Unlike previous years, oil tax revenue dipped to 30.6 per cent, falling short of the annual 50 per cent returns and leaving the Federal Inland Revenue Service (FIRS) with an accrual of N4.9 trillion owing to the impact from the twin problems of oil price plunge and the negative impact of the Covid-19 pandemic that dealt the economy a terrible blow in the Year 2020.
While the oil sector ebbed, the non-oil sector pooled more tax revenue, generating a total of 109 per cent, that is Nine per cent above the 2019 earnings.
Just like other sectors, the oil and gas sector took a hit from the pandemic that pushes the global economy to an ebb, with devastating effects on Nigeria economy which rely more on earnings from the sector for funding of its activities.
“In other words, oil which used to contribute over 50 per cent in tax returns through the Petroleum Profits Tax in previous years, accounted for only 30.6 per cent contribution to the tax revenue generated in 2020. From non-oil tax collection, we recorded 109 per cent in 2020, which is 9 per cent higher than the previous year” noted the Executive Chairman, FIRS Muhammad Nami.
With this, the FIRS ended the Year 2020 with a total tax accrual of N4,952,243,711,728.37, falling short by two per cent, of the N5.076 trillion target set for the agency by the federal government.
The tax revenue is approximately 98 per cent of the national tax target according to Nami who noted that the feat was all the more remarkable considering the debilitating effects of COVID-19 on the Nigerian economy;
“The all-time low price of crude oil in the international market; business disruptions and lootings during the #EndSars protests; generous tax waivers granted by the FIRS to ease the impact of the COVID-19 shutdown; additional tax exemptions granted to small companies in the 2019 Finance Act; and insecurity in some parts of the country”.
Nami while analysing the significance of the 2020 performance, noted that the FIRS recorded this feat at a time when the price of oil hit an all-time low but attributed the revenue generation success to a number of reforms initiated by the Board and Management of the Service under his leadership.
The reforms included capacity building for members of the staff; improved staff welfare package; promotion and proper placement of staff; deployment of appropriate technology for tax operations; segmentation of taxpayers to ease tax compliance; and continuous collaboration with relevant stakeholders, among others.
The FIRS Boss commended “the conscientious taxpayers in the country and dedicated members of staff of the FIRS nationwide for their support and devotion to work which made this performance possible despite the numerous obstacles encountered by the Service in 2020”.
The Executive Chairman added: “The FIRS is optimistic this current fiscal year 2021 will be better than 2020. We shall perform exceedingly well given that our Service reforms are expected to yield greater dividends, especially as different parts of tax administration are being automated.
“We are also optimistic that exploration activities will improve in the oil sector and increase the prospect of higher tax revenue from the sector. Similarly, the ongoing reforms by the Service together with increased stakeholder collaborations will brighten the prospect of improved voluntary compliance and consequently higher tax revenue generation for the country this year and beyond.”
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