FIRS Dismiss Reports on Fowler’s Call For 50% Increase
The Federal Inland Revenue Service (FIRS) has dismissed reports quoting its Chairman, Mr. Tunde Fowler, as suggesting an increase in the rate of Value Added Tax (VAT) from five percent to 50 per cent.
Media outlets, yesterday, quoted Fowler as recommending a hike of that proportion during a meeting with members of the Senate Finance Committee at the 2019-2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (PSP) on Tuesday in Abuja.
In a statement issued by its Communication Unit, the FIRS said what Fowler recommended is an increase in the number of individuals and business entities paying VAT. The Service also rebutted reports that Fowler called for an increase in the rate of Companies Income Tax (CIT), stating that what the FIRS boss suggested is a reduction in CIT rate for small businesses, so as to improve compliance.
The statement, signed by the Director, Communication and Servicom, Wahab Gbadamosi, said while Fowler suggested an increase in VAT rate by the end of the year, it was not by 50 per cent.
Rather, the FIRS explained in the statement, Fowler promised improved collection in CIT, Petroleum Profits Tax, (PPT) and VAT in 2019 relative to the collection performance of the Service in 2018. In 2018, the FIRS collected the sum of N1.1 trillion in VAT, N1.42 trillion in CIT and N2.4 trillion in PPT.
Asked by Senator John Enoh (Chairman, Senate Committee on Finance) how the FIRS aims to surpass the record revenue collection of N5.32 trillion last year in view of the fact that it has been given a target of N8 trillion for the current year, the statement said Fowler responded that the FIRS has increased VAT collection over the last three years by over 25 per cent.
“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 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 businesses are registered for VAT.
“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 is improved.
The statement quoted Fowler as saying, “I believe that by the end of this year, government and Nigerian people should be ready for an increase in VAT.”