The Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, says Nigeria has been able to raise its revenue from Value Added Tax (VAT) by about 21.5 per cent through the use of technology systems in the last one year.
Mr Fowler said the use of technology in the last one year also increased the country’s tax revenue base by 800,000 corporate accounts, while growing non-oil tax revenues from 42.8 per cent to 64.3 per cent of total revenue between 2012 and 2014.
Mr Fowler was speaking in New York at the opening of the meeting of the United Nations’ Economic Council (ECOSOC) on Taxation and Digitalisation of the Economy and Taxation of ODA-Funded Projects.
The FIRS Chairman, who is also the First Vice Chairman of the United Nations International Committee of Tax Experts, and Chairman, African Tax Administration Forum (ATAF), urged developing countries to take advantage of the digital economy to grow their tax revenues an lessen their dependence on revenues from natural resources.
“Developing nations should focus more on taxation, as they have no control over the prices of goods produced by developed economies from the natural resources they export,” Mr Fowler said.
“We have moved away from an oil-dependent revenue source to a non-oil revenue source. At the same time, we have focused on VAT. VAT continues to be the fastest growing tax type in the world and I was quite amazed when the UAE spoke about introducing VAT,” he said.
According to the FIRS Chairman, Nigeria realised over N767 billion from VAT in 2015, N828 billion in 2016 and N972 billion in 2017, a growth of about 25 per cent.
He ascribed the development to the political will by the government, international collaboration and cooperation of the judiciary.
These qualities, he noted, recently yielded a favourable judgement over Vodacom in the case of VAT liability for a non-resident firm.
He urged other developing countries to follow the Nigerian example, which includes tax treaties that assist collection and remittance.
The only way to ensure sustainable socio-economic development, he said, was through taxation. He called on developing countries to reform their tax processes to boost their revenue collection capacity.
He said with most of the items produced in developed economies sold in developing economies, the latter is deprived of both profits and tax revenues.
On tax revenue from the digital economy, Mr Fowler advised developing countries to emulate their developed counterparts so as not to be left behind.
He urged the UN to show greater interest in the tax affairs of the developing countries to help them in their development processes.
“If we look at Apple and Ireland, other members of the European Union (EU) found that in giving certain tax benefits, Ireland had an undue advantage for business and the EU insisted that Apple should pay EUR13 billion as tax,” he noted.
He said many countries have come up with individual strategies to get some tax revenue from the digital economy, citing the example of India, which applies a six per cent equalisation levy for specified services provided by non-residents.
Mr Fowler said it requires a foreign supplier to register for VAT in Argentina, while the city of Buenos Aires applies a levy via Withholding Tax mechanism requiring debit and credit card firms to withhold three per cent of the net amount of any payment remitted to them.Share this News