How MDAs evade 7.5% VAT – FIRS chairman

The Executive Chairman, Federal Inland Revenue Service (FIRS), Alhaji Nami Muhammed, on Monday said that some government’s Ministries, Departments and Agencies (MDAs) have devised means of evading the 7.5 percent Value Added Tax (VAT), saying that the contracts they had awarded does not reflect the new tax regime.

Nami, who spoke at a meeting with the House of Representatives Committee on Finance, said the MDAs insisted that their contracts were base on the old 5 percent VAT rate, and therefore cannot pay 7.5 percent at the point of consumption.

He said the issue of revenue leakages was the major problem of FIRS, which prevented the agency from generating revenue for government to fund its budget.

Nami noted that Nigeria has enjoyed a premium position of number one economy in Africa but the GDP growth in Nigeria is at about 6.3 percent, when the tax ratio to GDP in South Africa that is second to Nigeria is 27 percent.

“While the average tax to GDP growth in sub-Saharan Africa stands at 17 percent,” he added.

The chairman also accused multi-national companies operating in the country like Google, Yahoo, Amazon of not paying taxes but capitalizing on residency in the content of Nigerian law which allows businesses without operational structure not to pay tax.

“But the more you sent text massage, you have consume their services; but because of the content of the residency in our law, they don’t pay tax,” he added.

He also cited issue of fake pioneer status to get tax exemption for a period of five years instead of the three years contained in the laws as another source of revenue leakage.

He said the revenue agency is seeking the support of the National Assembly to amend the laws dealing with pioneer status for companies, saying that some of them were abusing the law and getting tax waivers they don’t deserve in Nigeria.

He said FIRS has sent an executive bill to President Muhammadu Buhari through the office of the Attorney General of the Federation to allow them deploy technology in generating revenue, saying when the order is applied, the FIRS will be able to generate huge revenue for the government.