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“Federal Government to Centralize Revenue Collection, Ending Direct Collection by Multiple Agencies”

August 9, 2023

 

 

 

 

 

The Presidential Committee on Tax Policy and Fiscal Reforms has unveiled a significant change in revenue collection processes in Nigeria. Chairman Taiwo Oyedele, former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC), revealed that the Nigeria Customs Service and 62 other Ministries, Departments, and Agencies (MDAs) will no longer directly collect revenue. Instead, the Federal Inland Revenue Service (FIRS) will take charge of revenue collection for these MDAs.

Speaking on Channels Television’s Sunrise Daily breakfast program, Oyedele emphasized the need to improve Nigeria’s revenue collection efficiency and reduce the associated costs. He noted that Nigeria’s tax revenue collection ranks among the lowest globally, while the cost of collection remains high.

Oyedele highlighted the disadvantages of having multiple agencies responsible for revenue collection. He stated, “These agencies are being distracted from doing their primary function which is to facilitate the economy. Number two, they were not set up to collect revenue, so, they won’t be able to collect revenue efficiently.” He suggested that transferring revenue collection responsibilities to the FIRS would lead to improved cost-effectiveness, efficiency, and transparency.

Clarifying his comments, Oyedele urged MDAs to concentrate on their core duties and allow the FIRS to handle revenue collection. He used examples such as the Nigeria Customs Service and the Nigerian Communications Commission (NCC), emphasizing that MDAs should focus on their designated roles and let the revenue collection function be managed by a specialized entity.

Oyedele also highlighted the staggering tax gap estimated at around N20 trillion, attributed to many elites evading their tax obligations. He revealed that compliance issues primarily affect major taxes like Value Added Tax, Corporate Income Tax, and Personal Income Tax, with significant segments of the middle class and elite not fully compliant. The reform aims to address these gaps and create a more transparent and accountable revenue collection process.

The move follows the inauguration of a tax reforms committee by President Bola Ahmed Tinubu, including a student member from the University of Ibadan, Orire Agbaje, to address issues in the country’s taxation system.

Source: Nigerian Tribune

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