Nigeria And Tax Enforcement Challenges

The Federal Inland Revenue Service (FIRS) recently announced the arrest of  heads of three companies in Lagos over alleged failure to remit taxes totalling N2.17 billion.

The action by an enforcement team of FIRS from Abuja is said to be  a fresh move to deal with tax related offences in Nigeria.

While it is commendable that FIRS was able to confront  the many obstacles against exposing offences of the kind, and going further to make arrest, depicts a likely departure from era when companies were allowed to default for so long while  government appears helpless on how to addressed economic sabotage.

The arrest has also gone to show that some corporate organisations in Nigeria may be failing in their tax obligations to the country ostensibly because of the weak and easily compromised tax regime.

Sadly, the machinery of the state has also failed to notice that revenue due government were not remitted  as and when due because of the near total dependence on the easy money provided by the Petroleum sector. this requires a more proactive rethink.

We note that the need for the maximisation of tax earnings by the various levels of government in the country may have been grossly undermined by a number of other factors, including corruption and poor record keeping. The time for change has come.

Indeed, some people feel no remorse to evade   tax because they fear that the money might be stolen, misappropriated and misapplied by a privileged few within authority. Some even argue that earlier payments did not result in the provision of the needed social amenities.

Much as the fore-going cannot be supported anywhere in the world, the deliberate evasion of tax by individuals and corporate bodies cannot be excused. Worse still, the collusion of tax agents to either under-value or shield some firms from taxation is unacceptable.

Even more worrisome is the ease with which foreign firms evade taxes. Some are known to operate without sign boards and have perfected ways of out-witting tax authorities and earnings without meeting their obligations of tax payment. This, they do to the shame of Nigeria.

This, it is said, is one of the reasons some foreign investors continue to make the country an investment destination of choice, regardless of the much orchestrated security concerns.

We think it is time to do business differently in this country particularly, as it  affects the  tax sectors if the Federal Government’s avowed commitment to the transformation of the nation’s economy is to be realised. To achieve that, government needs all the revenue it can mop up.

A classic example is the Rivers State government which appears to be setting the pace in this area through the  proposed  taxation bill. A few years ago, some firms were actually shut down to drive the message home. Apart from harmonising taxes in the state, the law when passed will ensure that all legitimate taxes were paid.

The Rivers State Commissioner, for Commerce and Industry Mr. Chima Chinye said  the bill will also provide for a computerised data base for all firms doing business recently in the state, while, the on-line registration of business places will be enforced.

Clearly, a well articulated and harmionised ICT driven tax-enforcement regime has become imperative as a source of revenue generation since the nation cannot eternally depend on revenue from oil and gas which are exhaustible resources. Besides, the growing needs of the people in areas such as power, infrastructural development, health-care, education and indeed security among many others require improved revenue generation to address.

With that being pursued, Government at all levels must brace up for the responsibility of providing improved  social amenities and infrastructure to justify taxes sourced from firms and the citizenry. This will encourage the average tax payer to remain faithful to his or her obligations. It is only such position of strength that government can justifiably make  tax related demands from the citizenry.

We hope that auditors of accounts of companies will remain patriotic and resist the temptation of aiding and abetting tax offences by manipulating the books to deprive government of its due taxes.