FIRS Projects Lower Oil Tax Revenue At Year-End

By InsideBusiness On Dec 18, 2020

Following the glut in the oil and gas sector owing to the twin effects of the devastating impact of Covid-19 pandemic and the plunge in oil prices that have affected companies’ revenues, the Federal Inland Revenue Service (FIRS) has projected a crash in tax revenue from the industry at the end of the current year.

The FIRS fears the accruals at the end of 2020 will not match up with the N250 billion oil taxes that was realised in 2019 according to the Executive Chairman of FIRS, Muhammad Nami.

Besides the twin challenges that the global oil and gas industry currently grapples, many are switching to electric cars which has also debuted in Nigeria and which will impact oil revenue as more embrace the vehicles which will cut down on owners spending on automobiles.

Nami at the 46th meeting of the Joint Tax Board (JTB) in Abuja on Friday says “in 2019, only ₦250 billion was generated from oil taxes, what would be generated in 2020 would be far less than that of last year”.

Depending strongly on oil revenue as has been the practice he said was no longer feasible because of falling oil prices “hence the need to put necessary strategies to enhance non-oil sector for maximum revenue generation”.

Going forward, Nami said attention must shift from oil to non-oil revenue stressing that technology was key to achieving the shift.

To address the problem of dwindling revenue, the FIRS Chairman “urged states board of internal revenue service to leverage the use of technology to boost tax collection”.

Nami insisted that internal revenue agencies across the country must leverage technology to enhance tax collection stating that “the concept of using the manual model in collecting revenue is no longer obtainable”.

According to him, “people do a lot of businesses online; we must use the electronic system to tax such persons or companies”.

The essence of the Friday Joint Tax Board (JTB) meeting he said is “to talk to ourselves on how we can use technology, data and information to enhance tax collection in the respective states.”