90% Of Nigerians Not Filing Tax Returns – Abdullahi

There seems to be a misunderstanding regarding tax returns, especially for people working in the formal sector. Does the deduction made from employees’ salaries cover their tax obligations?

No, it does not cover their tax obligations. This is majorly because the deduction made from theirsalaries is just one part of their assessment or filing. For example, as anemployee who work with FCT IRS, we will make deductions on monthly basis basedon PAYE and remit same to FCT IRS. The law spells it out you should file yourtax return. So, as an individual, you are supposed to visit the tax authority,such as the website of the FCT IRS.  Weencourage online assessment, where you can as well assess yourself and sendyour assessment to us. It is important to note that if you have multiple sources of income, you are expected to declare your income and give a breakdown to easethe stress of all. G

Usually, at thebeginning of every new year, you are supposed to disclose what you generated,be it what you earned from salary, dividend, rent, etc from the previous year. Once that is completed, you go ahead to apply for a tax clearance certificate. So, people mistake the fact that because they say you deduct at source then that is it; that is just one part, and the responsibility of the deducting authority is to remit after deducting. As an individual, you have a responsibility to file your tax return by filing what we call form A; and on this form A, you are supposed to declare all income from all sources, it is very clear, and the law is very clear. Also, it is an individual’s responsibility, it is not your office that will do it for you and if you don’t, the law is very clear of what the penalties are for not doing that. Section 26 of the Finance Act is very clear in terms of the penalties of what happens if you don’t and so we are trying to encourage people to do that. But unfortunately, 90 percent of the people that will be reading this paper today are already in breach of this.

90 percent signifies a very huge loss. Can this anomaly be corrected. If yes, how?

As tax administrators, we are faced with a very huge responsibility. The truth is that our mandate is not only limited to collection of tax but also to educate and enlighten tax payers of their obligations. I can proudly say that we are doing that through series of sensitisation campaigns, road shows, particularly by the FCT IRS as well as through our TV programmes, newspapers adverts and interviews. We do this often to continuously engage the general public. So, both the administrator and the individual have a role to play in terms of this. Of course, we talked about this issue around filing, and I said it is a strict liability issue, strict liability issue is scary, of course, in some countries, and more personal income tax and direct assessment contributes more than any other forms of taxation. It is the place of citizens to contribute enrich the purse of running government than other corporate taxes. Sadly, all that is different in Nigeria. At the end of the day, if we are able to revive that culture, people getting to pay income taxes as individuals, I bet you, funds to be turned in by all revenue generating agencies under the JTB platform will certainly increase.

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Your organisation partnered with the Nigeria Financial Intelligence Unit recently. Would this help you in accessing financial data of individuals and further boost your task collection strategy?

With the backing of the law, our relationship with NFIU will automatically grant us access to information because the law is backing it. This is because, it is one thing to have legal backing, and it is another thing to have the needed information. So, with agencies like the NFIU, we have adequate access. As FCT IRS, we have decided that since we now have unlimited access to information, we will interrogate individual assessment. Now, the focus of the FCT-IRS is not the quantity of tax clearance certificate that we issue but the quality.  Individuals should note that when they are coming to file their returns at the FCT internal revenue service, they have to be honest because we now have the capacity to interrogate their submission and to know everything about their financial dealings, businesses and other sourcesof income that they may fail to declare.  The NFIU relationship like any otherrelationship that we have tried to create, now gives us access to very vital information.

 Citizens, especially small business owners, complain about multiple taxation. We’ve heard of people paying signage,  environmental bills/tax and so on. What are you doing about that?

Well, I think there are usually isssues about multiple taxation. Just like you mentioned signage, it is not tax for example. There are issues around taxation, yes, but sometimes dues,f ees and all that, are often collected by the local government authorities.

Thetruth is that the constitutions actually make provisions for what states willcollect, what local government will collect and there is also an approved listof taxes and levies. So, the fact that several persons are coming dressed invarious uniforms does not make them tax collectors.  Last year the FCT IRS organised a retreat forall revenue generating agencies in Abuja, plus the six area councils and thewhole idea of the retreat was to see how to harmonise our revenues, taxcollections and all that.  We are workingto have just a single dashboard that identifies what belongs to Mr., B andC. The FCT IRS has the capacity as it is today, to bring all revenue generatingagencies under one umbrella. We talked about the FCT IRS and what the mandateof the FCT IRS is in the act establishing it because it says the FCT IRS willcollect all revenues accruable to the FCT. But you know the FCT IRS is young,it came at a time where other revenue generating agencies were already inexistence. For now, our job is to gradually harmonise the collection system sothat every form of collection to government comes under the platform of the FCTinternal revenue. For instance, if you are paying ground rent, you shouldreceive a receipt from FCT internal revenue service, but it will be detailedground rent. But every form of revenue that is supposed to go to the FCT shouldcome under the platform and that is the spirit of the FCT internal revenueservice act. On the issue of harmonisation, at the moment you are going to seea lot of stories that of course, Abuja is after Lagos, Lagos is the number oneand then Abuja is second. Of course, 5years ago we were five, we kept onbuilding and now we are number two. So, the whole idea at the moment, if you goto the joint tax board or the statistics that are being thrown out, if you seeIGR in FCT, it is only taxes, what FCT IRS collects. We are hoping that when weharmonise, every revenue will be well captured and you will see that whenpeople come, they will see Lagos is collecting this amount, but that something tangibleis also happening in the FCT because we have not consolidated and are notreporting taxes alone nut reporting all revenues and the IGR of those that useit in terms of statistics or for planning. It will be on record that the FCTalso is a huge generator of IGR. Sadly, at the moment we only report taxes tothe appropriate authority. For example, the joint tax board, probably NBS. Eventhough Abuja is the second as it is, but in terms of the number we can do muchbetter than what is reported. So, it is our hope that after all thisconsolidation and harmonization, you will see greater reporting of IGR byFCT.

 Talkingabout collection, what has been the trend for the FCT IRS in the past fewyears?

Previously, the federalInland Revenue service was collecting personal income taxes on behalf of theFCT, but of course, the FCT IRS Act was passed in 2015 and the FCT IRS did notcome into operation until 1st of January 2018. So, after we took over from FIRS,we signed a MoU and there was a huge newspaper advert directing immediate thatpayment be commenced immediately, FIRS was generating about 40billion, 38, 40per annum around that for the FCT. As at today, the FCT IRS is generating aboutN120 billion per annum. A very tangible growth has been recorded.  We have organically been growing ourcollection by about 16 to 20 percent annually but our target is to maintain andsustain minimum 20 percent. So, it has been a great time in terms of collection, but we are certainly not doing up to the expectations, we can do much more. Ihave said that the FCT IRS can easily do N500billion per annum, the FCT canfund 100 percent of its budget via IGR. So, all the activities and all theengagements that we are having now is what is driving that, and I am sure, thenext 2years, 3years, with the institutional framework that we have built now inthe FCT IRS you will comfortably see a very huge growth in the numbers goingforward.