President Bola Tinubu is planning to introduce a single agency, the Nigeria Revenue Service, to handle revenue collection on behalf of the Federal Government. This comes as the Federal Government instituted a comprehensive set of fresh tax reforms aimed at significantly boosting revenue collection. The reforms, designed to enhance the efficiency of collecting direct taxes and various levies imposed on behalf of the government, will bar the Nigerian Customs Service, Nigerian Ports Authority, and 60 other revenue collection agencies from participating in revenue collection activities but will lead to the creation of the Nigeria Revenue Service.
By implementing these changes, the government seeks to streamline the tax collection process, ensuring that all taxable entities contribute their fair share and that the revenue generated is maximized to support public services and infrastructure development. The policy directive was instituted on Thursday when the President forwarded four executive bills to the National Assembly for consideration, aiming to implement significant tax reforms.
Nigeria is contending with a revenue challenge that cuts across all government tiers but wants to attain a minimum tax-to-GDP ratio of 18 percent. The country’s tax-to-GDP ratio is below Africa’s average and ranks as one of the lowest in the world. This has led to a fiscal deficit and over-reliance on borrowing to finance public spending, resulting in a cycle of inadequate funding for socio-economic development.
One of the key proposals is the renaming of the Federal Inland Revenue Service to the Nigeria Revenue Service. A source at the Presidency hinted that the new bill would not lead to a merger but seek to remove the revenue collection arm from the agencies and allocate its function to the Nigerian Revenue Services. The new revenue agency will be like the US or UK revenue agency that collects all government revenues, while other revenue agencies like NIMASA, NPA, Customs, etc. will now focus on their core mandate, which is trade facilitation.
In addition to the name change for FIRS, Tinubu submitted three other tax reform bills under the title ‘Transmission of Fiscal Policy and Tax Reform Bills’ to the National Assembly. The House also consolidated six bills seeking the repeal of the Fiscal Responsibility Act, 2007 to enact the Fiscal Responsibility Bill, 2024.
The tax reforms are policy recommendations from Taiwo Oyedele’s Presidential Fiscal Policy and Tax Reforms Committee, which seek to reduce taxes in the country from the current 62 to a maximum of nine. It also aligns with the recommendations of the President Tinubu Policy Advisory Council, which proposed declaring a state of emergency on revenue generation in the country.
This new law will expunge the revenue collection function from 62 revenue-generating agencies and transfer the responsibility of revenue collection to a single agency to promote collection efficiency. Some of the agencies include the Federal Airports Authority of Nigeria, the Nigerian Ports Authority, the Federal Inland Revenue Service, the Nigeria Deposit Insurance Corporation, the Nigerian Meteorological Agency, the National Agency for Food and Drug Administration and Control, the Federal Road Safety Corps, the Nigeria Customs Service, the Standards Organization of Nigeria, and the Nigerian Airspace Management Agency.
Dr. Eugene Nweke, a former national president of the National Association of Government Approved Freight Forwarders, criticized the bill in his remarks regarding its implications.
He continued by saying that customs officers were well-known for collecting taxes worldwide.
“Customs are renowned for their ability to collect revenue worldwide. It implies that they would contract with a third party to handle that task. Customs is well-known for its tax collection and anti-smuggling efforts worldwide, according to Nweke.
According to him, revenue collection involved lots of complications.
The Nigerian Customs Service (NCS) should educate importers and force them to perform more than just scanning with concessions. The administration should stop considering security measures and consider a bill to improve security measures. The Association of Registered Freight Forwarders of Nigeria (ARFFT) National Public Relations Officer, Taiwo Fatobilola, argued that revenue collection is not enough and that training people on tasks the NCS has been trained to do is not possible. However, the National Public Relations Officer of the Nigeria Customs Service, Abdullahi Maiwada, was unaware of the bill.
