By Jeph Ajobaju, Chief Copy Editor
For the first time in its history, the Federal Inland Revenue Service (FIRS) netted 98 per cent target in 2020 with N4.95 trillion as tax revenue.
An original N5.076 trillion target had been set amid economic disruption caused by the coronavirus pandemic and low oil prices.
FIRS Communications Director, Abdullahi Ahmad, disclosed the figures in a statement which quoted FIRS Executive Chairman, Muhammad Nami, as saying that the performance was remarkable, considering the negative impact of coronavirus.
Nami said factors that negatively affected the operations of the FIRS last year included low oil prices, disruptions and lootings during #EndSARS protests, and tax waivers granted to businesses to ease the impact of lockdown.
Additional tax exemptions granted to small businesses in the 2019 Finance Act and insecurity in parts of the country also affected collections, he added.
Nami explained that oil revenue, which contributed over 50 per cent in tax returns through the Petroleum Profits Tax in previous years, accounted for only 30.6 per cent in 2020 due to low oil prices.
Non-oil tax collection, which was 109 per cent in 2020, was 9 per cent higher than that of 2019, which he attributed to reform initiated by the board and management under his leadership.
His words: “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 in 2020.
“The FIRS is optimistic that this current fiscal year will be better than 2020. We shall perform 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 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.’’
Effects of reforms
Despite the unprecedented crisis in the oil sector caused by coronavirus, the non-oil sector performed beyond expectation in tax collection.
Per Nairametrics, this was made possible by incentives granted to encourage taxpayers to voluntarily fulfil their obligations in addition to reforms to aid effective tax collection.
The reforms include the deployment of technology for tax operations and staff capacity building and improved welfare.