Presidential Tax Reforms Committee mulls Nigeria Revenue Service to replace FIRS

The Presidential Fiscal Policy and Tax Reforms Committee, in a bid to bolster tax collection in the country, has proposed, among other recommendations, the setting up of the Nigeria Revenue Service (NRS) to replace the Federal Inland Revenue Service (FIRS).

Under the arrangement, the Nigeria Customs Service (NCS) and States Inland Revenue Services would become departments under the NRS.

The Tax Reforms Committee also proposed a 5 per cent reduction in the country’s company income tax rate to improve the ease of doing business and attract more domestic and foreign direct investments into the country.

This was disclosed by the Chairman of the Committee, Mr Taiwo Oyedele, at a public consultation and stakeholder engagement on Monday in Abuja.

He said the Committee had considered the need to incentivize more companies to operate in the country, create jobs, and stimulate economic activity as part of the comprehensive reforms proposed to transform the fiscal space, tax landscape, and business environment.

Oyedele said, “Nigeria’s current company income tax rate is 30 per cent, and the plan is to reduce it by 5 per cent to incentivize companies to operate here.

“This will lead to significant investments in new projects, the expansion of operations, and the unlocking of economic opportunities.”

Also, he highlighted that the Committee seeks to reduce the number of taxes in the country to a single digit through its proposed reforms.

He said, “Currently, Nigeria has about 60 different taxes and levies officially approved and over 200 unofficial levies across the country, which has increased business costs and adversely impacted the economy.

“The focus is to streamline them into a single digit, improving compliance and ease of tax payment.”.

The National Bureau of Statistics (NBS) report states that the company income tax total collections into the federation’s account increased to N1.8 trillion for the full year 2023.

Mr Oyedele explained that under the Nigeria Revenue Service, the Federation Account Allocation Committee (FAAC) meeting can be programmed to function, and the accounts of all the states in the country are credited with their allocations on a weekly basis without them physically converging in Abuja monthly to share the allocations.

He said, “We can configure the system to credit the accounts of states on a weekly basis. FAAC will only meet to discuss other fiscal issues and other matters of interest.”

On the cost of collection, Oyedele said, “We are targeting 1% here. It ranges from 4% to 35% at present. Agencies should not collect taxes; they don’t have the competence. For example, the FIRS collected N700 billion last year for TetFund.”

He pointed out that the committee’s pillars are fiscal governance, revenue transformation, and economic growth facilitation, stressing that the committee’s work is expected to receive approvals for the proposed draft national fiscal policy from the National Assembly and the amendments eventually signed into law by President Bola Tinubu.

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