The acting Executive Chairman of the FCT Internal Revenue Service (FCT-IRS), Haruna Y. Abdullahi, in this exclusive interview with Daily Trust, shares the organisations’ plans of driving voluntary tax filing as it bids to achieve its target of funding 100 per cent of the FCT’s budget. Excerpts:
Recently, the FCT-IRS has intensified efforts in tax collection, with sensitisation of citizens on their obligations. What is informing these renewed activities by the service?
I am not sure it is renewed, it has always been there, and we are now re-emphasising what needs to be there. So, recently, of course, we have had retreats and seminars around reviving the culture of filing tax returns by individuals.
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The law talks about the duty and obligation of every citizen to file and declare their income rightly without even being asked.
So we want to make sure that people understand that this is a civic responsibility that they should take seriously and file their returns and declare their income and then pay tax to the government or to the appropriate tax authority.
So that is the whole idea around what we’ve been doing recently to push citizens’ engagement.
But some of the arguments people make is that why should they pay tax when the system is not working for them?
Sometimes you can say it’s a valid question, but what I always say when this type of question is asked is. I tell them, first of all pay, contribute to the basket then you have the moral right to interrogate political leaders.
But the truth is that quite a number of us, I am sure about 90 per cent of the people that might be reading this interview, wouldn’t have filed their returns. I wouldn’t doubt that because we don’t do that; it is not culture any more. You ask for things to be done to you, but you have obligations, you have responsibilities.
When you play your own part, you are proud of it, you have your tax clearance certificate to say you did this, then you can boldly come and interrogate political leaders whose responsibility is it to account for the taxpayers’ money.
If I work in a formal organisation where deductions are done and remitted to the relevant agency, which for me settles it. Is there something else I need to do?
The deduction is just one part of your assessment or filing. Example; you work with the FCT-IRS and every month we deduct PAYE and we remit to the FCT-IRS, but the law says you as an individual, you should file your tax return.
So as an individual you are supposed to come to the tax authority. In the case of FCT-IRS, it is on our website. We are encouraging online assessment; you can go online, assess yourself and send your assessment to us. You can pay without even seeing anybody; that is PAYE.
But you have other sources of income, example; you have rent, dividends, you are supposed to declare your income, all incomes from all sources, globally, anywhere you are supposed to declare. So at the beginning of the year, you are supposed to say last year I earned this from salary, this from dividends, this from rent, etc; that is the declaration, and at that point you apply for a tax clearance certificate.
What are the penalties for non-declaration?
The law is clear in terms of penalties. I want to go back to the fact that I said 90 per cent of the people that will be reading this paper are already in breach because I am sure they have not filed their returns. It is a strict liability offence.
Recently, FCT-IRS went into partnership with the Nigeria Financial Intelligence Unit (NFIU); how would that help your duty of tax collection?
The relationship with NFIU will now give us access to information with which we will interrogate individual assessment.
So when you are coming to file your returns and you are coming to FCT-IRS, you have to be sure you are honest because we have capacity to interrogate your submission and to know all your financial dealings, all your other businesses and other sources of income that you fail to declare. Failing to declare is also an offence that is punishable.
Are you going to interrogate these data backwards to see whether some persons had been under-declaring?
My priority is not in the past. I look at the future; it is visionary, it is more of what happens, but the service as a tax authority has the right to go six years back. But at the moment, the FCT-IRS is the youngest member of the joint tax board; we came in 2018.
So my priority at the moment is to set a standard for what we do in the future. The law allows us to go back, but for me at this moment it is not a priority to go back. We are currently doing that at the organisational level.
Our priority, in fact, will be from March 31, 2023, because from January, February and March individuals had been filing their returns. So it is at that point that new filings will be interrogated.
There have been conversations and controversies around property tax in Abuja; what is your take on the issues?
Truthfully, the most sustainable aspect of revenue or collection or whatever is around property in Abuja because that is its oil.
So at the moment the service is engaging stakeholders on the way forward, but the FCT-IRS Act makes a provision for us to collect property tax, and we are in the process right now of drafting a regulation based on it. So at the end of the day we will have a regulation which will be approved by the Minister of the FCT and it will be implemented.
We are having serious engagements with stakeholders in the FCT and very soon you will see the impact of this engagements through an FCT property tax regulation as provided by in the FCT-IRS Act.
A major issue which comes to mind is that of citizens’ complaints about multiple taxation. What are you doing about that?
Sometimes there is confusion about multiple taxation. There are issues around taxation, but sometimes these are dues, fees and all that area council officials charge you. The constitution makes provisions for what states will collect, what local councils will collect; there is an approved list of taxes and levies.
Last year, the FCT-IRS organised a retreat for all revenue-generating agencies in Abuja, plus the six area councils, and the idea of the retreat was to see how we can harmonise our revenues, our tax collection and all that so that they are less of a burden on the individual. We are on it; we are trying to continuously harmonise and the harmonisation will take away the need to see so many people, because hopefully we will have a single dashboard that identifies what is this and the FCT-IRS has the capacity to bring all revenue-generating agencies together as one.
The FCT is said to be the second biggest IGR collector after Lagos, what is your take on this?
There are a lot of stories indicating that Abuja is after Lagos. Lagos is the number one and then Abuja is second. Five years ago we were number five, we kept on building and now we are number two.
Because we have not consolidated, at the moment we only report taxes to the appropriate authority. So even though Abuja is the second as it is, in terms of the number, we can do much better than what is reported. So it is our hope that after all this consolidation and harmonisation, you will see greater reporting of IGR by FCT.
Previously, the Federal Inland Revenue Service (FIRS) was collecting personal income tax on behalf of the FCT, of course the FCT-IRS Act was passed in 2015, but the FCT-IRS did not come into operation until January 1, 2018.
So when we took over from FIRS, it was generating about N40bn per annum for the FCT. As of today, the FCT-IRS is generating about N120bn per annum.
We have organically been growing our collection by about 16 to 20 per cent annually, but our target is to maintain and sustain a minimum of 20 per cent.
So it has been a great time in terms of collection, but we are certainly not doing up to expectation. I have said that the FCT-IRS can easily do N500bn per annum and the FCT can fund 100 per cent of its budget via IGR.
I am sure that in the next two, three years, with the institutional framework that we have built now in the FCT-IRS, you will comfortably see a very huge growth in the numbers going forward.
Speaking about strategy, how much of collaboration are we going to be seeing between you and other agencies of government?
We are engaging, for example with the FCT Development Control. We are hoping that very soon before you get any permit to construct or to go ahead, you must show your tax clearance certificate. That collaboration is ongoing and it is all part of our global harmonisation with the agencies you have talked about.
So it is our hope that before you get any public service in the FCT, even if you talk about vehicle registration or before you apply for land, you have to attach a copy of your tax clearance certificate.
Hopefully, by next year most of the services you will receive in the FCT should be contingent on you providing your tax clearance certificate.