Business & Economy - News - January 19, 2021

FIRS realizes 98% of its N5.076trillion tax revenue target in 2020

Optimistic of better performance in 2021

Buoyed by realizing 98 percent of its N5.08trillion tax revenue target in 2020, the Federal Inland Revenue Service (FIRS) says there are brighter prospects for a higher tax revenue generation for the country in 2021 and beyond.
The tax agency said on Tuesday in Abuja that despite the atmosphere of declining oil revenue as a result of the impact of the coronavirus on the oil market and exports, it collected about N4.95trillion in total tax revenue during the year 2020.
Describing the collection as a landmark achievement, the FIRS Chairman, Muhammad Nami, said the figure represents about 98% of the national tax target of N5.076 trillion set for the FIRS by the Federal Government during the year.
Mr Nami said the near 100% target collection was all the more remarkable against the backdrop of the debilitating impact of COVID-19 on the Nigerian economy; the all-time low price of crude oil in the international market; business disruptions and lootings during the #EndSars protests; generous tax waivers granted by the FIRS to ease the impact of the COVID-19 shutdown; additional tax exemptions granted to small companies in the 2019 Finance Act, and insecurity in some parts of the country.
On the significance of the 2020 performance, the FIRS Chairman said the service recorded this feat at a time oil accounted for only 30.6 percent contribution to the tax revenue generated in 2020.
In previous years, oil revenue has always contributed over 50 percent in tax returns through the Petroleum Profits Tax (PPT).
However, in 2020, the non-oil tax collection was over 109 percent, which is about 9 percent higher than the previous year’s figures.
Mr. Nami attributed the FIRS revenue generation success story in 2020 to the various reforms initiated by the Board and management of the Service under his leadership.
He listed some of the reform initiatives to include capacity building for members of the staff; improved staff welfare package; promotion and proper placement of staff; deployment of appropriate technology for tax operations; segmentation of taxpayers to ease tax compliance; and continuous collaboration with relevant stakeholders, among others.
“The conscientious taxpayers in the country and dedicated members of staff of the FIRS nationwide for their support and devotion to work made this performance possible, despite the numerous obstacles encountered by the Service in 2020,” he said.
The Chairman said he was optimistic that the performance in current fiscal year would be better than 2020.
“We shall perform exceedingly well given that our Service reforms are expected to yield greater dividends, especially as different parts of tax administration are being automated.
“We are also optimistic that exploration activities will improve in the oil sector and increase the prospect of higher tax revenue from the sector.
“Similarly, the ongoing reforms by the Service, together with increased stakeholder collaborations will brighten the prospect of improved voluntary compliance and consequently higher tax revenue generation for the country this year and beyond,” he said.
Out of an aggregate revenue of about N7.99 trillion expected to be available to fund the 2021 budget, Minister of Finance, Budget and National Planning, Zainab Ahmed, said 30 percent would come from oil-related sources, with about 70 percent to be earned from no-oil sources.
Details of the revenue streams, the minister said, include N2.01 trillion as share of oil revenue; N208.5billion as Federal Government’s share of the dividend from the Nigeria LNG investment; N2.65billion from the share of the minerals and mining revenue, while N1.49trillion would come from the share of non-oil sector revenue.
A breakdown of the non-oil revenue showed that N681.7billion would come from corporate income tax (CIT); N238.4billion from value added tax (VAT); N508.3bilion from the Nigeria Customs Service revenue; N60.5billion from share of the Federation Account levies, and N2.17trillion from revenues from government-owned enterprises (GOEs).
Other revenue streams expected during the year include N1.06trillion from independent revenue sources; N300billion as transfers from special levies accounts;N677.12billion from signature bonus/renewals/early renewals from oil companies; N32.7billion from domestic recoveries, assets and fines; N500billion from stamp duty and N354.9billion from grants and donation funding.

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