Defaulters of FIRS Tax Policy Now to Pay N25,000 Fine Daily

By Mohammed Mohammed

The Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami, has assured that the Service will use the instrumentality of the Finance Act 2021 to finance the 2022 budget, even as he warned that defaulters of its tax automation of processes will be fined N25,000 daily.

According to him, with the amendment of Section 25 of the FIRS Establishment Act, the Service can now deploy either proprietary or third-party developed technologies for tax administration, adding that those that stand in the way of achieving this objective will now be liable to a daily penalty of N25,000.00.

The FIRS boss added: “With the extension of secrecy and confidentiality requirements to other persons, like service providers, vendors and consultants of the Service, the fear of taxpayers are further allayed on the secrecy and confidentiality of their commercial and other information.

“With the amendment to Section 68 of the FIRS Establishment Act by the Finance Act, complaints from taxpayers about multiple agencies of government demanding payment of tax from them had been addressed.

“This unfortunate situation is not in line with the national tax policy thrust and was causing confusion for our taxpayers and increasing their cost of compliance.

“However, the amendment to section 68 of the FIRS Act by the Finance Act 2021 has made it clear that FIRS is the only agency responsible for tax assessment, collection and enforcement. As such, taxpayers are to expect a streamlined tax administration regime going forward.”

Nami, stated that the Service will deploy compliance and enforcement strategies, and will leverage on intelligence and strategic data mining and analysis, to provide intelligence and information to enhance its audit and investigation functions, while also reducing the prevalence of tax abuse in incentive management in the country.

On budget finance, he added that this will be achieved through collaboration with taxpayers and key stakeholders to ensure adequate funding of the country’s budget and to raise the requisite financing for national development.

Nami made the disclosure while delivering the keynote address at the KPMG’s Webinar on Nigeria’s 2022 Budget and the Finance Act 2021, where he also noted that the Act had provided a framework for equitable treatment, automation and deployment of ICT infrastructure, a single agency for tax collection, taxation of the digital economy among other critical interventions for improved tax administration in the country.

On equitable treatment, he explains: “In the past, situations abound where certain goods or services streamed into Nigeria by non-resident companies, especially to consumers (B2Cs), were not subject to VAT. This raised the issue of equity, as goods and services offered by domestic companies are subject to VAT.

“With the amendment of Section 10 of the VAT Act and our publication of the ‘Guidelines on Simplified VAT Compliance Regime for Non-Resident Suppliers’, there is now a mechanism for applying VAT on such goods or services, affording the same tax treatment to both local and foreign supplies. 

“Similarly, companies deriving income from Nigeria without physical presence can now be assessed, like other companies with physical presence, on fair and reasonable percentage of their turnover in line with Section 30 of CITA.”

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