Nigerian government hires tax consultants to increase revenue generation

The consultants will be paid over N1.3 billion.
The federal government said on Wednesday that it has contracted an international tax firm to assist the Federal Inland Revenue Service, FIRS, in strengthening tax collection in the non-oil sector.
The government said it plans, through the consultant, to rake in an additional N75 billion into its revenue within the 2014 fiscal year. The increase will be through tightening the lapses in tax collection.
The Finance Minister, Ngozi Okonjo-Iweala, stated this while briefing journalists at the State House after the weekly meeting of the Executive Council of the Federation, FEC, chaired by President Goodluck Jonathan.
Ms. Okonjo-Iweala, who spoke on the revenue drive of the government, said over 75 per cent of small scale business operators in the country are consistently evading tax in Nigeria.
The Finance Minister also revealed that the revenue drive will increase the FIRS revenue target which is put at N2.2 trillion in 2014 by another N75 billion, making it a total of N2.95 trillion.
She said government has already contracted McKinsey & Co, a consultancy group, for the provision of technical support to the FIRS towards the enhancement of non-oil revenue taxes and increasing the capacity of the organisation in its tax drive.
The minister said the consulting firm will commence operation this year and work for the next 12 months. It is expected to be paid 1.75 per cent of the generated tax as commission (about N1.3 billion).
“One of the areas of weakness has always been in our tax policy. The new move will see the non- oil sector contribute more to the economy through payment of appropriate taxes by relevant organizations.
“The FIRS has a target of N2.2 trillion under the 2014 budget and Nigeria can increase this by another N75 billion and we hope that in the medium term we can improve further.
“The company will collect 1.75 per cent from the projected revenue which is one of the lowest in the world,” she said.
The minister noted that the Finance Ministry, is seeking to strengthen the non- oil revenue collection, as part of the collective efforts of government to ensure diversification of the economy in the face of the dwindling oil revenue.
She said the Nigerian tax revenue to Gross Domestic Product, GDP is only 7 per cent adding that government is working to progressively increase it to 22 per cent of GDP by the end of 2015.
“FIRS has really worked hard but we feel that there is still room to do better, compared to South Africa, and Angola, Nigeria’s tax to GDP ratio is the lowest; McKinsey and company have found out that 75 per cent of our medium scale enterprises are not paying tax, 30 per cent of those enjoying pioneer status are also abusing the privileges. So we want to ensure that we do what is right,” she said.
In order to tackle this, the minister disclosed that McKinsey &Co has suggested five strategies to be adopted by the FIRS which include improve audit, tax filing enforcement, review of tax holidays and exemption, tax arrears and debt enforcement, increased registration of companies, and improved external communication.
The Minister of Communication Technology, Mobolaji Johnson, also brought a memo to the FEC on a policy that will standardize communication system in the country.
According to a working document of FEC, this policy will assist government’s ability to plan and implement public policies and services, fight against natural disasters and diseases including emergency management and to reinforce national and international security in line with the UN Universal Postal Union’s Doha Declaration.

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