 of the 1999 Constitution. Unless the parties are compelled as a precondition for accommodating them in courts to first state their issues before the tribunal, they may choose to bye pass the tribunal and go straight to court. To give effect to the creation of Tribunals, there should be a constitutional amendment to integrate it into the system of courts or quasi judicial institutions
Operational and enforcement provisions/power to prosecute tax offenders have also contributed to the efficiency of the Service and the development of tax in Nigeria amongst other contributions to tax development in Nigeria.
5. OFFENCE AND PENALTIES
It is noted that the penalties for the offences stated when compared to other penalties contained in our Criminal jurisprudence is in line with the modern day realities and potent enough to deter would be assailant or impersonators. This does not preclude the call for fines to be based on percentage basis so that inflation does not render it insignificant in the near future.S.40 to 49 FIRS Act which deals with offences and penalties have increased most of the fines to N200, 000 while the terms of imprisonment, have also been pegged between 3 to 10 years. The fines previously ranged from N500 to N10, 000 depending on the type of tax or offence.
Sections 45 – 47 FIRS create offences and penalties that are novel in the history of tax administration in Nigeria have provided the following offences and pealties. These include: arming oneself and causing injury to tax officials (5 years and 10 years imprisonment respectively), impersonation of FIRS officials (3 years imprisonment or N200,000 fine), General Offences not provided for in the Act (N50,000.00 or 6 months imprisonment).
6. POWERS OF PROSECUTION
The FIRS is empowered by S. 47 FIRS Act prosecute tax offences. Furthermore the FIRS does not require the approval of any other authority before it can prosecute offenders as was the case with the former FIRS under Section 99 of PITA. The implication of this is that the office of the Attorney General of the Federation and Minister of Justice is not responsible for staffing the legal unit. With this, it is expected that cases will be speedily handled, accountability will be ensured and loyalty will be undivided.
7. POWER TO COMPOUND OFFENCES
Section 48 of FIRS Act empowers the FIRS to compound offences by collecting sums of money not exceeding the maximum fine for the offence as provided by the Act. This provision is novel to our criminal jurisprudence. Although the intention of the lawmaker here is to reduce the cost of criminal litigation and timeously dispose of such cases, where the power is arbitrarily used, it may create room for corruption of tax officials and open a flood gate for tax leakage. It is suggested that clear and unambiguous rules should be created for compounding tax offences.
8. POWER TO CONDUCT TAX INVESTIGATION
Section 35(2) FIRS empowers the FIRS or conduct or cause an investigation to be conducted to ascertain whether or not there is a violation of any tax law. This provision can be used whether or not a violation has been reported and has widened the powers of FIRS to the effect that they can now perform the functions of law enforcement officers (especially the intelligence officers). Section 35(3) specifically provides the extent to which the provision under Section 35(2) can be exercised when it provides that the FIRS can investigate the lifestyle and property of any taxable person whose income cannot justify his lifestyle.
Section 35(1) further empowers the FIRS to employ the services of special purpose tax officers to assist any relevant law enforcement officer for the purpose stated in Section 35(2).
While applauding the provision of Section 35, we must be wary of the politicians and/or “statesmen” in the country who may want to ride on these provisions to settle scores with perceived opponents. It is therefore worthwhile for the Act to operate in such a way as to insulate the FIRS from political interference or unnecessary witch hunting.
Despite the several calls[63] to bring the rich and affluent dodgers of taxes to the tax net there is a further worry that the use of Special Purpose Tax Officers who may transform themselves into consultants could constitute another source of leakage of public funds to corrupt government officers. This is obvious from the fact that the duties of Special Purpose Tax Officers as defined by Section 69 of the Act is synonymous with the duties of law enforcement officers such as the police which Section 36(1) and (2) has empowered the FIRS to utilize in the course of enforcing payment of tax. This could amount to duplication of duties.
9. REWARD OF INFORMANTS
Another welcome innovation is that provided by Section 37 of the Act, which provides for reward of informants that supply information to tax authority. Such rewards would motivate people to supply necessary information that could curb the monster of tax evasion in tax administration. It is however suggested that rewards under Section 37 of the Act should not be left at the discretion of the board but should be dependent on a certain percentage of the amount recoverable from the evader. This will not only serve as bait to volunteer information, but will also act as a check against corrupt practices of government officials. Once there is enough information to create tax awareness it would arouse the patriotic feelings of citizens to ensure that tax defaulters are detected.
10. POWER OF THE ACCOUNTANT GENERAL OF THE FEDERATION TO DEDUCT UNREMITTED TAX FROM SOURCE
Section 24 of the Act empowers the Accountant General of the Federation to deduct at source (from budgetary allocation) the unremitted taxes of government agencies and transfer such deducted sums to the FIRS within 30 days of deduction. The intention of the legislature here is to:
(i) Compel ministries and government agencies to remit as soon practicable taxes deducted from worker’s salary (PAYE) or withholding tax received from contractors.
(ii) Ensure compliance with tax laws for example that such sums deducted as tax are not applied on behalf of the government for other government businesses, but paid to the appropriate tax authority who in-turn shall remit same to the designated government account.
(iii) Prevent fraud. A parastatal knowing that such unremitted sum would be deducted from its allocation may not find it enticing to hold unto deducted taxes beyond the allowed period.
11. USE OF TAX CONSULTANTS
To further improve on the revenue of the country, the Act by virtue of S. 12(4) has empowered the service to engage the services of Consultants such as Tax Consultants, Accountants and Agents to transact any business or to do any act required to be transacted or done in the execution of its function. The Consultants shall however not be engaged to carry out the primary functions of the service such an assessment, collection of taxes and other routine responsibilities.
In this regard a number of tax related businesses and training institutions have emerged; the efficiency of the private sector is, therefore, being brought to bear in the administration of taxes.
It seems that the FIRS Act 2007 has legitimized and legalized the engagement of tax consultant because the service itself is empowered to appoint and employ such consultants, including tax consultants or accountants and agents to transact any business or to do any act required to be transacted or done in the execution of its functions under the FIRS Act.[64]
12. HUMAN CAPITAL DEVELOPMENT:
Capacity building of the Staff as well as enhanced welfare packages and regular training have all become the hallmark of the service that has made it very attractive to a number of Professionals.
13. E-TAXATION/DATA BASE DEVELOPMENT:
The introduction of internet tax payment known as E-payment via the FIRS Portal has been made for Tax Payers thereby making all forms of tax payments less cumbersome, more efficient and also eliminating errors due to manual process of tax collection.[65]
Before the establishment of the Service most of the operations relating to taxation were done manually with a lot of paper work involved. The introduction of FIRS online payment, e-ticket, Tax Identification Number (TIN) Project Fact[66] and payment cards was one major contribution of the service to tax administration in Nigeria is. The operations of the Service are now fully automated. All the processes can now be done electronically on-line on the FIRS Portal. The incident of human interaction has been reduced drastically.
Under S. 8(q) of the Act, the Service is mandated to issue Taxpayers Identification Number (TIN) to every taxable person in Nigeria in collaboration with State Boards and Local Government Councils. By this the database of the Service is being developed for monitoring of compliance. TIN is one major innovation that has propelled voluntary compliance with the taxation in Nigeria. It is now mandatory to have TIN for every Public Procurement and business transaction in Nigeria.
Furthermore, TIN, is a mandatory requirement of E-payment for all transactions with the Banks effective from 1st February, 2008.
Issuance of FIRS Tax Card (E-Card), provides a special debit card that enables the payment of FIRS Taxes. Banks have also been designated and authorized to transact business with Taxpayers with the E-Card.
The development of the FIRS database and integrated linkages with other relevant stakeholders in the financial sector has not only helped in proper monitoring but has also improved compliance and widened the tax net.
The National Tax Policy
The Nigerian tax system has been characterized by very low level of compliance with Tax Laws, and evasion. The inherent lapses in our tax regime, have gingered successive Government to continually try to improve on Nigeria’s Taxation Systems with a view to having a Tax System that will encourage voluntary compliance; Reduction of tax evasion to the barest minimum; instilling public confidence in the integrity of the tax systems and bringing about a fair, uniform and impartial administration of relevant tax laws.[67]
It became imperative that the Nigerian tax policies were in need of a drastic review, being characterized by multiple and often arbitrary taxes imposed by the Federal, State and Local Governments. The Organized Private Sector has repeatedly complained that multiple taxes impose extra costs on businesses. To be effective, therefore, the new tax initiatives must harmonise the tax structure at the three levels of government and eliminate doubletaxation.[68] The impositions of arbitrary and oppressive taxes have been cited by some firms that either closed down or relocated to neighbouring countries.
According to the then minister of finance, Dr. Mansur Muhtar, the new policy will lay out a new set of rules, correct the inherent lapses in the existing tax structure and promote fiscal federalism. He said the policy would also help the three tiers of government to improve their internally-generated revenues, block the glaring leakages in the system and facilitate economic growth by reviewing the legal and institutional framework of tax administration in Nigeria.[69]
These are laudable objectives that should be vigorously pursued and which deserve the support of all stakeholders. The latest initiative aims to completely prevent local authorities from harassing individuals and corporate bodies from dubious taxes.
In 2002, a Study Group (the SG) was inaugurated to review the entire tax system in Nigeria.[70] The terms of reference included inter alia:
· Review all aspects of the Nigerian Tax system and recommend improvements therein.
· Review the entire tax administration and recommend improvements in the structure for the whole country.
· Consider measures to bring international developments in tax administration to bear in Nigeria.
· Employing taxation as an instrument of diversifying the economy and improving economic development;
· Using taxation to create a system that ensures greater accountability for tax revenue, both on the part of government and revenue authorities;
· Limiting the granting of excessive tax incentives, particularly in the oil and gas sector;
· Creating a modern tax system which is capable of responding to the dynamics of international socio-economic changes from time to time.
Objectives of the National Tax Policy[71]
The national tax policy provides a set of rules, modus operandi and guidance to which all stake holders in the tax system will subscribe.
The ultimate goal of the draft national tax policy is to ensure that taxation provides a significant and sustainable source of funding for the country’s expenditure and also to achieve a tax system that will dramatically increase investment within the Nigeria economy, thereby leading to more jobs and higher economic growth. It also hopes that a bye-product of this process would be to identify those salient issues to be adopted for possible inclusions in the additional amendment of the 1999 constitution of the Federal Republic of Nigeria, and the various Nigeria tax laws.
The draft policy is presented in two segments; one part highlighting the tax policy and administration concerns, while the other consider how government may want to achieve a sound tax policy.
The draft prescribed that the National Assembly shall be the guardian of Nigeria’s national tax policy.
The reform process of the Nigeria tax system commenced in 2002 when the Federal Ministry of Finance inaugurated a study group which examined the tax system and made appropriate recommendations to entrench a better tax policy and improve tax administration in the country, the study group submitted its report in July 2003. Thereafter, a working group was set up in 2004 to review the recommendations of the study group which were further reviewed and commented upon by various stake holders[72].
A clear outcome of the various meetings and consultations was a general agreement that Nigeria was in urgent need of a national tax policy to prescribe a set of guiding principles and also provide a stable point of reference which all stakeholders in the tax system can refer to and on which they shall be held accountable.
To this end, a committee was commissioned to provide a blue print of the national tax policy document for onward transmission to the Federal Ministry of Finance.
Administration and Policy Issues
To ensure an effective tax policy document, the following are the crucial administration and policy issues that were recommended;[73]
1. A sufficient proportion of revenue collected by the federal or state revenue authority, as judged by international comparisons with well-funded, efficient tax systems, shall be provided to the federal or state tax authority for its administration.
2. That any unspent portion of such allocated fund shall be returned back to Government while the revenue authority shall retain 10% of the total revenue to cater for refund requests.
3. The government is committed to achieving high level of technical training and capacity building of all the tax revenue officials in the country.
4. All tax and revenue authorities who are saddled with tax refund obligations shall meet these obligations both diligently and efficiently.
5. It is the responsibility of the tax authority to constantly educate taxpayers on the relevant aspects of the tax system.
6. All the tax revenue authorities in Nigeria shall embrace self-assessment, and should put in place structures that will guarantee the realization of true self-assessment.
7. Every company and taxable persons shall be registered for tax purposes. The federal revenue authority is required to issue a tax identification number (TIN) upon the registration by taxpayers for taxes.
8. The Nigeria taxation system shall be subject to a general review every year and subject to a comprehensive review every three years.
9. The Ministry of Finance is the sole body saddled with the responsibility of proposing amendments to all tax and revenue laws and legislations to the legislators.
10. The current policy of shifting away from direct taxation to indirect taxation is to pursue the goal of encouraging economic growth by decreasing direct taxes, whilst still meeting the revenue requirements.
The National Tax Policy as a Guide to Effective Tax Administration and Enforcement
The aim of the National Tax Policy is to provide a set of rules, modus operandi and guidance to which all stakeholders in the tax administration are given the Federal Government’s economic reform agenda. The Federal Ministry of Finance, in collaboration with the Federal Inland Revenue Service has commenced the process of reform in the system of taxation in Nigeria in line with National Tax Policy. The inauguration of a Study Group by the Federal Ministry of Finance on 6th August, 2002 marked the beginning of the current reform process. The Study Group was mandated to examine the Tax system and make appropriate recommendations to entrench a better Tax Policy and improve Tax Administration in the country. The Study Group submitted its report in July 2003.[74]
Thereafter, a private Sector-driven Working Group was constituted on 12 January 2004 to review the recommendations of the Study Group. Both the study and Working Groups’ recommendations were further reviewed and commented upon by various stakeholders. Both groups addressed macro and micro issues in tax policy and administration. Among the macro issues discussed were the drafting of a National Tax Policy, Taxation and Federalism, Tax Incentives and Tax Administration generally.[75]
Thus, the outcome of the various meetings and consultations was a general agreement that Nigeria was in urgent need of a National Tax Policy which will prescribe a set of guiding principles and also provide a stable point of reference for all stakeholders in the country and for the efficient administration of tax.[76]
To this end, a sub-committee was commissioned to provide a blue-print of the National Tax Policy document for onward transmission to the Federal Ministry of Finance.
The National Assembly shall therefore be the guardian of Nigeria’s National Tax Policy. After the approval of Nigeria’s National Tax Policy by the Federal Executive Council, following consultations with the National Economic Council (NEC), the Policy shall be implemented administratively, pending enactment by the National Assembly and eventual inclusion in the Constitution.[77]
Tax administration in Nigeria is shared responsibility of the three-tiers of government namely the Federal, State and Local Government. The core success factor for any policy is enshrined in its position on effective policy and administrative issues.
The National Tax Policy Draft, 2007 has therefore laid down certain guide lines to ensure effective tax enforcement as well as reduce high cost of tax enforcement. The Draft has proposed cooperation between the Revenue Authorities and various Law Enforcement Agencies, such as the Nigerian Police, Economic and Financial Crimes Commission (EFCC), Independent and Corrupt Practices Commission (ICPC).[78] This would in no small means assist Tax Authorities to acquire skill, training and competences on investigation and enforcement activities in relation to the provisions of the enabling legislations, with respect to the problems of tax defaulters and recalcitrant taxpayers. Revenue authorities may also conclude information sharing agreements with EFCC, ICPC and State Security Service SSS, in order that proper assessment can be made on taxpayers. This in turn will make tax enforcement easier and less expensive.
A more structured information-sharing arrangement shall in line with the National Tax Policy be established between the Tax and Revenue Authorities on the one hand and government bodies earlier mentioned such as the Central bank of Nigeria, Consultants, Nigerian Customs Service, Banks, Nigerian National Petroleum Corporation (NNPC), DPR, National Drug Law Enforcement Agency (NDLEA), National Agency for Food and Drug Admission Commission (NAFDAC) and the Ministry of Finance on the other hand.
Note that one of the key features of a good Tax system is that the cost of administration and enforcement must be relatively low in comparison with the benefits derived from its imposition. The simpler the process of a tax administration, the easier it will be for taxpayers to comply and the better for compliance. Thus, the more the effort and money spent on the collection/enforcement of taxes, the greater the revenue expectations. As such the whole machinery of Nigerian Tax Administration and Enforcement should be geared towards efficiency and cost-effectiveness.[79]
High compliance is achievable by the effective consideration of the economic costs, time and the expense which a tax payer may incur in the course of compliance. The tax payer is important branded as “the king” by the FIRS and should as such be treated well.
The Federal Inland Revenue Authority (FIRS) is required to issue a Tax Identification Number (TIN) upon the registration by taxpayers for payment of taxes. This TIN, via Information Communication Technology will guide and provide insights into all the tax activities of the tax payers.[80] The FIRS has since commenced the issuance of TIN since 2007.[81] This is expected to reduce the cost of administration and supervision while enhancing higher compliance. It is suggested that the various State Boards of Internal Revenue should take a queue from the Lagos State procedure.
In order to effectively reduce the cost of enforcement by boosting high compliance among taxpayers, every person carrying out business or eligible to pay tax in Nigeria must begin to truly trust the Tax system. It is therefore imperative that the Nigerian tax System must in compliance with the cannons of a good tax, be simple (easy to understand by all), certain (its administration must be consistent) and clear (stakeholders must understand the basis of its imposition).[82] The tax policy will serve as the basis upon which stakeholders that is, the Revenue authorities and government shall be held responsible and accountable by the tax payers.
Highlights of the Draft National Tax Policy[83]
The following points are seen as key highlights of the draft tax document;
1. The current overriding objective of the Nigeria tax system is to enable economic growth and development.
2. The taxes in the Nigerian tax system shall be few in number, broad-based and high revenue-yielding.
3. The overall Nigerian tax system shall be fair, so that similar cases are treated similarly, and different cases are handled based on their respective peculiarity.
4. There shall be a shift in the focus of the tax system from direct taxation to indirect taxation. Nigeria shall therefore seek to have low rate of companies’ income tax and personal income tax by relevant international comparison. This will be accompanied by an increase in the rate of Value Added Tax (VAT). An increase in the emphasis on VAT and custom duties should have an upward effect on the country’s stable revenue base. It is being proposed by the Study Group that for personal income, the strategy is to bring the top rate down from 25% to 17% of taxable income by, while corporate taxes will be dropped to 20% from 30% by. Accordingly, the proposal is to increase VAT to 15% from 5% by 2009. These proposals are yet to be implemented.
5. Internal multiple taxation by the various tiers of government on income, property, imports, production and turnover shall be avoided.
6. The Nigerian Tax System will minimize and streamline the number of Tax incentives and restrict their use to instances where they help achieve a national objective that cannot be achieved more efficiently in any other way.
7. The Ministry of Finance should be the body charged with providing the oversight function over the activities of the Tax and Revenue Authorities in Nigeria. It should be the sole organization responsible for initiating the drafting of any suggested addition or amendment to laws or legislations on taxation and revenue.
8. The power to impose, increase, reduce, vary or cancel any rate of tax should be vested on the National Assembly with respect to all laws or proposals by the Executive.
9. The Joint Tax Board (JTB) should be strengthened as an institution to coordinate Personal Income Tax across Nigeria. By giving it legal powers to function as a policy making body for those taxes for which the administration is split across states, rather than merely an advisory body, will ensure an increase in collection efficiency.
10. The Nigerian Tax System shall be subject to comprehensive review every three years. This review will not only be restricted to all the existing tax legislations i.e. CITA, PPTA, PITA, VATA, CGT etc; but would cover all aspects of tax administration and tax policy matters.
11. Nigeria shall ensure that all the international tax obligations contracted by it are respected. Nigeria shall also continue to pursue and expand its frontiers on international tax treaties.
12. Tax shall be collected only by career tax administrators, who are civil servants, and not by ad hoc consultants or agents in adhoc capacity.
Nigeria’s National Tax Policy was approved by the Federal Executive Council in mid – January, 2010,[84] following consultation with the National Economic Council (NEC). It is expected that the National Assembly who is the guardian of Nigeria’s National Tax Policy will enact it into law and eventual inclusion in the constitution. Furthermore, it hoped that after the enactment, the policy shall be implemented by the three tiers of Government and that the new tax policy would drive the country’s fiscal policy in the immediate, medium and long term. Also, the document will be a reference point for all stakeholders on issues of taxation in the country. It is expected to grow tax revenue at all tiers of government; enhance government revenue from non-oil tax, and also increase transparency and accountability in tax management and administration. The policy shall be implemented administratively pending enactment by the National Assembly and eventual inclusion in the constitution.[85]
REVENUE MOBILIZATION ALLOCATION & FISCAL COMMISSION
Revenue Allocation and Sharing Formula in Nigeria
A careful look at the historical outline of the Revenue Allocation formula in Nigeria since the pre-independence era, to the era of independence, and the post-independence comprising the period of Military rule up to this present era of democratic civilian dispensation shows that it has been going through a lot of troubled waters as it has remained an unequal and inequitable formula leading to agitations by States and Local Governments seeking for it to be restructured in a more equitable manner.
Revenue Allocation Formula is provided for in the Allocation of Revenue (Federation Account, etc) Amendment Decree, No. 106 of 1992 now captured by section 162 of the 1999 Constitution, for the disbursement of the revenue from the Federation Account.
Section 162 of the Constitution of the Federal Republic of Nigeria, 1999 provides inter alia:
(1) The Federation shall maintain a special account to be called the Federation Account into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from Personal Income Tax of personnel of the armed forces of the Federation, the Nigeria Police Force, the Ministry or Department of Government charged with the responsibility for Foreign affairs and the Residents of the Federal Capital Territory, Abuja.
(2) The President, upon the receipt of advice from the Revenue Mobilization,Allocation and Fiscal Commission,shall table before the National Assembly Proposals for revenue allocation from the Federation Account, and in determining the formula, the National assembly shall take into account, the allocation principles especially those of population, equality of states, internal revenue generation. Land mass, terrain as well as population density; provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen per cent of the revenue accruing to the Federation Account directly from any natural resources.
(3) Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the Local Governments Councils in each state on such terms and in such manner as may be prescribed by the National Assembly.
(4) Any amount standing to the credit of the States in the Federation Account shall be distributed among the States on such terms and in such manner as may be prescribed by the National Assembly.
(5) Any amount standing to the credit of local government councils in the Federation Account shall also be allocated to the States for the benefit of their Local Government councils on such terms and in such manner as may be prescribed by the National Assembly.
The formula for the distribution of revenues to the three tiers of government is presently based on a certain ratio as prescribed by the Federal Government from time to time. The initial formula in operation as at 29th May, 1999 was as follows: Federal Government, 48.50%; State Governments, 24%; Local Government Councils, 20%; and Special Funds, 7.59%. Following the Supreme Court’s judgment in the “Resource Control Case” in April, 2002, the Revenue Allocation formula changed.[86] After due consultations with all stakeholders on issues of revenue distribution, consequent amendment was made by Mr. President on the Executive Order on Allocation of Revenue now referred to as the “Modification Order 2002”, issued in July, 2002. This new allocation formula increased resources to the States and Local Government Councils.
However, the Federal Government in January, 2004 further increased the State Governments’ share by 2%, pending the provision of a new allocation formula by the Revenue Mobilization, Allocation and Fiscal Commission. The new formula with effect from that date stands as follows:
(i) Federal Government 52.68% (F/A)
(ii) State Governments 26.72% (F/A)
(iii) Local Government Councils 20.60% (F/A)
(iv) Derivation 13% (Mineral Rev.)
(Started in Jan. 2000 and it replaced the 1% M.R. Derivation and 3% M.R. to OMPADEC)
Details of Federal Government Distribution Rate
(i) Federal Government - 48.50
(ii) Federal Capital Territory - 1.00
(iii) FGN share of Derivation and Ecology - 1.00
(iv) Stabilization Fund - 0.50
(v) Development of Natural Resources - 1.68
Total - 52 .68
Composition and Powers:
The composition and powers of the Revenue Mobilization, Allocation and fiscal commission which by virtue of S. 162(2) advises the president on revenue allocation is provided under Part 1 N (Paragraph 31-32) of the third schedule of the 1999 constitution as follows:
The Revenue Mobilization, allocation and fiscal commission shall comprise of the following members:[87]
a) A Chairman; and
b) One member from each State of the Federation and the Federal Capital Territory, Abuja who in the opinion of the president are person of unquestionable integrity with requisite qualifications and experience.
The Commission shall have power to-[88]
a) Monitor the accruals to and disbursement of revenue form the federation Account:
b) Review from time to time, the revenue allocation formulae and principles in operation to ensure conformity with changing realities.
Provided that any revenue formula which has been accepted by an Act of the National Assembly shall remain in force for a period of not less than five years from the date of commencement of the Act:
c) Advise the Federal and State Government on fiscal efficiency and methods by which their revenue can be increased:
d) Determine the remuneration appropriate for political office holders, including the President, Vice President, Governors, Deputy Governors, Ministers, Commissioners, Special Advisers, Legislators and the holders of the officers mentioned in sections 84 and 124 of the 1999 Constitution of the Federal Republic of Nigeria.
e) Discharge such functions as are conferred on the Commission by this Constitution or any Act of the National Assembly.
There is also the Federation Account Allocation Committee (FAAC) under the chairmanship of the Hon. Minister of State for Finance and comprising of the Commissioners for Finance of the Thirty Six States of the Federation, the Accountants General of the Federation and the Director of Treasury, FCT based on percentage that accrues to each tier as are released by the Accountant General.
The amount of revenue shared from the Federation Account has continued to increase substantially from year to year as indicated by table below, yet there is no appreciable development to show for the Amount allocated to the three tiers of Government in Nigeria. In most of our cities, there is no water and other basic social amenities are lacking. One then begins to wonder, if there is a proper understanding of what governance really is and ought to be. A cursory look at the Revenue Allocation formula itself shows that it is inequitable and disproportionate. While the Federal Government takes 52.68%, the states take 26.72% and the Local Governments which are closer to the masses and therefore ought to get more, take only 20.60%.
DISTRIBUTION FROM THE FEDERATION ACCOUNT[89]
(JUNE 1999-DECEMBER 2006)
BENEFICIARIES
Note: The distribution for the year 1999 is for the period, June-December.
Between June, 1999 and December, 2006, the sum of N15,827.27 billion was released and shared from the Federation Account amongst the beneficiaries of the Account. While the sum of N312.93 billion was shared within the period, June-December, 1999; N1, 163.429 billion was distributed in the year 2000. In 2001, a total of N1,585.947 billion accrued and was shared. The sum of N1, 664,326 billion and N1, 842,603 billion was distributed in 2002 and 2003 respectively. By 2004 and 2005, the yearly distributions had increased tremendously to N2, 501,767 billion for the year 2004 and N3, 069,332 billion in 2005. In the year 2006, a total sum of N3, 686,938 billion was collected and shared amongst the three tiers of Government.
The high revenue performance over the years was attributed partly to the unexpected but quite substantial rise in the price of crude oil in the world market, as well as the prudent management of the Nation’s finances. Of the N15,827.27 billion statutory revenue shared within the period, June, 1999 to December, 2006, N7,024.348 billion went to the Federal Government; State Governments including the Federal Capital Councils, and the Area Councils of the FCT, while N604.745 billion was set aside for other beneficiaries of the Account and for miscellaneous expenses. These beneficiaries include the Development of National Resources, FGN share of Derivation and Ecology, Stabilization Funds, cost of collection to the Nigeria Customs Service and the Federal Inland Revenue Service, etc.
Value Added Tax (VAT)
The existing formula for distributing the VAT revenue was retained. The VAT revenue recorded during the period under consideration was very impressive. Table below shows that a total sum of N992.666 billion was collected and shared. Of the amount shared, the Federal Government received N138.085 billion; the State Governments and the Federal Capital Territory (FCT) got N492.669 billion; N339.636 billion went to the Local Government Councils, including the Area Councils of the FCT; while N22.275 billion was paid to the Federal Inland Revenue Service (FIRS) as cost of collection/refund.
VALUE ADDED TAX (VAT) DISTRIBUTION[90]
Note: The distribution for the year 1999 is for the period, June-December.
INTER-RELATIONSHIP BETWEEN THE STAKEHOLDERS IN THE DEVELOPMENT OF A GOOD TAX SYSTEM
The Ministry of Finance is the body charged with the responsibility of performing the oversight function over the activities of Revenue Authorities in Nigeria. It is also the sole organization responsible for tax policy matters, including drafting any proposed amendments to laws or legislations on taxation.[91] All Tax/Revenue Authorities such as Federal Inland Revenue FIRS and Nigerian Custom Services NCS shall account to the Federal Ministry of Finance in respect of all taxes collected by them.
Some of the Government Organizations responsible for advising Government on Tax Policy direction include the National Planning Commission (NPC) and Nigerian National Petroleum Corporation (NNPC). The NPC has a coordinating role on economic policy formulation of which National Tax Policy is a component.[92] Its major role is to harmonize all tax policies and applications within the country so as to promote uniformity and avoid double taxation between states of the federation[93].
At State level, Tax and Revenue Authorities are also required to report to the State Government through the States’ Ministry of Finance. The relationship between the Federal Inland Revenue Service which is the Federal Tax organ and the respective State Internal Revenue Boards on tax related matters is moderated through the Joint Tax Board (JTB). In addition, the JTB should continue to play an advisory role to government whenever its opinion is sought.[94]
The FIRS Act, 2007 mandates Tax Authorities to establish formal inter-agency cooperation with various Law Enforcement Agencies, such as the Nigerian Police, EFCC, and ICPC.[95] This is necessary in order to assist Tax Authorities to acquire skill, training and competences on investigation and enforcement activities in relation to the provisions of the enabling legislations, with respect to the problems of tax defaulters and recalcitrant taxpayers.
Tax authorities may also conclude information sharing agreements with EFCC, ICPC, CAC, SSS, etc., in order that proper assessment can be made on taxpayers.
It is the aim of the National Tax Policy that a properly structured information-sharing arrangement shall be established between the Tax and Revenue Authorities on the one hand and government bodies such as the Central Bank of Nigeria, Tax Consultants, Nigerian Customs Service, Banks, Nigerian National Petroleum Corporation (NNPC), DPR, National Drug Law Enforcement Agency (NDLEA), National Agency for Food and Drug Admission Commission (NAFDAC) and the Ministry of Finance on the other hand. FIRS works with the Banks and CAC in gathering Data base of Companies and Individuals who carry out transactions with the CAC and banks in order to bring them within the tax net.[96]
Finally, the different levels of government as well as the Tax Authorities are expected to provide guidance and information to the taxpaying public. This will elicit higher compliance and cooperation from the taxpaying public. In addition to putting in place a National Tax Policy (NTP) FIRS strives to uphold the principles of Fiscal Federalism in our tax and fiscal administration that will translate to economic growth and development of the entire nation.[97]
COLLABORATION BETWEEN STAKEHOLDERS
Office of the Accountant General of the Federation
Joint Tax Board
Federal Ministry of Finance
NNPC
NPC
Tax proceeds
Law Enforcement Agencies e.g. Economic & Financial Crime Commission, Nig Police
CBN, Tax Consultants, Professionals, Nigerian Customs Service, Banks Etc.
Revenue Authorities
Tax Paying Public
The above diagram is a pictorial depiction of the collaboration between all the Stakeholders in the Administration of taxes in Nigeria.[98] The Revenue (Tax) Authority is at the centre of the diagram. The Tax Authority and the Office of the Accountant –General of the Federation (OAGF) are shown to be in charge of tax proceeds. For instance, while the Tax Authority is responsible for rendering account of tax proceeds to the Government through the Federal Ministry of Finance, the OAGF is responsible for charging tax proceeds into the Federation Account and VAT Pool Account as the case may be.
The Revenue Authority collects tax from taxpayers and from time to time engages in the sanitization of the taxpayers. It also collaborates with Law Enforcement Agencies i.e. Nigerian Police in cases of arrest, investigation and prosecution of tax evaders and suspects are alleged to have forged Tax Clearance Certificates.
The Joint Tax Boards serve as a link with the relevant tax authorities and serves in advisory capacity to the Government.
The Federal Inland Revenue Service as the main tax revenue organ of the Federal Government collaborates with banks in collection of taxes, as a matter of fact there are various designated tax collecting banks all over the Federation i.e. Oceanic Bank, First Bank Plc., Unity Bank, Bank PHB etc.[99]
The Federal Inland Revenue Service collaborates with NNPC to monitor and administer Petroleum Profit Tax.
All levels of Tax/Revenue Authorities which include FIRS and NCS appoint Tax Consultants for effective administration and enforcement of taxes. However, Tax Consultants are prohibited from assessment and collection of tax as only a Tax Authority mentioned in the Taxes and Levis (Approved List for Collection) Act[100] has authority to so collect. They may however give advice on the issue.
The Tax Authority from time to time collaborates with the National Planning Commission (NPC) the body charged with coordinating economic policy formulation of which National Tax Policy is a component as earlier discussed. There should be solid linkages between the various stakeholders in the various tax systems so as to influence the achievement of voluntary tax compliance.
Linkages for Effective Tax Policy: For an effective Tax Policy to exist, linkages / collaborations need to be established with the following groups or bodies so as to bring all within the tax net. They include; stakeholders support groups, persons, organizations and associations whose responsibities are mainly to influence the achievement of voluntary Tax compliance generally.[101] Also see the suggested linkage /relationship provided by the national Tax Policy Draft Document.[102]
Unified Registration processed/ linkages to Third Party Data
-FIRS/CAC/NS
-OAGF/BMPIU
-National population commission
-CBN/Banks
Stakeholder support
-FEC/NEC/FMF/
FIRS/JTB
-Law enforcement
Agencies
-Tax Professionals
-National Assembly
Taxation in Education curriculum
-Primary
-Secondary
-Tertiary
LINKAGES FOR EFFECTIVE TAX POLICY
Organisation for regular Tax Policy research and annual review with linkage to legislation
Tax Payer Considerations
- Convenience
- Number of Taxes
- Points of Taxation
- Services
- Education
Tax Policy
-Tax types
-Sectoral focus
-Tax Base
-Rates/Incentives
-Competencies
-Admin. Resp.
Relationships between
FG, SG and LGs
-Policy
-Legislative
-Responsibility
-Collection
-Distribution
National Mapping and Building numbering
Systems policy and implementation(to enable registration and taxcorrespondencies.
Holistic approach to provision of duties, waivers, exemptions, incentives, etc
GUIDING PRINCIPLES FOR ALL STAKEHOLDERS IN THE ADMINISTRATION OF A GOOD TAX SYSTEM
The stakeholders in the administration of tax system in Nigeria should as a matter of urgency imbibe the following universal principles which are aimed at ensuring effective interaction/collaboration between the stakeholders.[103]
1. Affirmation and acknowledgement of stakeholder’s importance and contribution at all times.
2. Provision of specific and general proactive feedback on issues and developments that are relevant to tax administration. For example, the collecting banks and the National Planning Commission (NPC) should render feed backs on the effective means of collection to the Federal Inland Revenue Service.
3. Ensuring that the principle of good faith is observed by all stakeholders especially between the tax payer and the tax / revenue authority on the one hand and the government and tax authority on the other hand.
4. Fairness in the treatment of all stakeholders by one another. This can be shown by respecting each other views points and ensuring proper allocation of resources.
FUNDING OF TAX AUTHORITIES
The Government is to provide adequate funding arrangement for Tax and Revenue Authorities in Nigeria. In order to ensure that the Tax and Revenue Authorities in the country are well funded, government at all levels shall ensure that a sufficient proportion of revenue collected by any Revenue Authority, as judged by international companies with well funded, efficient tax systems, shall be provided to cater for its administration. That not less that 10% of total revenue collection by Tax/Revenue Authorities shall be appropriated each year by the National Assembly to FIRS in order to cater for refund requests from taxpayers.[104]
In view of the foregoing there is the need to include this arrangement in the Federal tax statutes, as well as replicate it at the State Revenue Authority level. In furtherance of this, section 23 FIRSEA has made elaborate provisions for refund.
CONCLUSION
The innovations introduced by the National Tax Policy as well as the FIRS Establishment Act, 2007 have tremendously improved on the taxation system and its administration Nigeria. It is hoped that if the two are properly implemented it would go a long way in enhancing the Nigerian tax system. It is also hoped that the government will put a machinery in place to rebuild the confidence of the taxpayers in the system. The masses are usually agitated when they do not trust the government to use funds collected from them for any welfare purpose. The current outrage over removal of fuel subsidy is not unconnected with such absolute distrust.[105]
[1] Ishola K. A. Companies and Personal Taxation in Nigeria Ibadan, Chresthill Publishers Limited, (Vol. 1) 2008, pp. 1 – 32.
[2] The calls were often made in the reports of various communities, and study group’s set-up to review taxation and its administration towards reforms especially that of Dotun Philip in 2003.
[3] Auru Osimabale, H. Principles and Practice of Taxation, Nigeria, Klinx Press, 2008, pp. 1 – 30.
[4] The calls were often made in the reports of various communities, and study group’s set-up to review taxation and its administration towards reforms especially that of Dotun Philip in 2003.
[5] The FIRS Act has repealed parts of the Companies Income Tax Act.
[6] Cap P8, Laws of the Federation of Nigeria 2004, as amended by CITA (Amendment) of 2007.
[7] Section 1 – 3, PITA
[8] Ibid, Sections 54 - 59
[9] Ibid, sections 68 - 85
[10] Ibid, Sections 86 - 93
[11] Cap C21, Laws of the Federation of Nigeria 2004 as well as the CITA (Amendment) Act 2007
[12] Sections 9 – 23, CITA
[13] Ibid, Sections 1 - 4
[14] Cap P13, Laws of the Federation of Nigeria 2004
[15] Cap VI, Laws of the Federation of Nigeria 2004. Now CI, LFN 2004
[16] Cap 42 Laws of the Federation of Nigeria 1990
[17] Section 1 CITA, Section 3 PPTA and Section 43(c) CGTA as well as S.I FIRS Act.
[18] Section 87 PITA. S. Constitution of the FederalRepublic of Nigeria.
[19] Federal Inland Revenue Service (Establishment) Act, 2007
[20] CITA Cap. C21 Laws of the Federation of Nigeria, 2004
[21] PITA Cap. P 8, LFN, 2004
[22] PPTA Cap. P 13, LFN, 2004
[23] VATA Cap V. 1, LFN, 2004
[24] CGTA Cap. C. 1, LFN, 2004
[25] FIRS, Act, 2007. Op cit. S. 1(i)
[26] Repeal of Part 1 of CITA, This body was previously known as the Federal Board of Inland Revenue while the FIRS was the administrative arm.
[27] Part II of the 1st Schedule to the (amendment) Decree No 21, 1998
[28] Sections 1 and 2 FIRS Act, 2007
[29] Section 68 (1)
[30] Section 68 (2) FIRS, Act, 2007
[31] See Section 85 now 87–89 of PITA No. 104 of 1993, as amended by the Finance (Miscellaneous taxation provisions) No. 2 Decree No. 31 of 1996
[32]www.fmf.gov.ng
[33] Se. S. 60, PITA Act, No. 104, 1993
[34] See Second Schedule, S. 20 (2) VAT Act, No. 102, 1993
[35] See S. 59; First Schedule FIRS Act, 2007
[36] Overview of Tax Reforms to RMAFC BY Mrs. Ifeuko Omoigui (Chairman, FIRS) 10 October, 2006, pg. 25
[37] Ibid Pg. 26
[38] Ibid
[39] Section 1 of the FIRS Act, 2007
[40] Section 3 of the FIRS Act, 2007
[41] Section 17 FIRS Act
[42] Section 27 CITA
[43] Nigerian Tax Reform in 2003 & Beyond, Op. Cit., p. 12
[44] Punch Newspaper of 12th May, 2008, p. 15
[45] Section 8 (1) (e) of the FIRS Act
[46] Culled from a paper delivered by Neil Brooks titled Key Issues in Income Tax: Challenges of Tax Administration and Compliance at the Asian Development Bank Tax Conference, Asia, 2001
[47] Daily Sun, Tuesday, January 3, 2012. p. 5
[48] Osemene, E.N (2004). Taxation in Nigeria Case Studies, Latek Prints P. 281
[49] Awosan E.A., Tax System and Administration in Nigeria P. 175 (being a memorandum to the Study Group on Nigeria Tax System and Administration) in Report of Study Group on Nigeria Tax System and Administration, 1991, Lagos
[50] Ibid P. 176
[51] Guage, Ibid, p. 14
[52] The Nation Friday February 4, 2011 p. 53
[53] Section 59 of the FIRS Act, 2007
[54] See paragraphs (1) – (11) of the first schedule to the Act for all the laws
[55] Paragraph 20(1) Fifth Schedule to the Act
[56] Paragraph 19, Ibid
[57] Paragraph 22, Ibid
[58] Paragraph 16(1), Ibid
[59] Paragraph 17(1), Ibid
[60] Prior to the enactment of the Act, two forms of body of Appeal Commissioners existed, they are
(1) Body of Appeal Commissioners created under Section 60 of PITA
(2) Body of Appeal Commissioners created under Section 71 of CITA
[61] Paragraph 12 of the Fifth Schedule to the Act
[62] Ibid. Par. 17(2)
[63] Osemene E.N. Op. cit., p. 281
[64] Section 12(4) FIRS Act, 2007
[65] Ibid
[66] Guage, a Quarterly Publication of the FIRS, April-June 2009, pp.8-13, Backpage
[67] Abubakar Yusuf Mahmud “Tax Policy in Nigeria” www.Buzzle.com
[68] Ibid.
[69] ‘The Draft National Tax Policy’ www.fmf.gov.ng
[70] National Tax Policy (Draft Document ) p.ii www.fmf.gov.ng
[71] Ibid. p.5-8
[72] Ibid. p(ii)
[73] Ibid p. 13 -15
[74] “Draft Document on the National Tax Policy”, Op. Cit., P. 10
[75] Ibid
[76] Ibid
[77] Ibid
[78] National Tax Policy, Op. Cit., Pg. 9-10
[79] Ibid Pg. 6
[80] Ibid, p. 16
[81] FIRS News Bulletin, Jan., 2008, p. 4
[82] National Tax Policy, Op. Cit, p. 5
[83] Ibid p. 1 - 2
[84] Olaseni Oyefeso ‘FEC approved National Tax Policy’ www.ladybrillenigeria. com
[85] Draft National Tax Policy. P. 2
[86] The Modification Order 2002
[87] Also see Section 2 Revenue Mobilization, Allocation & Fiscal Commission Act(RMAFC Act)
[88] See Section 6 RMAFC Act
[89]www.fmf.gov.ng
[90] Ibid.
[91] Draft Document on the National Tax Policy by the Presidential Committee on National Tax Policy, 2008, P. 9
[92] NTP Op. Cit
[93] S. 86 (9) PITA
[94] NTP Op. Cit
[95] See also Section 8 (1) (d) & (i) of FIRS Act, 2007
[96] News Bulletin of FIRS June, 2007 Ed. P.5
[97] See Mike Ikosin op cit. p. 10
[98] Op. Cit. P 10
[99] “FIRS interaction with Collecting Banks” a paper presented at Project Fact Training organized by FIRS on 16 July, 2007 at Aptech Computers, Central Area Abuja, P. 5
[100] Cap 12, Laws of the Federation, 2004
[101] NTP Ibid p. 12
[102] Ibid p.42
[103] National Tax Policy draft document updated as at 7th June, 2007 pg 12
[104] Op. Cit. P. 14
[105] Daily Sun, Tuesday, January 3, 2012. p. 5
Tax Policy is a key resource allocation between the public and private sectors in a country. The draft National Tax Policy basically outlines the rules and regulations that will guide all parties involved in the Tax System in Nigerian; namely, the Regulators, the Legislators and the Taxpayers. The National Tax Policy provides a set of rules, modus operandi and guidance to which all stakeholders in the tax system will subscribe.
The draft National Tax Policy was part of the current reform programme of the tax system in Nigeria, which commenced in 2002 when the Federal Ministry of Finance inaugurated a study group to examine the tax system in Nigeria and make appropriate recommendations to entrench a better tax policy and improve tax administration in Nigeria.[1]
The enactment of Federal Inland Revenue (Establishment) Service Act (FIRS Act) 2007 was a response to several calls[2] and attempts towards ensuring an efficient tax administration and taxation in Nigeria.
The FIRS Act 2007 as was expected came with a lot of reforms and innovations aimed at strengthening the policy of taxation as well as its administration. While some of these innovations are a modification, re-codification or reenactment of existing laws, others are radically different from the existing law.
The Federal Inland Revenue Service (Establishment) Act, 2007 was therefore a follow-up action by government in continuation of the tax reforms in Nigeria which was commenced in the year 2002.[3]
The combined effects of the National Tax Policy and the subsequent enactment of the Federal Inland Revenue Service (Establishment) Act, 2007 have become a watershed in the annals of tax administration in Nigeria. The National Tax Policy which gave birth to the Act have together brought about, the needed Legal and Administrative framework that has revolutionized the tax systems in Nigeria.
This article discusses the reforms introduced by the draft National Tax Policy and the Federal Inland Revenue Service Establishment Act 2007 as well as the effectiveness of the allocation sharing formula. When the total revenue is collected by tax authorities and paid into the federation account, the body responsible for advising the President as to the allocation of the fund between the three tiers of Government is the Revenue Mobilization Allocation and Fiscal Commission.
The Federal Inland Revenue Service is a creation of Federal Inland Revenue Service (Establishment) Act (FIRS Act) 2007. This enactment was a response to several calls[4] and attempts towards ensuring an efficient tax administration and taxation in Nigeria.
The FIRS Act 2007 as was expected came with a lot of reforms and innovations aimed at strengthening the policy of taxation as well as its administration. While some of these innovations are a modification, re-codification or reenactment of existing laws, others are radically different from the existing law.
The reforms introduced by the draft National Tax Policy as well as the innovations introduced by the Federal Inland Revenue Service Establishment Act 2007 cannot be underestimated when considering the roles of stakeholders.
Prior to the enactment of the Act, several legislations provided for the regulation and administration of different classes of taxation. Although these legislations are still in force as the enabling legislations of those branches of taxation, some of their provisions (especially those that have bearing with the administration of tax) have been repealed by the provisions of the Act.[5] The principal legislations in this respect are:
(a) Personal Income Tax Act[6] (PITA). PITA which came into existence in 1993. It is an Act which imposes income tax on individuals, communities, families, executors and trustees[7] and also provides for the assessment[8] collection[9] and administration[10] of the tax.
(b) Companies Income Tax Act[11] (CITA). CITA came into existence on 1st April, 1977 and consolidated the provisions of Companies Income Tax Act 1961. It imposes tax on the profits[12] of companies and also provides for the administration of the tax.[13]
(c) The Petroleum Profit Tax Act[14] (PPTA) imposes tax on the profits from the mining of petroleum in Nigeria. It also provides for assessment, collection and administration of the tax. The PPTA came into effect on 1st January, 1958.
(d) Value Added Tax Act[15] (VATA) came into effect on the 1st December, 1993 and it imposes tax on the value added on certain goods and services and also provides for the administration of the tax.
(e) Capital Gains Tax Act[16] (CGTA) imposes tax on the gains made on property. CGTA came into effect in 1967 as the Capital Gain Decree No. 44 of 1967.
These legislations each provide for the administration, operation (i.e. assessment and collection) and enforcement of tax. The administration of the various taxes created by the respective legislations is principally placed on the FIRS[17] for taxes accruing to the Federal Government while the State Boards of Internal Revenue of 36 various State Governments[18] except the Federal Capital Territory collect from individuals resident in those states.
The Federal Inland Revenue Service (Establishment) Act came into force on the 16th April, 2007.[19] The Act was enacted as a part of the reform processes aimed at correcting the lapses in the tax systems in Nigeria. The Act incorporated some of the recommendations of the Study Group set up for Tax reforms in Nigeria.
Prior to the enactment of the Act in 2007, the legal frame work for the regulation and administration of the numerous types of taxes were contained in different tax laws to wit;
(i) The Companies Income Tax Act (CITA)[20]
(ii) The Personal Income Tax Act (PITA)[21]
(iii) The Petroleum Profit Tax Act (PPTA)[22]
(iv) The Value Added Tax Act (VATA)[23]
(v) The Capital Gain Act (CGTA)[24]
The enactment of Federal Inland Revenue Service (Enactment) Act, 2007 was a remarkable landmark in the development of Tax Administration in Nigeria. The Act has the effect of harnessing and consolidating administrative procedures in the various Acts.
It is important to note the provision of S. 68 of the Act which provides that “Notwithstanding the provisions of this Act the relevant provisions of all existing tax enactments shall be read with such modifications as to bring them into conformity with the provisions of this Act.” Any existing provision which is inconsistent with the FIRS Act shall be void.
The Act also provided for the Establishment of the Federal Inland Revenue Service[25]with juristic personality to sue and be sued by virtue of Section 1 (3) of the Act shall have such powers and duties as are conferred on it by the Act or any other enactment or law on such matters on which the National Assembly has power to make law.
S. 2 empowers the Service to control and administer the different taxes and laws as specified in the First Schedule (The laws specified in the First Schedule includes PITA, CITA, PPTA, CGTA, VATA, Stamps Duty Act) or other laws made or to be made, from time to time, by the National Assembly or other regulations made there under by the Government of the Federation.
The Section also empowers the Service to account for all taxes collected.
The functions of the service are specifically set out in S. 8(1) (a-t) inter alia as follows:
(a) Assess persons including Companies, enterprises chargeable with tax;
(b) Assess, collect, account and enforce payment of taxes as may be due to the government or any of its agencies;
(c) Collect, recover and pay to the designated account any tax under any provisions of the Act or any other enactment or law;
(d) In collaboration with the relevant ministries and agencies, review the tax regimes and promote the application of tax revenues to stimulate economic activities and development;
(e) In collaboration with the relevant law enforcement agencies, carry out the examination and investigation with a view to enforcing compliance with the provisions of the Act, etc.
Effect of the Federal Inland Revenue Service Act, 2007
The Federal Board of Inland Revenue (FBIR) which was created via section 1 of the Companies Income Tax Act CAP 60, 1990 Laws of the Federation of Nigeria now known as the Federal Inland Revenue Service (FIRS)[26] is charged with the administration of the following Federal Tax Statutes:-
The Companies Income Tax (CITA),
a. Withholding Tax Act,
b. Petroleum Profit Tax,
c. VAT Act
d. The Personal Income Tax of members of the Armed Forces of the Federation, members of the Nigerian Police Force, residents of the Federal Capital Territory, Abuja and Staff of the Ministry of Foreign Affairs and non-resident individuals.[27]
e. Capital Gains Tax
f. Stamp Duties
g. Taxes and Levies (Approved for Collection)
h. All regulations, proclamations, government notices or rules issued in terms of these legislation.
The Federal Government with the desire to bring about uniformity in the taxation of personal income enacted a comprehensive Personal Income Tax law for the whole country in 1993 so as to avoid multiplicity of tax legislations for various states. Another vital regime of taxation started with the coming into force of FIRS (Estab) Act, as earlier stated which has given the FIRS the powers to prosecute anyone who offends any provision of the Act. It is now an autonomous body like other statutory bodies such as the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) with power to sue and be sued in its own name.[28]
The combined reading of sections 2, 25 and 68 FIRS Act show that it is the intention of the legislation to unify of tax laws in Nigeria. Sections 2 and 25 of the Act give the service the power to control and administer the different taxes and laws specified in the First Schedule or other laws made or to be made from time to time by the National Assembly or other regulations made there under by the Government of the Federation and to account for all taxes collected. Section 68 of the Act states the relevance of other laws by providing that, the relevant provisions of all existing enactments including, but not limited to the laws in the First Schedule shall be read with such modifications as to bring them into conformity with the provisions of the FIRS Act[29] The Act went further to state that if the provisions of any other law including the enactments in the First Schedule are inconsistent with the provisions of the Act the Provisions of the Act shall prevail and the provisions of that other law shall to the extent of the inconsistency be void.[30] The laws as stated in the First Schedule are:- Company Income Tax Act, Petroleum Profits Tax Act, Value Added Tax Act, Capital Gain Tax Act, Minerals and Mining Act, Stamp Duties Act, Taxes and Levies (Approved List for Collection) Act and enactment or Laws imposing Taxes and Levies within the Federal Capital Territory.
It is important to consider the provisions of the previous law vis-Ã -vis that of the FIRS so as to understand clearly that the Act has wiped out completely the division of tax administration which hitherto existed between the then Federal Board of Inland Revenue (FBIR) now Federal Inland Revenue Services (FIRS) and State Board of Internal Revenue (SBIR) now State Internal Revenue Service (SIRS). Section 47 of PITA gives relevant Tax Authorities the power to call for returns, books, documents and information in respect of income or gain of a taxable person. The provision of this section is similar to the provision of section 49 of PITA which makes it mandatory for bankers to deliver information to tax authority of the area where the bank operates. The words tax authority of the area where the bank operates, presupposes the State Board of Internal Revenue. However, the provisions of Sections 46, 47 and 49 of PITA are virtually the same with the provisions in Sections 26, 27 and 28 of FIRS Act with the exception of the words ‘tax authority of the area where the bank operates which has been substituted with the Service i.e. FIRS and since any other law that is inconsistent with the provision of the Act shall be null and void, it clearly shows that the powers given to FIRS in sections 26, 27 and 28 supercedes the powers in sections 46, 47 and 49 of PITA. Also the Personal Income Tax Act of 1993[31] establishes for each State of the Federation a State Board of Internal Revenue (SBIR) which is saddled with the responsibilities of the administration of taxes such as:-
a. Personal Income Tax which is a Federal Legislation,
b. Other States Tax Laws and
c. Collection of VAT on behalf of the Federal Government.
The above statutory role given to SBIR seems to have been extinguished by the coming into existence of Sections 2 and 8 FIRS Act of 2007. One then wonders where states now derive their power to administer tax from. The fact still remains that those PITA provisions have not been repealed and by virtue of Section 68 FIRS Act provisions those legislations will be read with such modifications as to give them meaning since the Act has not also created offices for the 36 states of the Federation, it would appear that they will still deal with the SBIRS.
Tax Reforms in Federal Inland Revenue Service
As earlier mentioned, the FIRS Act came with some novel innovations which shall be broadly categorized into administration and operation/enforcement.
A. ADMINISTRATION
Administration of tax in Nigeria is the responsibility of the three tiers of government namely: the Federal, State and Local Government respectively. To this end section 1 of the Act established the Federal Inland Revenue Service as the tax authority of the Federal Government, while Section 85(A)(1) now 87 of PITA established the State Board of Internal Revenue (SBIR) as the tax authority for each of the State of the Federation, Section 85(D)now 90 of PITA established the Local Government Revenue Committee (LGRC) as the tax authority for each Local Government Area of a State.
The creation of the Federal Inland Revenue Service as the highest government agency of taxation in Nigeria implies that all other such authorities of equal standing must give way. Consequently, the Act in Section 62(1) repealed Sections (1) – (7) of CITA wherein the Federal Board of Inland Revenue (FBIR) was created. Section 62(2) of the Act went further to dissolve the FBIR and under Section 62(3) the Act as a transitional measure, transferred all the rights, interest and obligations of the dissolved FBIR to the FIRS.
In addition to assigning the rights, interest and obligation of the defunct FBIR to the FIRS, the Act, further in Section 8 assigned specific functions to the FIRS. It is however important to state that the statutory functions of the FIRS are anchored on two statutory objects as provided in Section 2 of the Act. The objects are:
(i) To control and administer all existing tax laws or such other laws as may be enacted by the National assembly, and
(ii) To account for all taxes.
It therefore follows from object (i) above that all tax laws and taxes mentioned above are to be administered by the FIRS. The Act specifies the laws to be administered in the first schedule to the FIRS Act as follows;
(a) CITA Cap. 60 LFN 1990 (Now Cap. C21, LFN 2004)
(b) PPTA Cap. 354 LFN (Now Cap. P13, LFN, 2004)
(c) PITA No. 104, 1993 (Now Cap. P8, LFN, 2004)
(d) CGTA Cap. 42, LFN 1990 (Now Cap. C1, LFN, 2004)
(e) VATA No. 102, 1993 (Now Cap. VI, LFN, 2004)
(f) Taxes and Levies (Approved list of collection) Act No. 21, 1998.
(g) All regulations, proclamation, government notices or rules issued in terms of these legislation.
Other Laws to be administered include;
(i) Any other law for the assessment, collection and accounting of revenue accruable to the Government of the Federation as may be made by the National Assembly from time to time or regulation incidental to those laws, conferring any power, duty and obligation on the service.
(ii) Laws imposing taxes and levies within the Federal Capital Territory.
(iii) Laws imposing Collection of Taxes, Fees and Levies collected by other government agency and companies including signature bonus, pipeline fees, penalty for gas flares, depot, levies and License, fees for Oil Exploration License (OEL), Oil Mining License (OML), Oil Production License (OPL), Royalties, Rents (productive and non-productive) fees for license to operate drilling rigs etc.
The import of this object viz a viz the content of the first schedule (as highlighted above) is that the FIRS can control and administer any collectible tax or taxes. It is noteworthy that this object further gives reinforcement and validity to the administrative functions conferred on the FIRS in Section 8(d), (e), (l).
(d) To collaborate with other relevant government ministries, agencies and promote the application of tax revenue to stimulate economic activities.
(e) To ensure compliance with tax law.
(1) Provide and maintain access to up to date and adequate data and information on all taxable persons – individuals, corporate bodies or all agencies of government involved in the collection of revenue for the purpose of efficient, effective and correct tax administration and to prevent tax evasion or fraud.
By virtue of the provisions of Section 62(3) of the Act, the FIRS vide its Chairman is the chairperson of the Joint Board created by Section 86 of PITA. It therefore means that the FIRS remains a veritable organization in the administration of tax in Nigeria.
For the FIRS to be able to perform all its functions as specified in Section 8 (1) (a) – (t) the Act confers on it (FIRS) the status of an artificial person recognized in law, when it provides in Section 2 that the FIRS is an organization capable of suing and being sued. This is novel considering the fact that under the repealed Section 1 – 7 of CITA, the then FIRS was the operational arm of the FBIR. Simply put, under the Act, the FIRS is no longer an appendage of any other regulatory authority but is autonomous.
The Act by virtue of S. 3 (1) established The Federal Inland Revenue Service Board with the mandate to exercise overall supervision on the service as stipulated under the Act. The Composition of the Board[32] is as specified in S. 3(2) of the Act as follows:
(a) Chief Executive Chairman of the Service who shall be experienced in taxation. The Appointment of the Chairman is by the President of Nigeria and subject to confirmation by the Senate;
(b) Six members with relevant qualifications and expertise who shall be appointed by the President to represent the six Geo-Political Zones;
(c) Representative of the Attorney General of the Federation;
(d) The Governor of Central Bank of Nigeria or his representative;
(e) A representative of the Minister of Finance not below the rank of a Director;
(f) The Chairman of the Revenue Mobilization, Allocation and Fiscal Commission or his representative who shall be any of the Commissioners representing the 36 states of the federation;
(g) The Group Managing Director of the Nigerian National Petroleum Corporation NNPC or his representative who shall not be below the rank of a Group Executive Director of the Corporation or its equivalent;
(h) The Comptroller General of the Nigerian Customs Service or his representative not below the rank of Deputy Comptroller-General;
(i) Registrar-General of the Corporate Affairs Commission or his representative not below the rank of a Director, and
(j) The Chief Executive Officer of the National Planning Commission or his representative not below the rank of a Director.
The Powers and Functions of the Board have been broadly spelt out in S. 7 of the Act.
The Board shall:
a. Provide general guidelines relating to the functions of the service;
b. Manage and superintend the polices of the service on matters relating to the administration of the revenue assessment, collection, and accounting system under the Act or any enactment or law;
c. Review and approve the strategic plan of the service;
d. Employ and determine the conditions of service including disciplinary measures of the employees of the service;
e. Stipulate remuneration, allowances, benefits and pensions of staff and employees in consultation with the National Salaries, Income and Wages Commission and
f. Do such other things which in its opinion are necessary to ensure the efficient performance of the functions of the service under this Act.
By the wording of Section 3(2)(a) appointing the Executive Chairman of FIRS as a member of the Board and the provision of S. 69 FIRS Act, the Executive Chairman of FIRS also doubles as Chairman of the Board. This strengthens the submission that the FIRS is not an appendage of any other regulatory agency.
The Act also stipulates in S. 89(1) PITA that there shall be a Technical Committee of the Board composed of:
a. The Executive Chairman of the Service as Chairman;
b. All Directors and Heads of Department of the Service;
c. The Legal Adviser of the Service; and
d. The Secretary to the Board.
The functions of the Technical Committee as provided by S. 89(2) PITA shall be to:
a. Consider all tax matters that require professional and technical expertise and make recommendations to the Board;
b. Advise the Board on any aspect of the functions and powers of the Service under this Act; and
c. Attend to such other matters as may from time to time be referred to it by the Board.
d. Co opt additional staff from the State Service in the discharge of its duties.
The National Tax Policy and the Act have undoubtedly introduced a number of far reaching innovations into tax administration in Nigeria that are in line with the reform programmes of the Government.
The Act has laid the appropriate legal frame work for proper tax administration of tax in the country through the harmonization of all existing taxes and empowering the Board and the Service with power of implementation of the laws. The administrative frame work for proper tax administration has also been put in place. The establishments of the Board and the Service as well as other Administrative Bodies/Stakeholders in Tax Administration in Nigeria are major contributions to tax administration. The powers and functions of these Administrative Bodies and Stakeholders which are well spelt out, have not only helped in the reduction of conflicts and multiplicity of taxes, but it have also provided ways and means of resolving these conflicts among stakeholders.
Other contributions of the National Tax Policy and those of the FIRS, (Establishment) Act, 2007such as the following have helped the growth and administration of taxation and are worthy of mention in the areas listed below:
1. Consolidation:
The consolidation of the Board of Appeal Commissioners[33](previously responsible for determining the appeals from the operation of the PITA) and the VAT Tribunal[34](previously responsible for determining the appeals from the operation of the Value Added Tax Act) into a Tax Appeal Tribunal with jurisdiction to entertain litigations of all tax types.[35]
2. Changes in Organisational Structure:
Major changes in organizational structure was created by the integration of offices (CIT, VAT, PIT, and STAMP DUTY) into a “One Stop Shop”.[36] This is in contrast with the structure that existed previously whereby the various taxes were paid in different offices. Under theInternal Restructuring, FIRS whichpreviously, had six departments, now has four groups with several departments under each group. FIRS now have large Tax Offices and Integrated Tax Offices (no more Area & VAT Offices). The effect of this is that all tax issues can now be tackled in any of the Integrated Tax Office nearest to the taxpayers.All tax payments can now be made in one place depending on the category. For instance:
a. Large Tax Offices (LTO): Large companies that have a yearly turnover of One Billion Naira and above for three (3) consecutive years are to make all Tax payment in this office. Also, Ministries and Parastatals in FCT that have a budget of over One Billion Naira will also make payments in this office.[37]
b. Integrated Tax Offices (ITO): Medium and Small companies that have turnover of less than One Billion usually make payments in this office.[38]
3. Transition:
Section 63 of the Act provides for a transition Programme from the old FIRS to the new FIRS, so that the staff of the FBIR can be deemed to be transferred to FIRS. There is therefore no need for fresh applications for the transmission to take place. In the same way, all previous liabilities and assets are automatically taken over.
4. Change of name and juristic personality under the FIRS Act:
The Federal Board of Inland Revenue is now to be known as the Federal Inland Revenue Service. But there is now what is known as the FIRS Board as a juristic body[39], which is capable of suing and being sued.
5. Membership:
The membership of the board has been enlarged to include representatives of Corporate Affairs Commission, Nigerian National Petroleum Corporation, Revenue Mobilization, Allocation And Fiscal Commission, National Planning Commission, Nigeria Customs Service, Central Bank of Nigeria and Representatives of all six geo-political zones.[40]
6. Autonomy of the FIRS
Under the FIRS Act, certain percentage of tax revenue is now to be retained for smooth running of FIRS.[41]Prior to the enactment of the Act, funding remained a major impediment to tax administration in Nigeria. The funds were irregular and inadequate. This invariably bred corruption which affected efficiency of the Personnel and effective service delivery. The situation has now improved tremendously since the Service is now entitled to 4% of its total collection as cost of collection. Section 15 of the Act provides for the financial autonomy of the FIRS subject to appropriation by the National Assembly. The FIRS retains a certain percentage (as may be determined by the National Assembly) of the total of all non oil and gas revenue and such other grants as it may receive from any tier of the government of the Federation of grants – in – aid and gifts, testamentary dispositions, endowments and contributions received from any other source. Section 15(a) requires the FIRS to take its estimates for capital and recurrent expenditure to the National Assembly for approval.
7. Budget:
It does appear from the wordings of Section 15, that the budget office does not handle the budget of the FIRS. This, in addition to the allowance from the non-oil and gas revenue which will allow the FIRS easy access to funds needed to adequately equip and staff the FIRS and therefore ease the problem of tax administration. By virtue of S.17 FIRS Act, the FIRS can now cause to be prepared not later than 30th September of each year an estimate of its income and expenditure for the succeeding year for the purpose of appropriation by the National Assembly. This will to a large extent buttress their financial autonomy.
8. Reforms under CITA:
Before the 2007 amendment to Companies Income Tax Act CITA, company losses could only be carried over for a period of 3 to 4 years. But, now a company can carry over losses forever.[42] Section 14 of CITA on insurance stipulates separatetax liabilities for life insurance and non-life insurance and on computation.
9. Draft National Tax Policy:
The Prof. Dotun Phillip’s Study Group recommended that there should be a National Tax Policy.[43] Hence, a Presidential Committee on National Tax Policy was constituted by the Administration of President Olusegun Obasanjo with the mandate to develop a National Tax Policy for Nigeria.
The committee submitted a 48 paged Draft National Tax Policy to the Federal Government in 2008. The Draft was publicized calling for suggestions and communiqué from stakeholders and the public.[44] It is worthy to note at this juncture that thisis the first attempt at having a holistic National Tax Policy.
10. Collaboration: The FIRS Act[45] also empowers FIRS to collaborate with law enforcement agencies i.e. Nigeria Police Force, Independent and Corrupt Practices Commission ICPC, Economic and Financial Crimes Commission EFCC, and Nigeria Customs Service.The “Tax Policy and Administration Thematic Group” of the World Bank has developed a useful diagnostic framework for tax administration reform which includes a description of quantitative indicators for effectiveness and efficiency that might be used to get a general ideal of the physical dimension of the revenue administration and how effectively and efficiently it is currently performing its functions and where performance problems might be acute.[46]
The regular stakeholders consultations or collaborations and the numerous public enlightenment campaigns as well as the institutionalized measures to curb bribery and corruption among tax officials by the Service is gradually instilling public confidence in the integrity of the tax system. In Lagos State for example, the masses are beginning to associate payment of taxes with the development of Lagos. The slogan ‘Eko oni baje’ meaning Lagos will not be destroyed is a direct undertaking by each person that in performing his part of the bargain by paying his taxes, Lagos will be developed. This tax awareness is what is needed for the development of a tax regime. It is also imperative that the Government has a lot of role to play in this expectation of the masses. The current uprising over the removal of fuel subsidy in Nigeria is an indication of total lack of distrust over the government’s use of public funds.[47]
For all reform efforts to significantly improve the effectiveness of tax administration, government must be politically committed to reform, the major obstacles to an effective tax administration have to be identified, and there has to be well designed strategies for addressing them.
11. Tenure of Office:
While Chairman’s tenure of office was indefinite under the old regime, S.4 FIRS Act fixes for him a term of 4 years renewable once only.
B. OPERATIONS/ENFORCEMENT MACHINERY
Operations, for our purpose refers to the various acts under the Act which ensure that collectible taxes are duly collected while enforcement refers to the provisions which seek to compel tax-payers to comply with the tax law. Under this heading, the following shall be considered:
1. POWERS OF FIRS TO COLLECT TAX
The Act empowers the FIRS under Section 8 to the following:
i. To assess persons (companies and enterprises) chargeable with tax
ii. Collect, account and enforce payment of taxes
iii. To pay taxes collected to designated account
iv. To collaborate with other relevant government ministries, agencies and promote the application of tax revenue to stimulate economic activities.
Notwithstanding the provision of Section 2 that the FIRS is to control and administer all taxes and tax laws, it is our humble submission that by virtue of the above provision of Section 8(1) (a) – (d) of the Act, the FIRS is directly involved in the assessment and collection of all personal income taxes including those collectible by State Governments under PITA. Although the Act did not repeal or in whatsoever way interfere with the provision of Section 87 of PITA wherein the State Board of Internal Revenue were created and empowered to collect Personal Income Tax accruable to State Government, the combined effect of the said Sections 2 and 8 (1)(a)-(d) would appear, to sweep away the powers of States Boards of Internal Revenue under the State Governments. It is considered that Section 68(1) which gives superiority to the provisions of FIRSA presupposes that all other existing enactments (PITA inclusive) shall be read with such modifications as to bring them into conformity with the provisions of the FIRSA. That is a saving provision which ensures the continued existence of the States Board of Internal Revenue alongside other creations of PITA that are not expressly repealed by the provisions of FIRSA. Further to this is the fact that FIRS does not have all it takes to be in thirty six States and probably all the Local Governments of the Federal Republic of Nigeria.
2. ENFORCEMENT
Prior to the enactment of the FIRS Act, the under-mentioned enforcement provisions existed under the various tax laws viz:[48]
(1) Section 96 of PITA and Section 66 of CITA, which empowers tax officials to distrain the goods or property of defaulting persons,
(2) Section 59 of PITA, which established the Body of Appeal Commissioners,
(3) Section 45A of CITA, which empowers tax officials to forcefully enter and search any premises for offences of non-disclosure or partial disclosure,
(4) Section 65 of CITA which prescribes penalty for non-payment and enforcement of payment and
(5) Section 71 of CITA which creates tax offences and prescribes penalty for same.
The above provisions notwithstanding, enforcement remains a problem in the administration of tax. The often cited factors for these are weak legislation, slow pace or overwork of Tax Appeal Commissioner and the seemingly slow pace at which tax cases in court were handled.[49] It is this vein that Awosan E.A. called for the setting up of special courts to specifically handle tax cases.[50]
The enactment of the FIRS Act takes care of the lapses or inadequacies in the above mentioned provisions. By virtue of S.68 FIRSEA, the provisions of the FIRS relating to enforcement shall take precedence over the other existing legislations.
3.BROADENED POWERS OF DISTRAINT AND ENFORCEMENT
Aside from the provision of Section 8(1) (b) which empowers the FIRS to enforce payment of taxes, Section 36(1) &(2) specifically provide for the use or assistance of law enforcement officials in the execution or levying of any warrant of distraint. Section 8(1) (g) mandates FIRS to adopt measures to identify, trace, freeze, confiscate or seize proceeds derived from tax fraud or evasion while Section 8(1)(e) mandates the FIRS to collaborate with relevant law enforcement agencies to ensure compliance with tax laws. The phrase ‘to adopt measures’ used in Paragraph (g) mentioned above is intended to widen the powers and/or duties of the FIRS beyond the scope of the Act itself provided such measures are not unconstitutional or illegal.
Enforcement Provisions in Sections 33-36 of the FIRS Act empowerFIRS to embark on rigorous enforcement drive. This has led to the recovery of over N16.8 billion tax liabilities in one month from defaulting taxpayers including MDAs and corporate bodies.[51] The FIRS announced that its collection in 2010 has hit 2.83 trillion naira thereby over shooting its 2.5 trillion targets by 300 billion naira[52].
4. TAX APPEAL TRIBUNAL
The FIRS Act established the Tax Appeal Tribunal which is an amalgam of the defunct Body of Appeal Commissioners and the Value Added Tax Tribunal.[53] Appeals from TAT lie to the Federal High Court. Although this would seem to have rectified the anomaly in the practice at the defunct VAT Tribunal wherein appeals from that tribunal go to the Court of Appeal, there are still arguments as to whether or not it is usurping the jurisdiction of a constitutionally created court i.e. the Federal High Court. Compliance has always been a problem in Nigeria’s tax system, during the military era; the Tax Force Unit was used to enforce tax compliance. However, with democratic rule, this is not allowed and the use of the traditional court system is not only too cumbersome but is also time consuming. To this effect, the FIRS Act by S. 59 has prompted the creation of Tax Appeal Tribunals so as to make room for quick dispensation of justice.
Section 59 of the FIRS Act established the Tax Appeal Tribunal (TAT) to adjudicate on disputes arising from tax laws.[54] The Tribunal which is empowered to make its own rules[55] is precluded from applying any of the provisions of the statute of limitation.[56] Each party to the dispute bears its cost.[57] An award or judgment of the tribunal shall, after registration with the Chief Registrar of the Federal High Court be enforced as a judgment of the High Court by the person seeking to enforce the award or judgment.[58] Appeal against the decision of the tribunal lies to the Federal High Court.[59] By virtue of paragraph 13(1) and 14(1) of the Fifth Schedule to the Act, an aggrieved person or the FIRS, if aggrieved over tax issues can appeal to the Tax Appeal Tribunal, in case the matter can be heard and probably decided timeously. It does however appear from the provisions of paragraphs 13(1) and 14(1) mentioned above that the body of appeal commissioners has gone into extinction.[60] One wonders if the Tax Appeal Tribunal can bring about the much desired expectation especially as it has no criminal jurisdiction.[61] Another issue is that the appeal against the decisions of the Tribunal is based on points of law and not facts.[62] This may create hardship and injustice for any of the parties at any given time especially if issues of law need to be canvassed all over again at the Federal High Court. A litigant under such a situation may need to spend money twice and that would defeat the intention of cost reduction.
Furthermore, failure of the constitution of the Federal Republic of Nigeria and FIRSA to strictly locate the tribunal within the judiciary or place it within the hierarchy of courts is likely to spark off controversies as to judicial interpretation of the status/nature of the tribunal and this can in turn lead to cases challenging the jurisdiction of the tribunal. It would be a shame to have the Tax Appeal Tribunal go the way of the earlier Body of Appeal Commissioners in stabilinus case (Supra).
An aggrieved party on any tax matter can appeal to the Tribunal instead of the regular courts. It is important to note that taxation being a matter of revenue can also go to the Federal High Court under S.251 of the 1999 Constitution. Unless the parties are compelled as a precondition for accommodating them in courts to first state their issues before the tribunal, they may choose to bye pass the tribunal and go straight to court. To give effect to the creation of Tribunals, there should be a constitutional amendment to integrate it into the system of courts or quasi judicial institutions
Operational and enforcement provisions/power to prosecute tax offenders have also contributed to the efficiency of the Service and the development of tax in Nigeria amongst other contributions to tax development in Nigeria.
5. OFFENCE AND PENALTIES
It is noted that the penalties for the offences stated when compared to other penalties contained in our Criminal jurisprudence is in line with the modern day realities and potent enough to deter would be assailant or impersonators. This does not preclude the call for fines to be based on percentage basis so that inflation does not render it insignificant in the near future.S.40 to 49 FIRS Act which deals with offences and penalties have increased most of the fines to N200, 000 while the terms of imprisonment, have also been pegged between 3 to 10 years. The fines previously ranged from N500 to N10, 000 depending on the type of tax or offence.
Sections 45 – 47 FIRS create offences and penalties that are novel in the history of tax administration in Nigeria have provided the following offences and pealties. These include: arming oneself and causing injury to tax officials (5 years and 10 years imprisonment respectively), impersonation of FIRS officials (3 years imprisonment or N200,000 fine), General Offences not provided for in the Act (N50,000.00 or 6 months imprisonment).
6. POWERS OF PROSECUTION
The FIRS is empowered by S. 47 FIRS Act prosecute tax offences. Furthermore the FIRS does not require the approval of any other authority before it can prosecute offenders as was the case with the former FIRS under Section 99 of PITA. The implication of this is that the office of the Attorney General of the Federation and Minister of Justice is not responsible for staffing the legal unit. With this, it is expected that cases will be speedily handled, accountability will be ensured and loyalty will be undivided.
7. POWER TO COMPOUND OFFENCES
Section 48 of FIRS Act empowers the FIRS to compound offences by collecting sums of money not exceeding the maximum fine for the offence as provided by the Act. This provision is novel to our criminal jurisprudence. Although the intention of the lawmaker here is to reduce the cost of criminal litigation and timeously dispose of such cases, where the power is arbitrarily used, it may create room for corruption of tax officials and open a flood gate for tax leakage. It is suggested that clear and unambiguous rules should be created for compounding tax offences.
8. POWER TO CONDUCT TAX INVESTIGATION
Section 35(2) FIRS empowers the FIRS or conduct or cause an investigation to be conducted to ascertain whether or not there is a violation of any tax law. This provision can be used whether or not a violation has been reported and has widened the powers of FIRS to the effect that they can now perform the functions of law enforcement officers (especially the intelligence officers). Section 35(3) specifically provides the extent to which the provision under Section 35(2) can be exercised when it provides that the FIRS can investigate the lifestyle and property of any taxable person whose income cannot justify his lifestyle.
Section 35(1) further empowers the FIRS to employ the services of special purpose tax officers to assist any relevant law enforcement officer for the purpose stated in Section 35(2).
While applauding the provision of Section 35, we must be wary of the politicians and/or “statesmen” in the country who may want to ride on these provisions to settle scores with perceived opponents. It is therefore worthwhile for the Act to operate in such a way as to insulate the FIRS from political interference or unnecessary witch hunting.
Despite the several calls[63] to bring the rich and affluent dodgers of taxes to the tax net there is a further worry that the use of Special Purpose Tax Officers who may transform themselves into consultants could constitute another source of leakage of public funds to corrupt government officers. This is obvious from the fact that the duties of Special Purpose Tax Officers as defined by Section 69 of the Act is synonymous with the duties of law enforcement officers such as the police which Section 36(1) and (2) has empowered the FIRS to utilize in the course of enforcing payment of tax. This could amount to duplication of duties.
9. REWARD OF INFORMANTS
Another welcome innovation is that provided by Section 37 of the Act, which provides for reward of informants that supply information to tax authority. Such rewards would motivate people to supply necessary information that could curb the monster of tax evasion in tax administration. It is however suggested that rewards under Section 37 of the Act should not be left at the discretion of the board but should be dependent on a certain percentage of the amount recoverable from the evader. This will not only serve as bait to volunteer information, but will also act as a check against corrupt practices of government officials. Once there is enough information to create tax awareness it would arouse the patriotic feelings of citizens to ensure that tax defaulters are detected.
10. POWER OF THE ACCOUNTANT GENERAL OF THE FEDERATION TO DEDUCT UNREMITTED TAX FROM SOURCE
Section 24 of the Act empowers the Accountant General of the Federation to deduct at source (from budgetary allocation) the unremitted taxes of government agencies and transfer such deducted sums to the FIRS within 30 days of deduction. The intention of the legislature here is to:
(i) Compel ministries and government agencies to remit as soon practicable taxes deducted from worker’s salary (PAYE) or withholding tax received from contractors.
(ii) Ensure compliance with tax laws for example that such sums deducted as tax are not applied on behalf of the government for other government businesses, but paid to the appropriate tax authority who in-turn shall remit same to the designated government account.
(iii) Prevent fraud. A parastatal knowing that such unremitted sum would be deducted from its allocation may not find it enticing to hold unto deducted taxes beyond the allowed period.
11. USE OF TAX CONSULTANTS
To further improve on the revenue of the country, the Act by virtue of S. 12(4) has empowered the service to engage the services of Consultants such as Tax Consultants, Accountants and Agents to transact any business or to do any act required to be transacted or done in the execution of its function. The Consultants shall however not be engaged to carry out the primary functions of the service such an assessment, collection of taxes and other routine responsibilities.
In this regard a number of tax related businesses and training institutions have emerged; the efficiency of the private sector is, therefore, being brought to bear in the administration of taxes.
It seems that the FIRS Act 2007 has legitimized and legalized the engagement of tax consultant because the service itself is empowered to appoint and employ such consultants, including tax consultants or accountants and agents to transact any business or to do any act required to be transacted or done in the execution of its functions under the FIRS Act.[64]
12. HUMAN CAPITAL DEVELOPMENT:
Capacity building of the Staff as well as enhanced welfare packages and regular training have all become the hallmark of the service that has made it very attractive to a number of Professionals.
13. E-TAXATION/DATA BASE DEVELOPMENT:
The introduction of internet tax payment known as E-payment via the FIRS Portal has been made for Tax Payers thereby making all forms of tax payments less cumbersome, more efficient and also eliminating errors due to manual process of tax collection.[65]
Before the establishment of the Service most of the operations relating to taxation were done manually with a lot of paper work involved. The introduction of FIRS online payment, e-ticket, Tax Identification Number (TIN) Project Fact[66] and payment cards was one major contribution of the service to tax administration in Nigeria is. The operations of the Service are now fully automated. All the processes can now be done electronically on-line on the FIRS Portal. The incident of human interaction has been reduced drastically.
Under S. 8(q) of the Act, the Service is mandated to issue Taxpayers Identification Number (TIN) to every taxable person in Nigeria in collaboration with State Boards and Local Government Councils. By this the database of the Service is being developed for monitoring of compliance. TIN is one major innovation that has propelled voluntary compliance with the taxation in Nigeria. It is now mandatory to have TIN for every Public Procurement and business transaction in Nigeria.
Furthermore, TIN, is a mandatory requirement of E-payment for all transactions with the Banks effective from 1st February, 2008.
Issuance of FIRS Tax Card (E-Card), provides a special debit card that enables the payment of FIRS Taxes. Banks have also been designated and authorized to transact business with Taxpayers with the E-Card.
The development of the FIRS database and integrated linkages with other relevant stakeholders in the financial sector has not only helped in proper monitoring but has also improved compliance and widened the tax net.
The National Tax Policy
The Nigerian tax system has been characterized by very low level of compliance with Tax Laws, and evasion. The inherent lapses in our tax regime, have gingered successive Government to continually try to improve on Nigeria’s Taxation Systems with a view to having a Tax System that will encourage voluntary compliance; Reduction of tax evasion to the barest minimum; instilling public confidence in the integrity of the tax systems and bringing about a fair, uniform and impartial administration of relevant tax laws.[67]
It became imperative that the Nigerian tax policies were in need of a drastic review, being characterized by multiple and often arbitrary taxes imposed by the Federal, State and Local Governments. The Organized Private Sector has repeatedly complained that multiple taxes impose extra costs on businesses. To be effective, therefore, the new tax initiatives must harmonise the tax structure at the three levels of government and eliminate doubletaxation.[68] The impositions of arbitrary and oppressive taxes have been cited by some firms that either closed down or relocated to neighbouring countries.
According to the then minister of finance, Dr. Mansur Muhtar, the new policy will lay out a new set of rules, correct the inherent lapses in the existing tax structure and promote fiscal federalism. He said the policy would also help the three tiers of government to improve their internally-generated revenues, block the glaring leakages in the system and facilitate economic growth by reviewing the legal and institutional framework of tax administration in Nigeria.[69]
These are laudable objectives that should be vigorously pursued and which deserve the support of all stakeholders. The latest initiative aims to completely prevent local authorities from harassing individuals and corporate bodies from dubious taxes.
In 2002, a Study Group (the SG) was inaugurated to review the entire tax system in Nigeria.[70] The terms of reference included inter alia:
· Review all aspects of the Nigerian Tax system and recommend improvements therein.
· Review the entire tax administration and recommend improvements in the structure for the whole country.
· Consider measures to bring international developments in tax administration to bear in Nigeria.
· Employing taxation as an instrument of diversifying the economy and improving economic development;
· Using taxation to create a system that ensures greater accountability for tax revenue, both on the part of government and revenue authorities;
· Limiting the granting of excessive tax incentives, particularly in the oil and gas sector;
· Creating a modern tax system which is capable of responding to the dynamics of international socio-economic changes from time to time.
Objectives of the National Tax Policy[71]
The national tax policy provides a set of rules, modus operandi and guidance to which all stake holders in the tax system will subscribe.
The ultimate goal of the draft national tax policy is to ensure that taxation provides a significant and sustainable source of funding for the country’s expenditure and also to achieve a tax system that will dramatically increase investment within the Nigeria economy, thereby leading to more jobs and higher economic growth. It also hopes that a bye-product of this process would be to identify those salient issues to be adopted for possible inclusions in the additional amendment of the 1999 constitution of the Federal Republic of Nigeria, and the various Nigeria tax laws.
The draft policy is presented in two segments; one part highlighting the tax policy and administration concerns, while the other consider how government may want to achieve a sound tax policy.
The draft prescribed that the National Assembly shall be the guardian of Nigeria’s national tax policy.
The reform process of the Nigeria tax system commenced in 2002 when the Federal Ministry of Finance inaugurated a study group which examined the tax system and made appropriate recommendations to entrench a better tax policy and improve tax administration in the country, the study group submitted its report in July 2003. Thereafter, a working group was set up in 2004 to review the recommendations of the study group which were further reviewed and commented upon by various stake holders[72].
A clear outcome of the various meetings and consultations was a general agreement that Nigeria was in urgent need of a national tax policy to prescribe a set of guiding principles and also provide a stable point of reference which all stakeholders in the tax system can refer to and on which they shall be held accountable.
To this end, a committee was commissioned to provide a blue print of the national tax policy document for onward transmission to the Federal Ministry of Finance.
Administration and Policy Issues
To ensure an effective tax policy document, the following are the crucial administration and policy issues that were recommended;[73]
1. A sufficient proportion of revenue collected by the federal or state revenue authority, as judged by international comparisons with well-funded, efficient tax systems, shall be provided to the federal or state tax authority for its administration.
2. That any unspent portion of such allocated fund shall be returned back to Government while the revenue authority shall retain 10% of the total revenue to cater for refund requests.
3. The government is committed to achieving high level of technical training and capacity building of all the tax revenue officials in the country.
4. All tax and revenue authorities who are saddled with tax refund obligations shall meet these obligations both diligently and efficiently.
5. It is the responsibility of the tax authority to constantly educate taxpayers on the relevant aspects of the tax system.
6. All the tax revenue authorities in Nigeria shall embrace self-assessment, and should put in place structures that will guarantee the realization of true self-assessment.
7. Every company and taxable persons shall be registered for tax purposes. The federal revenue authority is required to issue a tax identification number (TIN) upon the registration by taxpayers for taxes.
8. The Nigeria taxation system shall be subject to a general review every year and subject to a comprehensive review every three years.
9. The Ministry of Finance is the sole body saddled with the responsibility of proposing amendments to all tax and revenue laws and legislations to the legislators.
10. The current policy of shifting away from direct taxation to indirect taxation is to pursue the goal of encouraging economic growth by decreasing direct taxes, whilst still meeting the revenue requirements.
The National Tax Policy as a Guide to Effective Tax Administration and Enforcement
The aim of the National Tax Policy is to provide a set of rules, modus operandi and guidance to which all stakeholders in the tax administration are given the Federal Government’s economic reform agenda. The Federal Ministry of Finance, in collaboration with the Federal Inland Revenue Service has commenced the process of reform in the system of taxation in Nigeria in line with National Tax Policy. The inauguration of a Study Group by the Federal Ministry of Finance on 6th August, 2002 marked the beginning of the current reform process. The Study Group was mandated to examine the Tax system and make appropriate recommendations to entrench a better Tax Policy and improve Tax Administration in the country. The Study Group submitted its report in July 2003.[74]
Thereafter, a private Sector-driven Working Group was constituted on 12 January 2004 to review the recommendations of the Study Group. Both the study and Working Groups’ recommendations were further reviewed and commented upon by various stakeholders. Both groups addressed macro and micro issues in tax policy and administration. Among the macro issues discussed were the drafting of a National Tax Policy, Taxation and Federalism, Tax Incentives and Tax Administration generally.[75]
Thus, the outcome of the various meetings and consultations was a general agreement that Nigeria was in urgent need of a National Tax Policy which will prescribe a set of guiding principles and also provide a stable point of reference for all stakeholders in the country and for the efficient administration of tax.[76]
To this end, a sub-committee was commissioned to provide a blue-print of the National Tax Policy document for onward transmission to the Federal Ministry of Finance.
The National Assembly shall therefore be the guardian of Nigeria’s National Tax Policy. After the approval of Nigeria’s National Tax Policy by the Federal Executive Council, following consultations with the National Economic Council (NEC), the Policy shall be implemented administratively, pending enactment by the National Assembly and eventual inclusion in the Constitution.[77]
Tax administration in Nigeria is shared responsibility of the three-tiers of government namely the Federal, State and Local Government. The core success factor for any policy is enshrined in its position on effective policy and administrative issues.
The National Tax Policy Draft, 2007 has therefore laid down certain guide lines to ensure effective tax enforcement as well as reduce high cost of tax enforcement. The Draft has proposed cooperation between the Revenue Authorities and various Law Enforcement Agencies, such as the Nigerian Police, Economic and Financial Crimes Commission (EFCC), Independent and Corrupt Practices Commission (ICPC).[78] This would in no small means assist Tax Authorities to acquire skill, training and competences on investigation and enforcement activities in relation to the provisions of the enabling legislations, with respect to the problems of tax defaulters and recalcitrant taxpayers. Revenue authorities may also conclude information sharing agreements with EFCC, ICPC and State Security Service SSS, in order that proper assessment can be made on taxpayers. This in turn will make tax enforcement easier and less expensive.
A more structured information-sharing arrangement shall in line with the National Tax Policy be established between the Tax and Revenue Authorities on the one hand and government bodies earlier mentioned such as the Central bank of Nigeria, Consultants, Nigerian Customs Service, Banks, Nigerian National Petroleum Corporation (NNPC), DPR, National Drug Law Enforcement Agency (NDLEA), National Agency for Food and Drug Admission Commission (NAFDAC) and the Ministry of Finance on the other hand.
Note that one of the key features of a good Tax system is that the cost of administration and enforcement must be relatively low in comparison with the benefits derived from its imposition. The simpler the process of a tax administration, the easier it will be for taxpayers to comply and the better for compliance. Thus, the more the effort and money spent on the collection/enforcement of taxes, the greater the revenue expectations. As such the whole machinery of Nigerian Tax Administration and Enforcement should be geared towards efficiency and cost-effectiveness.[79]
High compliance is achievable by the effective consideration of the economic costs, time and the expense which a tax payer may incur in the course of compliance. The tax payer is important branded as “the king” by the FIRS and should as such be treated well.
The Federal Inland Revenue Authority (FIRS) is required to issue a Tax Identification Number (TIN) upon the registration by taxpayers for payment of taxes. This TIN, via Information Communication Technology will guide and provide insights into all the tax activities of the tax payers.[80] The FIRS has since commenced the issuance of TIN since 2007.[81] This is expected to reduce the cost of administration and supervision while enhancing higher compliance. It is suggested that the various State Boards of Internal Revenue should take a queue from the Lagos State procedure.
In order to effectively reduce the cost of enforcement by boosting high compliance among taxpayers, every person carrying out business or eligible to pay tax in Nigeria must begin to truly trust the Tax system. It is therefore imperative that the Nigerian tax System must in compliance with the cannons of a good tax, be simple (easy to understand by all), certain (its administration must be consistent) and clear (stakeholders must understand the basis of its imposition).[82] The tax policy will serve as the basis upon which stakeholders that is, the Revenue authorities and government shall be held responsible and accountable by the tax payers.
Highlights of the Draft National Tax Policy[83]
The following points are seen as key highlights of the draft tax document;
1. The current overriding objective of the Nigeria tax system is to enable economic growth and development.
2. The taxes in the Nigerian tax system shall be few in number, broad-based and high revenue-yielding.
3. The overall Nigerian tax system shall be fair, so that similar cases are treated similarly, and different cases are handled based on their respective peculiarity.
4. There shall be a shift in the focus of the tax system from direct taxation to indirect taxation. Nigeria shall therefore seek to have low rate of companies’ income tax and personal income tax by relevant international comparison. This will be accompanied by an increase in the rate of Value Added Tax (VAT). An increase in the emphasis on VAT and custom duties should have an upward effect on the country’s stable revenue base. It is being proposed by the Study Group that for personal income, the strategy is to bring the top rate down from 25% to 17% of taxable income by, while corporate taxes will be dropped to 20% from 30% by. Accordingly, the proposal is to increase VAT to 15% from 5% by 2009. These proposals are yet to be implemented.
5. Internal multiple taxation by the various tiers of government on income, property, imports, production and turnover shall be avoided.
6. The Nigerian Tax System will minimize and streamline the number of Tax incentives and restrict their use to instances where they help achieve a national objective that cannot be achieved more efficiently in any other way.
7. The Ministry of Finance should be the body charged with providing the oversight function over the activities of the Tax and Revenue Authorities in Nigeria. It should be the sole organization responsible for initiating the drafting of any suggested addition or amendment to laws or legislations on taxation and revenue.
8. The power to impose, increase, reduce, vary or cancel any rate of tax should be vested on the National Assembly with respect to all laws or proposals by the Executive.
9. The Joint Tax Board (JTB) should be strengthened as an institution to coordinate Personal Income Tax across Nigeria. By giving it legal powers to function as a policy making body for those taxes for which the administration is split across states, rather than merely an advisory body, will ensure an increase in collection efficiency.
10. The Nigerian Tax System shall be subject to comprehensive review every three years. This review will not only be restricted to all the existing tax legislations i.e. CITA, PPTA, PITA, VATA, CGT etc; but would cover all aspects of tax administration and tax policy matters.
11. Nigeria shall ensure that all the international tax obligations contracted by it are respected. Nigeria shall also continue to pursue and expand its frontiers on international tax treaties.
12. Tax shall be collected only by career tax administrators, who are civil servants, and not by ad hoc consultants or agents in adhoc capacity.
Nigeria’s National Tax Policy was approved by the Federal Executive Council in mid – January, 2010,[84] following consultation with the National Economic Council (NEC). It is expected that the National Assembly who is the guardian of Nigeria’s National Tax Policy will enact it into law and eventual inclusion in the constitution. Furthermore, it hoped that after the enactment, the policy shall be implemented by the three tiers of Government and that the new tax policy would drive the country’s fiscal policy in the immediate, medium and long term. Also, the document will be a reference point for all stakeholders on issues of taxation in the country. It is expected to grow tax revenue at all tiers of government; enhance government revenue from non-oil tax, and also increase transparency and accountability in tax management and administration. The policy shall be implemented administratively pending enactment by the National Assembly and eventual inclusion in the constitution.[85]
REVENUE MOBILIZATION ALLOCATION & FISCAL COMMISSION
Revenue Allocation and Sharing Formula in Nigeria
A careful look at the historical outline of the Revenue Allocation formula in Nigeria since the pre-independence era, to the era of independence, and the post-independence comprising the period of Military rule up to this present era of democratic civilian dispensation shows that it has been going through a lot of troubled waters as it has remained an unequal and inequitable formula leading to agitations by States and Local Governments seeking for it to be restructured in a more equitable manner.
Revenue Allocation Formula is provided for in the Allocation of Revenue (Federation Account, etc) Amendment Decree, No. 106 of 1992 now captured by section 162 of the 1999 Constitution, for the disbursement of the revenue from the Federation Account.
Section 162 of the Constitution of the Federal Republic of Nigeria, 1999 provides inter alia:
(1) The Federation shall maintain a special account to be called the Federation Account into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from Personal Income Tax of personnel of the armed forces of the Federation, the Nigeria Police Force, the Ministry or Department of Government charged with the responsibility for Foreign affairs and the Residents of the Federal Capital Territory, Abuja.
(2) The President, upon the receipt of advice from the Revenue Mobilization,Allocation and Fiscal Commission,shall table before the National Assembly Proposals for revenue allocation from the Federation Account, and in determining the formula, the National assembly shall take into account, the allocation principles especially those of population, equality of states, internal revenue generation. Land mass, terrain as well as population density; provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen per cent of the revenue accruing to the Federation Account directly from any natural resources.
(3) Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the Local Governments Councils in each state on such terms and in such manner as may be prescribed by the National Assembly.
(4) Any amount standing to the credit of the States in the Federation Account shall be distributed among the States on such terms and in such manner as may be prescribed by the National Assembly.
(5) Any amount standing to the credit of local government councils in the Federation Account shall also be allocated to the States for the benefit of their Local Government councils on such terms and in such manner as may be prescribed by the National Assembly.
The formula for the distribution of revenues to the three tiers of government is presently based on a certain ratio as prescribed by the Federal Government from time to time. The initial formula in operation as at 29th May, 1999 was as follows: Federal Government, 48.50%; State Governments, 24%; Local Government Councils, 20%; and Special Funds, 7.59%. Following the Supreme Court’s judgment in the “Resource Control Case” in April, 2002, the Revenue Allocation formula changed.[86] After due consultations with all stakeholders on issues of revenue distribution, consequent amendment was made by Mr. President on the Executive Order on Allocation of Revenue now referred to as the “Modification Order 2002”, issued in July, 2002. This new allocation formula increased resources to the States and Local Government Councils.
However, the Federal Government in January, 2004 further increased the State Governments’ share by 2%, pending the provision of a new allocation formula by the Revenue Mobilization, Allocation and Fiscal Commission. The new formula with effect from that date stands as follows:
(i) Federal Government 52.68% (F/A)
(ii) State Governments 26.72% (F/A)
(iii) Local Government Councils 20.60% (F/A)
(iv) Derivation 13% (Mineral Rev.)
(Started in Jan. 2000 and it replaced the 1% M.R. Derivation and 3% M.R. to OMPADEC)
Details of Federal Government Distribution Rate
(i) Federal Government - 48.50
(ii) Federal Capital Territory - 1.00
(iii) FGN share of Derivation and Ecology - 1.00
(iv) Stabilization Fund - 0.50
(v) Development of Natural Resources - 1.68
Total - 52 .68
Composition and Powers:
The composition and powers of the Revenue Mobilization, Allocation and fiscal commission which by virtue of S. 162(2) advises the president on revenue allocation is provided under Part 1 N (Paragraph 31-32) of the third schedule of the 1999 constitution as follows:
The Revenue Mobilization, allocation and fiscal commission shall comprise of the following members:[87]
a) A Chairman; and
b) One member from each State of the Federation and the Federal Capital Territory, Abuja who in the opinion of the president are person of unquestionable integrity with requisite qualifications and experience.
The Commission shall have power to-[88]
a) Monitor the accruals to and disbursement of revenue form the federation Account:
b) Review from time to time, the revenue allocation formulae and principles in operation to ensure conformity with changing realities.
Provided that any revenue formula which has been accepted by an Act of the National Assembly shall remain in force for a period of not less than five years from the date of commencement of the Act:
c) Advise the Federal and State Government on fiscal efficiency and methods by which their revenue can be increased:
d) Determine the remuneration appropriate for political office holders, including the President, Vice President, Governors, Deputy Governors, Ministers, Commissioners, Special Advisers, Legislators and the holders of the officers mentioned in sections 84 and 124 of the 1999 Constitution of the Federal Republic of Nigeria.
e) Discharge such functions as are conferred on the Commission by this Constitution or any Act of the National Assembly.
There is also the Federation Account Allocation Committee (FAAC) under the chairmanship of the Hon. Minister of State for Finance and comprising of the Commissioners for Finance of the Thirty Six States of the Federation, the Accountants General of the Federation and the Director of Treasury, FCT based on percentage that accrues to each tier as are released by the Accountant General.
The amount of revenue shared from the Federation Account has continued to increase substantially from year to year as indicated by table below, yet there is no appreciable development to show for the Amount allocated to the three tiers of Government in Nigeria. In most of our cities, there is no water and other basic social amenities are lacking. One then begins to wonder, if there is a proper understanding of what governance really is and ought to be. A cursory look at the Revenue Allocation formula itself shows that it is inequitable and disproportionate. While the Federal Government takes 52.68%, the states take 26.72% and the Local Governments which are closer to the masses and therefore ought to get more, take only 20.60%.
DISTRIBUTION FROM THE FEDERATION ACCOUNT[89]
(JUNE 1999-DECEMBER 2006)
BENEFICIARIES
Note: The distribution for the year 1999 is for the period, June-December.
Between June, 1999 and December, 2006, the sum of N15,827.27 billion was released and shared from the Federation Account amongst the beneficiaries of the Account. While the sum of N312.93 billion was shared within the period, June-December, 1999; N1, 163.429 billion was distributed in the year 2000. In 2001, a total of N1,585.947 billion accrued and was shared. The sum of N1, 664,326 billion and N1, 842,603 billion was distributed in 2002 and 2003 respectively. By 2004 and 2005, the yearly distributions had increased tremendously to N2, 501,767 billion for the year 2004 and N3, 069,332 billion in 2005. In the year 2006, a total sum of N3, 686,938 billion was collected and shared amongst the three tiers of Government.
The high revenue performance over the years was attributed partly to the unexpected but quite substantial rise in the price of crude oil in the world market, as well as the prudent management of the Nation’s finances. Of the N15,827.27 billion statutory revenue shared within the period, June, 1999 to December, 2006, N7,024.348 billion went to the Federal Government; State Governments including the Federal Capital Councils, and the Area Councils of the FCT, while N604.745 billion was set aside for other beneficiaries of the Account and for miscellaneous expenses. These beneficiaries include the Development of National Resources, FGN share of Derivation and Ecology, Stabilization Funds, cost of collection to the Nigeria Customs Service and the Federal Inland Revenue Service, etc.
Value Added Tax (VAT)
The existing formula for distributing the VAT revenue was retained. The VAT revenue recorded during the period under consideration was very impressive. Table below shows that a total sum of N992.666 billion was collected and shared. Of the amount shared, the Federal Government received N138.085 billion; the State Governments and the Federal Capital Territory (FCT) got N492.669 billion; N339.636 billion went to the Local Government Councils, including the Area Councils of the FCT; while N22.275 billion was paid to the Federal Inland Revenue Service (FIRS) as cost of collection/refund.
VALUE ADDED TAX (VAT) DISTRIBUTION[90]
Note: The distribution for the year 1999 is for the period, June-December.
INTER-RELATIONSHIP BETWEEN THE STAKEHOLDERS IN THE DEVELOPMENT OF A GOOD TAX SYSTEM
The Ministry of Finance is the body charged with the responsibility of performing the oversight function over the activities of Revenue Authorities in Nigeria. It is also the sole organization responsible for tax policy matters, including drafting any proposed amendments to laws or legislations on taxation.[91] All Tax/Revenue Authorities such as Federal Inland Revenue FIRS and Nigerian Custom Services NCS shall account to the Federal Ministry of Finance in respect of all taxes collected by them.
Some of the Government Organizations responsible for advising Government on Tax Policy direction include the National Planning Commission (NPC) and Nigerian National Petroleum Corporation (NNPC). The NPC has a coordinating role on economic policy formulation of which National Tax Policy is a component.[92] Its major role is to harmonize all tax policies and applications within the country so as to promote uniformity and avoid double taxation between states of the federation[93].
At State level, Tax and Revenue Authorities are also required to report to the State Government through the States’ Ministry of Finance. The relationship between the Federal Inland Revenue Service which is the Federal Tax organ and the respective State Internal Revenue Boards on tax related matters is moderated through the Joint Tax Board (JTB). In addition, the JTB should continue to play an advisory role to government whenever its opinion is sought.[94]
The FIRS Act, 2007 mandates Tax Authorities to establish formal inter-agency cooperation with various Law Enforcement Agencies, such as the Nigerian Police, EFCC, and ICPC.[95] This is necessary in order to assist Tax Authorities to acquire skill, training and competences on investigation and enforcement activities in relation to the provisions of the enabling legislations, with respect to the problems of tax defaulters and recalcitrant taxpayers.
Tax authorities may also conclude information sharing agreements with EFCC, ICPC, CAC, SSS, etc., in order that proper assessment can be made on taxpayers.
It is the aim of the National Tax Policy that a properly structured information-sharing arrangement shall be established between the Tax and Revenue Authorities on the one hand and government bodies such as the Central Bank of Nigeria, Tax Consultants, Nigerian Customs Service, Banks, Nigerian National Petroleum Corporation (NNPC), DPR, National Drug Law Enforcement Agency (NDLEA), National Agency for Food and Drug Admission Commission (NAFDAC) and the Ministry of Finance on the other hand. FIRS works with the Banks and CAC in gathering Data base of Companies and Individuals who carry out transactions with the CAC and banks in order to bring them within the tax net.[96]
Finally, the different levels of government as well as the Tax Authorities are expected to provide guidance and information to the taxpaying public. This will elicit higher compliance and cooperation from the taxpaying public. In addition to putting in place a National Tax Policy (NTP) FIRS strives to uphold the principles of Fiscal Federalism in our tax and fiscal administration that will translate to economic growth and development of the entire nation.[97]
COLLABORATION BETWEEN STAKEHOLDERS
Office of the Accountant General of the Federation
Joint Tax Board
Federal Ministry of Finance
NNPC
NPC
Tax proceeds
Law Enforcement Agencies e.g. Economic & Financial Crime Commission, Nig Police
CBN, Tax Consultants, Professionals, Nigerian Customs Service, Banks Etc.
Revenue Authorities
Tax Paying Public
The above diagram is a pictorial depiction of the collaboration between all the Stakeholders in the Administration of taxes in Nigeria.[98] The Revenue (Tax) Authority is at the centre of the diagram. The Tax Authority and the Office of the Accountant –General of the Federation (OAGF) are shown to be in charge of tax proceeds. For instance, while the Tax Authority is responsible for rendering account of tax proceeds to the Government through the Federal Ministry of Finance, the OAGF is responsible for charging tax proceeds into the Federation Account and VAT Pool Account as the case may be.
The Revenue Authority collects tax from taxpayers and from time to time engages in the sanitization of the taxpayers. It also collaborates with Law Enforcement Agencies i.e. Nigerian Police in cases of arrest, investigation and prosecution of tax evaders and suspects are alleged to have forged Tax Clearance Certificates.
The Joint Tax Boards serve as a link with the relevant tax authorities and serves in advisory capacity to the Government.
The Federal Inland Revenue Service as the main tax revenue organ of the Federal Government collaborates with banks in collection of taxes, as a matter of fact there are various designated tax collecting banks all over the Federation i.e. Oceanic Bank, First Bank Plc., Unity Bank, Bank PHB etc.[99]
The Federal Inland Revenue Service collaborates with NNPC to monitor and administer Petroleum Profit Tax.
All levels of Tax/Revenue Authorities which include FIRS and NCS appoint Tax Consultants for effective administration and enforcement of taxes. However, Tax Consultants are prohibited from assessment and collection of tax as only a Tax Authority mentioned in the Taxes and Levis (Approved List for Collection) Act[100] has authority to so collect. They may however give advice on the issue.
The Tax Authority from time to time collaborates with the National Planning Commission (NPC) the body charged with coordinating economic policy formulation of which National Tax Policy is a component as earlier discussed. There should be solid linkages between the various stakeholders in the various tax systems so as to influence the achievement of voluntary tax compliance.
Linkages for Effective Tax Policy: For an effective Tax Policy to exist, linkages / collaborations need to be established with the following groups or bodies so as to bring all within the tax net. They include; stakeholders support groups, persons, organizations and associations whose responsibities are mainly to influence the achievement of voluntary Tax compliance generally.[101] Also see the suggested linkage /relationship provided by the national Tax Policy Draft Document.[102]
Unified Registration processed/ linkages to Third Party Data
-FIRS/CAC/NS
-OAGF/BMPIU
-National population commission
-CBN/Banks
Stakeholder support
-FEC/NEC/FMF/
FIRS/JTB
-Law enforcement
Agencies
-Tax Professionals
-National Assembly
Taxation in Education curriculum
-Primary
-Secondary
-Tertiary
LINKAGES FOR EFFECTIVE TAX POLICY
Organisation for regular Tax Policy research and annual review with linkage to legislation
Tax Payer Considerations
- Convenience
- Number of Taxes
- Points of Taxation
- Services
- Education
Tax Policy
-Tax types
-Sectoral focus
-Tax Base
-Rates/Incentives
-Competencies
-Admin. Resp.
Relationships between
FG, SG and LGs
-Policy
-Legislative
-Responsibility
-Collection
-Distribution
National Mapping and Building numbering
Systems policy and implementation(to enable registration and taxcorrespondencies.
Holistic approach to provision of duties, waivers, exemptions, incentives, etc
GUIDING PRINCIPLES FOR ALL STAKEHOLDERS IN THE ADMINISTRATION OF A GOOD TAX SYSTEM
The stakeholders in the administration of tax system in Nigeria should as a matter of urgency imbibe the following universal principles which are aimed at ensuring effective interaction/collaboration between the stakeholders.[103]
1. Affirmation and acknowledgement of stakeholder’s importance and contribution at all times.
2. Provision of specific and general proactive feedback on issues and developments that are relevant to tax administration. For example, the collecting banks and the National Planning Commission (NPC) should render feed backs on the effective means of collection to the Federal Inland Revenue Service.
3. Ensuring that the principle of good faith is observed by all stakeholders especially between the tax payer and the tax / revenue authority on the one hand and the government and tax authority on the other hand.
4. Fairness in the treatment of all stakeholders by one another. This can be shown by respecting each other views points and ensuring proper allocation of resources.
FUNDING OF TAX AUTHORITIES
The Government is to provide adequate funding arrangement for Tax and Revenue Authorities in Nigeria. In order to ensure that the Tax and Revenue Authorities in the country are well funded, government at all levels shall ensure that a sufficient proportion of revenue collected by any Revenue Authority, as judged by international companies with well funded, efficient tax systems, shall be provided to cater for its administration. That not less that 10% of total revenue collection by Tax/Revenue Authorities shall be appropriated each year by the National Assembly to FIRS in order to cater for refund requests from taxpayers.[104]
In view of the foregoing there is the need to include this arrangement in the Federal tax statutes, as well as replicate it at the State Revenue Authority level. In furtherance of this, section 23 FIRSEA has made elaborate provisions for refund.
CONCLUSION
The innovations introduced by the National Tax Policy as well as the FIRS Establishment Act, 2007 have tremendously improved on the taxation system and its administration Nigeria. It is hoped that if the two are properly implemented it would go a long way in enhancing the Nigerian tax system. It is also hoped that the government will put a machinery in place to rebuild the confidence of the taxpayers in the system. The masses are usually agitated when they do not trust the government to use funds collected from them for any welfare purpose. The current outrage over removal of fuel subsidy is not unconnected with such absolute distrust.[105]
[1] Ishola K. A. Companies and Personal Taxation in Nigeria Ibadan, Chresthill Publishers Limited, (Vol. 1) 2008, pp. 1 – 32.
[2] The calls were often made in the reports of various communities, and study group’s set-up to review taxation and its administration towards reforms especially that of Dotun Philip in 2003.
[3] Auru Osimabale, H. Principles and Practice of Taxation, Nigeria, Klinx Press, 2008, pp. 1 – 30.
[4] The calls were often made in the reports of various communities, and study group’s set-up to review taxation and its administration towards reforms especially that of Dotun Philip in 2003.
[5] The FIRS Act has repealed parts of the Companies Income Tax Act.
[6] Cap P8, Laws of the Federation of Nigeria 2004, as amended by CITA (Amendment) of 2007.
[7] Section 1 – 3, PITA
[8] Ibid, Sections 54 - 59
[9] Ibid, sections 68 - 85
[10] Ibid, Sections 86 - 93
[11] Cap C21, Laws of the Federation of Nigeria 2004 as well as the CITA (Amendment) Act 2007
[12] Sections 9 – 23, CITA
[13] Ibid, Sections 1 - 4
[14] Cap P13, Laws of the Federation of Nigeria 2004
[15] Cap VI, Laws of the Federation of Nigeria 2004. Now CI, LFN 2004
[16] Cap 42 Laws of the Federation of Nigeria 1990
[17] Section 1 CITA, Section 3 PPTA and Section 43(c) CGTA as well as S.I FIRS Act.
[18] Section 87 PITA. S. Constitution of the FederalRepublic of Nigeria.
[19] Federal Inland Revenue Service (Establishment) Act, 2007
[20] CITA Cap. C21 Laws of the Federation of Nigeria, 2004
[21] PITA Cap. P 8, LFN, 2004
[22] PPTA Cap. P 13, LFN, 2004
[23] VATA Cap V. 1, LFN, 2004
[24] CGTA Cap. C. 1, LFN, 2004
[25] FIRS, Act, 2007. Op cit. S. 1(i)
[26] Repeal of Part 1 of CITA, This body was previously known as the Federal Board of Inland Revenue while the FIRS was the administrative arm.
[27] Part II of the 1st Schedule to the (amendment) Decree No 21, 1998
[28] Sections 1 and 2 FIRS Act, 2007
[29] Section 68 (1)
[30] Section 68 (2) FIRS, Act, 2007
[31] See Section 85 now 87–89 of PITA No. 104 of 1993, as amended by the Finance (Miscellaneous taxation provisions) No. 2 Decree No. 31 of 1996
[32]www.fmf.gov.ng
[33] Se. S. 60, PITA Act, No. 104, 1993
[34] See Second Schedule, S. 20 (2) VAT Act, No. 102, 1993
[35] See S. 59; First Schedule FIRS Act, 2007
[36] Overview of Tax Reforms to RMAFC BY Mrs. Ifeuko Omoigui (Chairman, FIRS) 10 October, 2006, pg. 25
[37] Ibid Pg. 26
[38] Ibid
[39] Section 1 of the FIRS Act, 2007
[40] Section 3 of the FIRS Act, 2007
[41] Section 17 FIRS Act
[42] Section 27 CITA
[43] Nigerian Tax Reform in 2003 & Beyond, Op. Cit., p. 12
[44] Punch Newspaper of 12th May, 2008, p. 15
[45] Section 8 (1) (e) of the FIRS Act
[46] Culled from a paper delivered by Neil Brooks titled Key Issues in Income Tax: Challenges of Tax Administration and Compliance at the Asian Development Bank Tax Conference, Asia, 2001
[47] Daily Sun, Tuesday, January 3, 2012. p. 5
[48] Osemene, E.N (2004). Taxation in Nigeria Case Studies, Latek Prints P. 281
[49] Awosan E.A., Tax System and Administration in Nigeria P. 175 (being a memorandum to the Study Group on Nigeria Tax System and Administration) in Report of Study Group on Nigeria Tax System and Administration, 1991, Lagos
[50] Ibid P. 176
[51] Guage, Ibid, p. 14
[52] The Nation Friday February 4, 2011 p. 53
[53] Section 59 of the FIRS Act, 2007
[54] See paragraphs (1) – (11) of the first schedule to the Act for all the laws
[55] Paragraph 20(1) Fifth Schedule to the Act
[56] Paragraph 19, Ibid
[57] Paragraph 22, Ibid
[58] Paragraph 16(1), Ibid
[59] Paragraph 17(1), Ibid
[60] Prior to the enactment of the Act, two forms of body of Appeal Commissioners existed, they are
(1) Body of Appeal Commissioners created under Section 60 of PITA
(2) Body of Appeal Commissioners created under Section 71 of CITA
[61] Paragraph 12 of the Fifth Schedule to the Act
[62] Ibid. Par. 17(2)
[63] Osemene E.N. Op. cit., p. 281
[64] Section 12(4) FIRS Act, 2007
[65] Ibid
[66] Guage, a Quarterly Publication of the FIRS, April-June 2009, pp.8-13, Backpage
[67] Abubakar Yusuf Mahmud “Tax Policy in Nigeria” www.Buzzle.com
[68] Ibid.
[69] ‘The Draft National Tax Policy’ www.fmf.gov.ng
[70] National Tax Policy (Draft Document ) p.ii www.fmf.gov.ng
[71] Ibid. p.5-8
[72] Ibid. p(ii)
[73] Ibid p. 13 -15
[74] “Draft Document on the National Tax Policy”, Op. Cit., P. 10
[75] Ibid
[76] Ibid
[77] Ibid
[78] National Tax Policy, Op. Cit., Pg. 9-10
[79] Ibid Pg. 6
[80] Ibid, p. 16
[81] FIRS News Bulletin, Jan., 2008, p. 4
[82] National Tax Policy, Op. Cit, p. 5
[83] Ibid p. 1 - 2
[84] Olaseni Oyefeso ‘FEC approved National Tax Policy’ www.ladybrillenigeria. com
[85] Draft National Tax Policy. P. 2
[86] The Modification Order 2002
[87] Also see Section 2 Revenue Mobilization, Allocation & Fiscal Commission Act(RMAFC Act)
[88] See Section 6 RMAFC Act
[89]www.fmf.gov.ng
[90] Ibid.
[91] Draft Document on the National Tax Policy by the Presidential Committee on National Tax Policy, 2008, P. 9
[92] NTP Op. Cit
[93] S. 86 (9) PITA
[94] NTP Op. Cit
[95] See also Section 8 (1) (d) & (i) of FIRS Act, 2007
[96] News Bulletin of FIRS June, 2007 Ed. P.5
[97] See Mike Ikosin op cit. p. 10
[98] Op. Cit. P 10
[99] “FIRS interaction with Collecting Banks” a paper presented at Project Fact Training organized by FIRS on 16 July, 2007 at Aptech Computers, Central Area Abuja, P. 5
[100] Cap 12, Laws of the Federation, 2004
[101] NTP Ibid p. 12
[102] Ibid p.42
[103] National Tax Policy draft document updated as at 7th June, 2007 pg 12
[104] Op. Cit. P. 14
[105] Daily Sun, Tuesday, January 3, 2012. p. 5