The Federal Inland Revenue Service, FIRS, has denied plans to increase Value Added Tax, VAT, as reported in some sections of the media (not The Next Edition).
In a statement published on its website, the revenue agency explained that contrary to reports in the media, the FIRS Executive Chairman, Tunde Fowler, only called for a reduction in Companies Income Tax, CIT, rate for small businesses so as to improve compliance.
“Though he indicated that there should be an increase in VAT rate by the end of the year, he never, for once suggested a 50 per cent hike of any percentage increase at all,” the statement read, adding that “he promised improved collection in CIT, Petroleum Profits Tax, PPT and VAT in 2019 relative to the collection performance of the Service in 2018.”
The FIRS also published a transcript of the interaction between Fowler and members of the Senate Committee on Finance at the 2019-2021 Medium Term Expenditure Framework, MTEF, and Fiscal Strategy Paper, PSP, interactive meeting on Tuesday.
In response to a question raised by Senator Yusuf Abubakar Yusuf, on CIT, Fowler had told the committee that “CIT should remain at 30 per cent, to make sure that we do not reduce the tax rate, without getting others who are not in the tax net into the tax net.”
He explained that in respect of small businesses, the revenue agency was already discussing with the Ministry of Finance for people who are having a certain turnover.
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“I believe that that can be reduced to maybe 20 per cent to promote the small-scale businesses. But in terms of immediate reduction, I think we should try and stabilize to ensure a 90 per cent compliance of those in the tax net. I’m sure that at the end of the year, we can consider reducing, our corporate income tax rate,” Fowler said, adding that the FIRS has increased VAT collection over the last three years by over 25 per cent.
He said, “In terms of whether there should be an increase. I believe there should be an increase. One issue about taxation is that it should be fair to all. We have discovered after the VAIDS (Voluntary Assets and Income Declaration Scheme) that a high percentage of businesses are collecting VAT and not remitting. We’ve also tried to address this issue. We’ve issued new VAT certificates. We have appealed to the public that if they are charged VAT and they are not sure it had been remitted they should contact us. We even gave a small promotion that for every 25 names, that they give to us, we give them a little gift either a power bank or something to show appreciation.
“But that aside, we are also on the streets; we have a team called FEETT, Federal Engagement and Enlightenment Tax Teams, going around to confirm that they (businesses) are registered for VAT. And I believe with the substitution of over 50,000 bank accounts that we just started this week I am sure that those businesses that have been collecting VAT and not remitting the same or not remitting any tax payment, are beginning to ensure that the level of tax compliance thus improve. And I believe that by the end of this year, government and Nigerian people should be ready for an increase in VAT.”
