FIRS and the outdated law on fixed assets

IN Nigeria today, some government agencies deserve kudos for their forward thinking and daily improvement in the use of technology. The Federal Inland Revenue Service (FIRS) and the Lagos State IRS are some of these agencies. Recently, Ogun State IRS has followed suit with the upgrade of its payment system, such that when citizens want to pay their tax, a bill is generated and the bank account on the invoice shows the payer’s name. One can  only hope and pray that this approach would continue and not become history whenever there is a change of government. Recently, there was an uproar among professionals across the country over a circular emanating from FIRS asking companies to ensure they obtained the Acceptance Certificate for Qualifying Capital Expenditure for N500,000 and above. This law was made in the 70s when such a threshold had a value of over N1.4b. The Industrial Inspectorate Act promulgated in 1970 was relevant at that time but it is not in today’s Nigeria. As of that time, the value of the naira to the US dollar was $4.7260.

It means that if one was to obtain the certificate using the exchange rate at that time, N1,000,000 worth of asset would be $4,726,000. Using today’s exchange rate which has regressed through the mismanagement of our economy and monetary policy by men who ought to face their duty of strengthening the system but allowed  greed and selfish interest to divert their attention from their responsibilities over the years, what N1m worth of assets would translate to is roughly N2,835,600,000. The implication of the above is that the only asset that qualifies for any company to seek Acceptance Certificate is the sum of over N1.4b. Please note, billion and not million. Apart from this, does it mean that in all these 23 years of the new unbroken democracy, nobody in the National Assembly saw any irrelevant provisions in this archaic law and deemed it fit to make an amendment or a complete deletion?

In a country where we hear the noise of amendment every day, where are my colleagues (chartered accountants) in the National Assembly, including former chartered accountants? Where are the real learned men in the National Assembly? Why should we be going backward instead of going forward? Looking at it from another angle, the requirement of substantiating the value of asset over the years does not require this archaic law. Third party document is enough as evidence to prove the asset value. Another way is to look at the ease of doing business. Why do we enjoy or derive pleasure in disturbing people that are running our economy? Why do we enjoy adding to the burdens of people that we should be encouraging? Where is the ease of doing business we all need to embrace? If one buys just two laptops, one printer and one table today, the cost should be in excess of N500,000.  Let us do the mathematics. To go and apply for Acceptance Certificate, one would need to travel to Abuja from say, Lagos. And with the current cost of flying (aviation fuel cost and airline ticket), one would spend about N350,000 (including ticket and hotel accommodation), which is almost  the value of N500,000 asset.

Officers would also come for inspection, wasting our dwindling resources on a useless trip that can only encourage corruption. All of this should stop. Again, the question is: where are the business-minded people in government? The value of N1,000,000 worth of assets in 1970 to the dollar now is about $1,667, but then it was $4.7m. The implication of this is that such law should not have a place here now at all. Nobody should be talking of such policy or a similar one now. We have too many battles to contend with. With the status quo, does it mean the FIRS is trying to display espirit de corps to make the Federal Inspectorate Division of Ministry of Trade happy? This child’s play must stop and give way to seriousness. Why shouldn’t state governments demand the Tax Clearance Certificate of those who purchased N100m, N50m or N20m forms and see what they paid as tax in the last 10 years? Should they do that, only very few people would show up. Let us stop piling more burdens on the average Nigerian. We have enough troubles already on power supply and cost of fuel.

About two years ago, a certain team started going from company to another, claiming it was from the Ministry of Labour and Productivity. What productivity? The team wanted to check on the workforce of private companies and their welfare. How many government agencies, ministries and departments even have good toilets, flowing water and good furniture? They wanted to check on people they should be learning from. The FIRS should instantly withdraw that circular and let the corrupt officials preparing to reap from where they did not sow in the name of this outdated and irrelevant Acceptance Certificate go back to their offices and think of how to better the lot of the country, and not to add to existing pains of fellow Nigerians. The Manufacturers Association of Nigeria(MAN), Nigerian Employers Consultative Assembly (NECA) and SMEDAN should resist this forthwith. It cannot stand the test of time in this current crisis of poor power supply, low exchange rate and economic hardship. I respect the way FIRS handles things, especially using latest technology like Tax Pro Max (which can be made better and better everyday). As such, it should not allow any other agency to stain its white clothes of development with red oil.

• Adeoye, PhD, barrister and chartered accountant, writes in via [email protected]