In business, one must develop strategies for operational efficiency in all the key business components. A key part of winning is knowing how to tap into government supports and subsidies especially in some strategic sectors where government has clear pain points. There is nothing wrong with that. General Electric operated for years in U.S. over […]
Nigeria Deploys Big Data As It Gets Serious With Non-Oil Revenue
The Nigerian government is getting serious with non-oil revenue as it works to modernize the process of collecting taxes in the nation. The government is developing a comprehensive system that will make it easier to collect taxes. They are beginning that process by possibly auditing government contractors who make money from government but refuse to even report the earnings, and in the process avoid paying taxes.
In efforts to improve tax compliance levels, the Federal Government has commenced the review of tax compliance records of all contractors, who received payments from its various agencies in the last seven years. ….
A statement from the Finance Ministry, said the result of the sampling exercise showed that some Tax Clearance certificates, which were presented at the point of contract award were found to have little bearing to the true value of business conducted by the contractors. —
The initiative is part of the construction of a central data base of financial information being developed for use in tax compliance. The data will be used to crosscheck information provided to the tax authorities.
The database project dubbed, ‘Project Light House’, is aimed at building comprehensive profiles of tax payers using a wide range of available data sources, including BVN, foreign exchange allocations, land registry records, and information obtained from foreign governments.
By working to aggregate the data from disparate sources, government is deploying big data in the process. I note the following on this effort by government:
- Government in Nigeria usually collects VAT and WHT at source especially when transactions involve the banking sector and government. The implication is that, under most cases, the tax on profit had already been collected. Of course, there are companies that can make more in profits than the 5-10% government had deducted at source for WHT. Nevertheless, for more than seven years now, the deducted VAT/WHT records are always with Federal Inland Revenue Service (FIRS) and it is very strange that federal contractors can get tax clearance without FIRS checking records which are already in their systems. The only way this can happen is when the government entity awarding the contract does not report the payment to FIRS. In that case, FIRS will not see it.
- Government is coming for the landed property. Also, they are equipped with BVN and can check bank records. Taxing the real estate is a very good development in the country. Let the rich people pay tax as rich people. Yet, there is also a concern that government can abuse this system where just having money in the bank could trigger tax burden for companies. This is a gray area and government needs to explain why it needs the BVN for tax purposes.
Meanwhile, if you are owing government tax, you have a grace period to self-report and do good.
She urged such companies to promptly take advantage of the concessions offered under the Voluntary Asset and Income Declaration Scheme (VAIDS), adding that once an audit or investigation had commenced, a company or individual would not be able stop that process by participating in VAIDS.
“VAIDS has now been open since July 1st and some applications have already been received. If the tax authorities reach a company before such company has applied for VAIDS, then the full audit process will be conducted. This could result in penalties, interest and prosecution. So companies and individuals who know they will be affected are urged to quickly take advantage of VAIDS,” she was quoted.
In general, efficiency in tax collection is a welcome development. Nigeria will not make progress if it cannot even collect taxes from its federal contractors. Everyone would have expected this to have been dealt with many years ago. Federal contractors are paid by government and FIRS is usually provided information as the government entity deducts the 10-15% of payment for VAT/WHT. Most times, the contractor may not have to pay more tax as the deducted amount had covered the tax due. But where FIRS does not look at the data, provided by the other government entities, before clearing the contractor, you have a dereliction of duty. So this reform should go beyond technology. They need to ensure the right people are working for government to avoid these lapses in operations.
My eBook Launch is Tomorrow
Good people, my new ebook launch is tomorrow, Tuesday 7am NY time.
You will enjoy reading Africa’s Sankofa Innovation.
Meanwhile, you can subscribe here as the link is up for $20 (or N7,000 for those in Nigeria) for one year. It comes with exclusive articles right here on Tekedia.
Thank you.
9Mobile’s New Strategy for Growth
This is a Short Note.
9Mobile (nee Etisalat Nigeria) is making its API available for Nigerian developers. This is certainly a novel idea as that will make people building solutions in the telecom industry to adopt 9Mobile. It is a new way of executing customer acquisition and 9Mobile could find success by deepening collaboration with the developer community. The result could be customers of the future.
Startups in Nigeria can now access access 9Mobile’s APIs, this follows a partnership between the telecoms giant and Africa’s Talking, a Pan-African company focused on providing developers with an easy and reliable way to access telecommunication infrastructure.
9Mobile will provide access to telecom apps while Africa Talking will provide a sandbox environment for developers to use while learning how to work with the APIs as well as testing their applications before moving into production.
The Director, Digital Business, 9mobile, Adia Sowho, said, “We at 9mobile are delighted to partner with Africa’s Talking in the bid to support Nigerian software developers and SMEs as they build viable and scalable businesses. This partnership will provide quality and affordable mobile communication tools like two-way SMS and USSD APIs that they can embed into their day to day business activities to improve their marketing capabilities and interact easily with their customers.
What 9Mobile is doing could be industry defining if they push it at scale. The implication is that no one wants to deal directly with telcos because they are high up there and few entrepreneurs can get access to them. So you have this solution that could have been integrated in a telco’s network, but you have no means of working with them. With what 9Mobile is trying to do, making its API available, we can see a new phase of innovation at the base of the telecom sector in Nigeria.
If 9Mobile has this mindset, it can change its fortune faster than many could anticipate. By releasing the APIs to developers, expect some apps and solutions to work better in 9Mobile networks when compared with competitors. I know that in cpanel web hosting, 9Mobile is among the networks that work without issues. In our web hosting business, we recommend 9Mobile to clients. Some other networks have their problems, locking customers from their emails, most times.
Simple things matter and this way of thinking could be the redesign that 9Mobile needs. Also, it will be good for the country, as entrepreneurs can build better products and solutions, that work seamlessly with the telecom infrastructure.
12.1 – How to Compete Against Conglomerates to Win
Around the world, conglomerates tax the citizens. They are powerful with lots of resources which help them enjoy the economies of scale. This makes their products better and largely cheaper, compared to smaller companies. Also, owing to the fact that they employ many people, governments like them. They are visible symbols of any nation’s economic […]