TAX NEWS - June 2010

Nigeria Tax: FG, states to spend N7.9bn on identification of tax payers

A project initiated by the Joint Tax Board to address existing loopholes in the country's tax system will cost the three tiers of government N7.9bn.

The project, which is called; Unique Taxpayer Identification Number will provide a national platform for the identification and registration of taxpayers.

The Federal Government is to provide 52 per cent of the fund, while the 36 states of the federation and donor agencies will provide the balance.

A document, which the JTB prepared for the House of Representatives Committee on Finance, dated May 25, 2010, and obtained exclusively by our correspondents on Friday night, indicated that the measure had become necessary "now that we have dwindling oil revenue and global economic meltdown."

Besides increase in revenue, other benefits of the project to the country according to the JTB, are reduction in cost of administration, increase in tax base, increase in tax compliance, reduction of tax evasion and reduction of multiple taxes.

According to the document, N7.23bn will be contributed by the federal and state governments towards the actualisation of the project, while donor agencies will contribute N711m.

The JTB said that the implementation of the project followed an earlier approval given on July 14, 2009, by the Federal Executive Council.

The JTB has already secured N4.1bn, representing Federal Government's portion (52 per cent) of the project cost from the Federal Inland Revenue Service.

Other stakeholders, who have so far provided funds for the project are Jigawa State Board of Internal Revenue, N103.3m; Kogi State BIR, N24m; and Kwara State BIR, N36.6m.

It was gathered that governors of Oyo, Benue, Bauchi and Delta states had approved payments of their counterpart funding, while other states were expected to pay up at the end of June.

To ensure that the states complied with the funding plan, the document stated that "each state shall contribute the applicable amount, using their Federation Account Allocation Commission fraction of the 48 per cent of the N7.23bn."

The UTIN is an electronic system of tax registration that is unique to an identified taxpayer. It will also to be available nationwide.

Besides blocking existing loopholes, JTB said that the project would promote confidence, effectiveness, efficiency, competitiveness and create conducive atmosphere for investors.

Under the new arrangement, information will be shared between states, Federal governments and FIRS.

On the mode of implementation of the scheme the JTB said, "The harmonised system will involve adopting common infrastructure and systems, format and standards. The registration application will be uniform nationwide.

"It is important to note that migration from what currently exists to what is planned will no affect the current tax administration system of each level of government in relation to collection and control of taxes.

"The UTIN will continue to be used by the federal and states governments to administer taxes in line with existing laws and practice."

To ensure the success of the project a 20-member stakeholder implementation and steering committee has been set up.

Apart from the JTB, other members are six chairmen of State Board of Internal Revenue, FIRS, Federal Ministry of Finance, Corporate Affairs Commission, Central Bank of Nigeria and National Bureau of Statistics.

Also included are the Economic and Financial Crimes Commission, Bureau of Public Procurement, Governors Forum, Speakers Forum, National Identify Management Commission, Office of the National Security Adviser, Association of Local Governments of Nigeria.

Customs Service, Immigration, Forum of Commissioners of Finance in Nigeria, Chief Compliance Officers of Banks in Nigeria and the Clerk of the National Assembly.

The JTF document noted that the project would provide sound "basis for planning, budgeting and appropriation."

Meanwhile, the Senate is set to spend N13.9bn on public hearings and other scheduled programmes during the 2010 fiscal year.

Although the year is half way gone and dovetailing into and election period, the upper chamber budgeted N12bn for its programme activities for the year.

The figures are contained in the 2010 Appropriation Act, which has been described as fraught with some anomalies.

Since the Senate had separately provided N270m in the budgeted for its retreat, N1.9bn for public hearing by its standing committees, N1.74bn for consultancy services to committees, financial consultancy, N350m; information technology consulting, N450m; and legal services, N940m, it was not clear what the N12bn was meant for.

Another curious provision of N1.bn was made for the maintenance of the Senate chamber and N2.29bn for contingency.

The Senate leadership, and particularly the Senate Spokesman, Senator Ayogu Eze, were not around to clarify issues on these allocations in the budget, as they were still in South Africa for the World Cup.