What Fowler must do as FIRS boss

The appointment of the former Chairman, Lagos State Internal Revenue Board (LIRS), Mr. Babatunde Fowler as the Chairman Federal Inland Revenue Service (FIRS) did not come to many Nigerians as a surprise. Fowler had raised the internal revenue of Lagos to an enviable position such that an impressed President Muhammadu Buhari was quoted after his electoral victory as saying he would attempt to replicate the Lagos internal revenue generation model at the federal level.

In as much as Fowler succeeded in Lagos, he must be aware that he is in a different terrain that will task his expertise in no small way. While in Lagos, Fowler could tax property, get companies to remit their pay-as-you-earn obligations, employ consultants to collect land use charges and so on. It is not the same with FIRS. The FIRS has jurisdiction in personal income tax only in Abuja. Its main tax focus is corporate tax.

The new FIRS boss has an uphill task to track down the companies that are not paying tax at the moment and those not paying enough. He must be aware that there exist in the nation’s corporate registry a total of 450,000 out of which only 150,000 are known to pay any form of taxes. Fowler’s job is to help unravel the other 300,000 companies that are not remitting any form of taxes at the moment and get them to pay.

He should also take keen interest in studying the Thabo Mbeki report on illicit financial flow out of Africa in which it is disclosed that several multinational companies operating in the continent indulge in one form of tax evasion or the other. The continent of Africa in which Nigeria is the largest economy, loses over $50 billion dollars each year as a result of the illicit flow of funds.  Nigeria loses large amounts of revenue owed to it due to the unlawful outflow of significant capital needed for development.

The FIRS should take a closer look at the taxes, royalties, concessions and waivers granted in the past to these multinational companies with a view to making them pay the appropriate amounts due to the federation. We also urge the tax authorities to go after companies that do businesses in Nigeria and pay their taxes outside our shores. These are mainly companies that are registered in tax havens with the sole aim of evading tax.

It should also examine the various loopholes in the nation’s tax laws that are being exploited by these companies and block them. This we believe will increase the revenue profile of the government in the short term more than the proposed increase in value added tax.