Stamp Duties
Wednesday,21st August, 2019. 2:51:43am

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The history of taxation in the world, which Nigeria is an integral part, is dated back to the pre-Christ era. Prior to independence, the Emirs, Obas and Obis collected various taxes. The tax administers then was the Emirs', Obas' and Obis' agents. The birth of Federal Board of Inland Revenue (FBIR) could be traced back to 1939 when the Companies Income Tax Ordinance was enacted. Since the first enactment, Nigerian taxation has witnessed very dynamic changes. As the tax laws change, the administering body (Federal Board of Inland Revenue) also witnessed corresponding changes. It is a fact that business community is so dynamic and gives no room for stagnation in the face of technological developments and the need for more by revenue by government to meet the day to day running of the country. Consequently, there is the need for constant review of tax laws and its administration. Some of the earlier reforms the tax system had gone through include:

Task force on Tax Administration (1978) headed by Alhaji Shehu Musa. The thrust of the reform includes:

Introduction of the withholding tax regime.

Imposition of 10 percent special levy on bank's excess profits

Imposition of 2.5 percent turnover tax on building and construction companies.

The study on the Nigerian tax system and administration (1992) headed by Prof. Emmanuel Edozien and the thrust of the reform include:

Establishment of Federal Inland Revenue Service (FIRS) as the operational arm of Federal Board of Inland Revenue (FBIR).

Setting up of revenue services at other tiers of government (states and local).

The study group on indirect taxation (1992) headed by Dr. Sylvester Ugoh had the thrust of the reform as policy shifts from direct to indirect/consumption tax. This brought about the introduction of Value Added Tax (VAT).

At the end of this presentation, I hope that this distinguished audience would have been better informed on the key objects of the current reform, the achievements so far attained and action plans for 2005 and beyond.

Objectives of the reform

The objectives of the tax reform include the following:

To reposition the FIRS for greater effectiveness and efficiency in meeting the revenue demands of government.

The administrative objective: All aspects of capacity building at all levels of tax administration, such as management and technical skills development; career paths that are intended to attract and retain high quality staff. Modern organizational structure; that is taxpayer focused and IT driven:

Improved integrity and ethical standards;

Reasonable financial and administrative autonomy;

Protection of the taxpayers' rights through professionalism, taxpayer education..

Fair hearing and adjudication of cases and prompt refund mechanism.

Other reasons include:

In most economies, tax is the major source of income for national development while the contribution to total revenue in Nigerian is still lower than desired especially with regard to non-oil taxes.

To achieve other fiscal objectives and improved services delivery to taxpayer.

Expand the tax net.

More services – Education, consulting, counseling etc.

Linkage to (CAC) other stakeholders.

Improved policy regime.

Scope tax exemptions/waivers.

Build the FIRS institution.

Right selection/positing off staff.

Right development of staff.

Right systems.

Right controls.

Formulate a national tax policy.

Amend tax law (simplify; clarify).

“The new FIRS” funding system should ensure its financial independence, and empower it to deliver on its expended responsibilities. Also remarkable, is the provision requiring the FIRS to publish its annual audited accounts, which should encourage transpencey and accountability. It is hoped that the Minister of Finance, will, in exerting his/her statutory powers of determining how the accounts of the FIRS would be kept, be guided by global best practices.”

“Institutionalizing refund of excess tax payers is long overdue. The refund system has not worked in the past with respect to refund of excess input VAT over output VAT and excess withholding tax deduction vis-à-vis final tax liability. Taxpayers cannot wait to see the proposed refund system deliver cash to their outstretched hands”

The proposed amendment will, hopefully, spur the private sector to fund research, developmental and academic activities of the country's tertiary institutions.

This is an indication that the reform is working for research and development by encouraging investment in research.

The paper concluded among other issues that.

The proposed FIRS bill is a demonstration of Government's resolve to strengthen the Tax Administration and collection machinery in Nigeria ”.

The highlights of the Bills encapsulate the Federal Government's reform agenda for Nigeria Tax system and administration, which include the following:

Restructuring of the FIRS

The FG has declared its intention to transform the FIRS into an autonomous agency.

The FIRS Bill, 2005, is the principal instrument by which the FG seeks to achieve this objective. Personnel matters recruit, reward, discipline, development is also a matter for consideration.

Improved funding for enhanced effectiveness- retains suitable percent of collection.

A clearer refund procedure

Amendment to Tax/Regulatory Laws PITA

This bill intends to amend the provisions of the existing PITA by introducing the following into it:

A more equitable income tax structure and thus encourages voluntary compliance.

Penalty provisions updated;

Consolidated allowances percent of total emolument introduced.


Update penalty provisions and ensure that provisions are consistent with expectation;

Update penalty provisions and ensure that provisions are consistent with expectation:

Greater incentives for donations to tertiary and research institutions buy making such deductions tax deductible expenses.

This was so important to the business community that KPMG professional commented that:

“The proposed amendment with hopefully, spurs the private sector to fund research, developmental and academic activities of the country's tertiary institutions.”

Greater responsibility and accountability on officers of the companies for the acts or omissions of those companies.


Update penalty provisions to be consistent with the current realities

NNPC to provide FIRS with comprehensive information on Joint Venture, PSC. Sole Risk and Contract Service in the upstream sub-sector of the oil industry for more effective taxation of the industry.

Encourage donations to tertiary and research institutions by making such donations tax deductible.


Remove all inherent ambiguities in the law;

Introduce zero rated goods and services;

Non-oil exports

Do not funded projects

Update penalty provisions increase VAT rate from 5 per cent (this is intended to compensate for the propose reduction in Companies Income Tax rate).

Change revenue allocations formula to align with experts to help in executing the reform as conceived.

Other organs of government appear not to have seen anything different in the duties being discharged by the FIRS hence work against the reform agenda or at bet be indifferent.

The challenges standing between the realizations of the agenda include:

Passage of the draft FIRS and other bill into law;

Conducting Training needs analysis to facilitate a comprehensive and all embracing training program;

Putting in place corporate plan documents for both short and medium term;

Meeting the stipulated conditions attached to accessing the donors funds.

Corporate image; to distinguish FIRS from other Government agencies


The imposts of the reform have started to manifest as noted in the following:

Enhanced uniformity and standards in application of laws and procedures:

Co-ordination the various tax types of companies and monitor their activities;

Reduction in functional duplications and waste;

Information cross-referencing;

Faster service delivery to the taxpayers and

Higher revenue collection profile.

It is hoped that your have been well informed about the thrust of the reform. I hope that the reform will uplift the tax administration in Nigeria to an enviable height.

The process of change can sometimes be slow, demanding and painful but a successful definitely, will justify all the efforts and resources expanded. We shall succeed not only in trebling the revenue collection performance target by the year 2007 but also in building a Revenue Service with a brand new image which will be a pride to Nigerians home and abroad.

I thank you for listening.


OLAJIDE AND ASSOCIATES is a member of BNI and a registered member of The Institute of Chartered Accountants of Nigeria and Chartered Institute Of Taxation Of Nigeria


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