How e-collection contained $92 million loss at Nigerian Inland Revenue Service December 3, 2007 | posted by Mobolaji Aluko (Archives)

---

---

Few people like to pay tax. In Nigeria and many parts of developing world, some tax officials, in collusion with some banks and mega corporations often squirrel bits and pieces of tax revenue.

 

The story in changing in Nigeria, where the Federal Inland Revenue Service, FIRS, has deployed Information Communications Technology, ICT to plug $92 million (N12billion) loss that traditionally vanishes into private pockets.

This amount-which could fetch Nigerian rural communities and villages 24,000 boreholes –at $3846 (N500, 000 naira) per borehole -- is the value of the loss which the automation of tax collection in FIRS has contained.

In a country, with less than 10 per cent IT penetration, FIRS’ attainment under Omoigui, exemplifies how functional application of Information Technology, IT could promote efficiency, accountability and plug institutional leakages.
Omoigui led the Nigerian federal tax agency to collect over 15 billion dollars ($15,000,000,000.00), tax revenue for the three tiers of Government in Nigeria: federal, states and local governments

The FIRS chairman spoke in Port Harcourt on Sunday, where she presented a paper on how states could develop efficient tax administrative machinery. It was at a budget retreat, organised by the Bayelsa state government, a state in the South-South region of Nigeria.

According to Omoigui, the FIRS contained leakages in tax collection, with the automation of the tax collection process. The manual collection system allowed banks to play God with taxpayers’ deposits.

The old manual collection process also gave staff access to taxpayers’ cash and cheques. Then, it was common to find some corrupt FIRS staff colluding with banks to defraud the FIRS and the nation.

The FIRS, said Omoigui, however, stemmed such leakages with the automation of the tax collection system. About 95 percent of tax collected by FIRS is now on-line.

The bigger automation collection process is called Project FACT-an acronym for Friendly, Accurate, Complete and Timely, is one of the several processes to improve the FIRS collection system. Tax collection in the Nigerian Inland Revenue Service became automated, about a year after Omoigui’s appointment.

The beauty of the system, the FIRS chairman said, is that from her table and that of any authorised official, the FIRS chairman could obtain FIRS daily collection data from any part of the country.

Collection is swept automatically through the Interswitch-based collection system from the 12 collecting banks to the lead banks and from thence to the Central Bank of Nigeria(CBN). Interswitch, is an ICT firm that provides the backbone for the bulk of e-payment transactions in Nigeria.

Said the FIRS chairman: “Automation of collection has ensured that tax collected daily by the FIRS from all parts of the country, is swept automatically, electronically, into the Central Bank of Nigeria (CBN) through our collecting banks. This has stopped incidents of trapped funds in banks; eliminated diversion of cheques by some bad staff and reduced fraud in the collection system. Members of staff no longer handle taxpayers’ cash or cheques.

"Today, taxpayers pay into designated accounts. Automation gives authorised Federal Government officials, real time, and almost minute by minute report on taxes collected by the FIRS. Cases of trapped or unremmitted funds, running into about N12 billion were rampant when the FIRS operated the manual system. FIRS offices are also being computerised, in preparation for an automated and fully Integrated Tax Administration System, (ITAS)," she said.

A further fall out of the automation of the operations of the FIRS and the reforms in the last three years, Omoigui said, is that there had been improvement in non oil revenue generation into the Federation Account.

"We have also improved revenue generation ... The Federal Inland Revenue Service generated N8 trillion from various taxes in the last 11 years. A large part of this revenue was generated in the last three years.

"The highest figure of a single annual generation of about N2 trillion was recorded in 2006, while the previous two years show a record of N1.0 trillion in 2004 and N1.8 trillion in 2005.The least figure was generated in 1998, with the Service posting N99.4 billion. The service generated N106bn in 1996, N 131 billion in 1997, N171 billion in 1999 and N455 billion in 2000. Others include N587 billion in 2001, N434 billion in 2002 and N698 billion in 2003. Deliberate efforts by the FIRS led to a marked increase in generation of non- oil revenue," she said.

"This was made possible with the training and retraining of 4,400 management, senior and junior staff (out of the current 5,600 staff in place), enjoying specialised and industry/issue specific training and study Tours, within and outside the country.

“Hitherto, very little training was in place. Most staff had received no training for over 10-years. As a result of the reorganization and realignment of functions, over 2,000 new job openings have been created with improved opportunity for career growth and development within the service," he said.

Four other bills pend at the National Assembly.

She told the gathering, which included Governor Timipre Sylva, Senators and Representatives former ministers that a skilled, trained an efficient workforce, a robust taxpayer database, legislative and financial autonomy for State Board of Inland Revenue (SBIR), taxpayer education had assisted the FIRS in inching towards a professionalised and efficient workforce.

Bayelsa and many states tax boards, she noted, could profit by embracing these steps.

Omoigui, who led the legal, administrative and structural changes that culminated in the passage of four bills by the National assembly: (FIRS (Establishment) Act 2007- which gave the autonomy to the Nigerian tax agency, Value Added Tax (Amendment) Act 2007, Companies Income Tax (Amendment) Act 2007, National Automotive Council (Amendment) Act 2007-- could be scrupulous with standards and ethics.

Daughter of Nigeria’s former Surveyor-General, Omoigui who was valedictorian at her class, made a First Class in Accounting and got the highest number of prices ever won by any individual in the Faculty of Business Administration at the University of Lagos, Nigeria. She also has a Masters degree in Management Science from the Imperial College London.

Omoigui was a Partner in the firm of Arthur Andersen and Co -now KPMG Professional Services and Accenture and was Chief Responsibility Officer of ReStraL Ltd., a leadership and management services company, which she founded in 1996. She is a Fellow of the Chartered Institute of Accountants of Nigeria, and a Chartered Tax Practitioner.

President Umar Musa Yar’Adua has forwarded Omoigui’s name for confirmation by the Senate, Nigeria’s upper chamber, for a fresh three-year term.

 

Press Release forwarded on December 3, 2007, by

Wahab Gbadamosi
Special Adviser, Communication & Documentation to the Chairman, FIRS
baauswat@yahoo.com

 

---