Illicit financial flows (IFFs) abroad, non-discretionary tax waiver grants and high overhead costs are the major reasons for the failure of Nigeria’s Federal Inland Revenue Service (FIRS) to meet its tax revenue targets in recent times according to its executive chairman, Muhammad Nami.
He is particularly concerned about IFFs facilitated by profit shifting by multinational companies, which Nami says also enjoy undeserved tax breaks.
Tax waivers and IFFs
“Nigeria loses a lot of revenue through tax waivers granted to big companies, which otherwise would have been taxed to buoy up government revenue,” according to Nami
“Also, [IFFs are] a major cause of revenue loss to Nigeria,” he added.
Nami says that FIRS is now working hard in collaboration with relevant government agencies to stem IFFs, “especially via profit shifting by multinationals operating in the country”.
He urged the National Assembly to assist the agency in this regard in order to increase government revenue towards the modernisation of public infrastructure in the country.
At a recent management retreat in Abuja, FIRS announced a revenue target of 8.5 trillion naira ($23 billion) in 2020.
But FIRS officials said this would be a tough target to meet because Nigeria is currently losing about US$10 billion a year of tax through illicit profit shifting by multinational corporations.
Categories: Trade Based Financial crimes News