The Federal Inland Revenue Service (FIRS) said it generated N10.1 trillion in 2022, a record revenue for the agency and the highest in Nigeria’s tax history.
The groundbreaking tax revenue was announced by the Service through the “FIRS 2022 Performance Update” report signed by its Executive Chairman Muhammad Nami. The report, which was released on Monday following Nami’s briefing with President Muhammadu Buhari, said non-oil tax contributed 59% more to the revenue generated by the FIRS.
“The FIRS, in the year 2022 collected a total of N10.1 trillion in both oil (N4.09 trillion) and non-oil (N5.96 trillion) revenues as against a target of N10.44 trillion.
“Companies Income Tax contributed N2.83 trillion; Value Added Tax N2.51 trillion; Electronic Money Transfer Levy N125.67 billion and Earmarked Taxes N353.69 billion.
“Non-oil taxes contributed 59% of the total collection in the year, while oil tax collection stood at 41% of total collection,” the report said.
Though it falls short of the N10.44 trillion tax revenue target, the record is a milestone that the service is expected to build on to fill the revenue gaps created by oil shortfalls. The FIRS said the revenue value is exclusive of tax waivers granted under various schemes of the government.
“N146.27 billion is the total value of certificates issued by the Service to private investors and NNPC for road infrastructure under the Road Infrastructure Development Refurbishment Investment Tax Credit Scheme created by Executive Order No. 007 of 2019.
“The report also stated that the N10.1 trillion is exclusive of tax waived on account of various tax incentives granted under the respective laws, which amounted to N1,805,040,163,008,” the tax agency said in a statement on Monday.
In 2021, the Service recorded a threshold of N6.405 trillion, the highest in history. This is the second consecutive year that the tax agency will be toppling its past revenue record. Nami said the FIRS reached the milestone through “dogged implementation of strategic reforms over the past two years; a renewed commitment by officers of the Service, accompanied with a boosted morale; as well as the innovative deployment of technology for automation of both tax administration and operational processes.”
Speaking on the outlook for 2023, the tax boss stated that the FIRS would build on the current reforms, achieve full automation and continue to establish a resilient Service that would continue to provide sustainable tax revenue to fund the government.
However, Nigeria’s 2022 Budget suffered a huge deficit despite the historic tax revenue. The N17.126 trillion budget incurred a deficit of N7.157 trillion, accounting for 12.07%, as the finance ministry conducted 7.18% downward review of the revenue projection, from N10.74 trillion to N9.97 trillion.
The revenue deficit forced the federal government to take to borrowing, increasing Nigeria’s public debt profile to more than N42 trillion.
Nigeria earned N11.5 trillion from crude oil in the first half of 2022.
However, it is not clear how much the FIRS remitted to the government’s purse from the N10.1 trillion tax revenue. The tax agency enjoys “cost of collection” percentage, which under the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), means that the Service and other revenue-generating agencies will be given a fixed percentage of their revenue as “cost of collection.”
Under the provisions of the Fiscal Responsibility Act, which was heavily abused, revenue-generating agencies are allowed to use their discretion in spending but are expected to remit 80% of the operating surplus. This has led to bloated spending and poor revenue remittance from the agencies.