Tuesday, November 13, 2018 / 08:44 AM / FBNQuest
The FIRS is the leading tax collection agency and has therefore the greatest responsibility for achieving the FGN’s targets for total revenue. Over the past decade it hit its annual target through to 2014 and has since fallen short of budget for the past three years (see chart).
Those targets have become more ambitious under the current administration, which in 2018 is looking for N6.75trn from the FIRS: this represents increases of 38% and 67% on the budget and the outturn for 2017. Given the state of the economy, we wonder how it will be achieved.
The quarterly target for collection is N1.69trn. The FIRS managed N1.17trn in Q1 and N1.33trn in Q2. The take from companies’ income tax (CIT) varies according to the deadlines set: this explains why the take from non-oil taxes in total was 93% below budget in Q1 and 21% short of the target in Q2.
According to the local media, Babatunde Fowler, FIRS chairman, indicated in Lagos last week that its total take this year (non-oil taxes and petroleum profits tax combined) through to end-October was N4.30trn. At this rate, it would achieve N5.16trn for the full year, well short of the budget but still its best collection to date ahead of 2012’s N5.01trn.
Fowler added that the service was vigorously pursuing 6,000 firms it had identified with annual sales over N1bn but without a record of “commensurate” tax payments. This pursuit, sometimes through the firms’ banks, has been queried by some leading accountancy firms in Lagos.
Tax collection by FIRS (N trn)
Sources: Federal Inland Revenue Service (FIRS); FBNQuest Capital Research
The FIRS has a target of N305bn from the tax amnesty programme this year. It raised nothing in the first two quarters although we should point out that the programme was running up to end-July. The FGN’s share per the approved 2018 budget is N88bn. (Revenues collected by the FIRS are distributed to the three tiers of government.)