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    FIRS generates N4.2tr revenue. Falls short of target

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    Naija247news Editorial Teamhttps://www.naija247news.com/
    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

    Revenue worth N4.2 trillion was generated by the Federal Inland Revenue Service (FIRS) by the third quarter ended September 2021 (Q3 2021), against N7.61 trillion target, but better than N5.076 trillion in Q3 2020.

    FIRS Chairman Muhammad Nami said the target would have been met but for output curbs imposed by the Organisation of Petroleum Exporting Countries (OPEC).

    He stressed that tax sources, including stamp duty, were ignored for a long time because of oil windfall but the FIRS has now embarked on unbundling tax administration.

    “We have collected so far N4.2 trillion as at nine months of the year, and out of this N4.2 trillion, N3.3 trillion came from non-oil taxes and the remaining one, which is about N950 billion came from oil taxes,” he told Arise News reported by TheCable.

    “So, if you look at it critically, for the fact that we realised that there’s a problem in the oil and gas sector, the fact that the Nigerian government requires these funds to fund the budget, we had to do one or two things differently, making sure we’re able to generate more money for the government.

    “It (fall in taxes) has to do with the drop in OPEC quota to Nigeria. It is as low as 1.4 million barrels per day, as against 2.4 bpd that we used to have, and Nigeria is not even able to produce up to that 1.4 million barrels per day (mbpd).

    “What we currently produce is in the region of 1.2 million barrels and 1.25 million barrels on a monthly basis.

    “So, you can imagine the difference of the impact that 1 million barrels a day will have on the revenue of this country and also on the taxes that come from that revenue.”

    Oil output increased in September to an average 1.25 mbpd from 1.24 bpd in August, the lowest this year. Nigeria is also performing below OPEC quota, from an average 1.36 mbpd in January 2021 to the current 1.25 mbpd.

    Nami said the Petroleum Industry (PIA) is the right thing to do because Petroleum Profit Tax (PPT) is very low due to losses declared by oil firms owing to the pandemic.

    “Those losses are as a result of the policy that gave these oil-producing companies investment allowance as against production allowance. So, whatever you spend, if you like, you spend money on a chartered flight from Abuja to my village, you still pass it to the company’s cost.

    “Charter a plane from Nigeria to Egypt or anywhere a meeting is taking place and those become liable to deductions. But with the new Petroleum Industry Act, that ceases to be the case, the reason being that their allowances are now based on the total volume of production that is carried out.

    “So if we have this fiscal regime, we’re going to be able to realise two goals. One, oil companies would focus their attention trying to produce, which will lead them to making their own money and also translating to revenue and taxes for Nigeria.

    “This is opposed to giving them the power or liberty of taking out or deducting all expenses whether it is exclusively or not necessarily in the ordinary course of their business from the profit that they’re supposed to pay taxes from. It is going to be based on the production of oil. This is a fundamental shift.

    “We are going to be able to monitor everything, particularly in terms of actually finding the allowable deductions so that going forward, even the Nigerian companies are able to pay taxes expected from them.

    “If by the end of nine months, we have generated N3.3 trillion from non-oil taxes alone, the oil sector used to account for over 55 to 60 per cent of the total taxes we collected in the past.

    “So, if everything were to be okay, by today, we should be talking about N7 trillion already because if the non-oil sector were to be operating at a level that you want it to operate, Nigeria would have been better for it.”

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