All government ministries, departments, agencies and business enterprises must ensure seamless connection with the Federal Inland Revenue Service (FIRS) to their systems for purposes of tax collection nationwide, President Muhammadu Buhari gave the directive on Thursday in Abuja.
The President gave the directive in his address at the First Annual National Tax Dialogue organized by the FIRS in Abuja on the theme “Taxation in a post-COVID-19 Economy.”
To gain the necessary access, the President said the FIRS must “speedily put all measures in place to fully implement programmes to stamp out base erosion and profit shifting in all of its ramifications and generally automate its tax processes.”
Also, the President wants the tax agency to fast-track the process towards full digitalization of its tax collection systems.
On Tuesday, the tax service said it realized over 98 percent of its N5.08trillion tax revenue target in 2020, despite declining oil revenue as a result of the impact of the coronavirus on the oil market and exports.
The agency, which attributed the performance to improved environment due to the reforms of its operational processes by the current management, said there were brighter prospects for a higher tax revenue collection in 2021 and beyond.
“As we are all living in a world that is fast digitalized, a seamless connection between the FIRS and MDAs business systems and transactions is mandatory.
“As the businesses are continually being migrated from “brick and mortar” locations to digital places or spaces, it is incumbent on tax authorities to adopt digital means to efficiently track taxable transactions for the purpose of tax collection,” the President said.
The President said it was the need to provide the necessary legislative framework for the adoption of the technology required in tax administration that informed the decision to amend the FIRS Establishment Act in the Finance Act 2020.
The President, African Development Bank (AfDB), Akinwunmi Adesina, who spoke on theme of the tax dialogue, gave assurances that the AfDB would continue to support the FIRS in modernizing the tax collection processes in Nigeria through capacity building.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, highlighted some provisions of the Finance Act 2020 that are meant to help businesses, especially small, medium enterprises (SMEs), recover from the adverse effects of COVID-19.
Mrs Ahmed said tax compliance was key to national prosperity, adding that the government was determined to minimize the high incidence of tax dodging through leakages, cross-border transactions through maximum use of technology.
FIRS Chairman, Muhammad Nami, said the dialogue was necessary in view of the universal collapse of traditional government revenue sources and the consequential resort to tax is a testimony.
The well-known arms race among nations is gradually giving way to “tax-race”. The international struggle for and against digital services tax is just the beginning of the tax race. It is a race for all nations – developed or developing. And for Nigeria, it is “a must-win” race.”
Mr. Nami who said the FIRS would move on to fully digitalize its tax process, canvassed the cooperation of the three tiers of government, the citizens and corporate organizations to ensure success.
“We want to further take advantage of the evolving technology in taxpayer registration, online payment platforms, remote filing of returns, etc. However, there was very limited success with the various initiatives due to inadequate statutory framework.
“A quantum leap was achieved with the 2020 Finance Act, which provided legal grounds for the deployment of technology in tax administration.
“The Service is taking advantage of the Finance Act 2020 to embark on studies with the assistance of friendly tax authorities and international tax organizations with a view to developing a robust roadmap towards digitalization.
“The roadmap will enable the Service to digitalise its whole operations (end-to-end) in a systematic, coherent and efficient manner.
“There is so much to look forward to in the coming years. The FIRS is starting this decade with the resolve to leapfrog tax administration into the digital age. We are banking on your continued support as we embark on this onerous journey,” he said