FIRS meets target, generates N1.3trn in Q2 ’20

Federal Inland Revenue Service, FIRS, for the first time in five years met and surpassed its quarterly tax revenue target in the second quarter of the year, Q2 2020, as it generated the sum of N1.29 trillion.

The last time the tax agency met its set target was in the second quarter, Q2, of 2015.

According to Nairalytics, FIRS generated the sum of N1.19 trillion as against a target of N1.02 trillion then.

FIRS has a quarterly target of N1.27 trillion.

But what the tax agency generated during the period under review was N19.15 billion in excess of its quarterly target.

Details of the Q2 performance revealed that 34.2 per cent of the tax revenue was petroleum profit taxes (N440.3 billion), while the remaining 65.8 per cent came in as non-oil taxes (848.1 billion).

The total collection in the second quarter of 2020 increased by 8.2 per cent compared to N1.19 trillion generated in the previous quarter, and 8.01 per cent decrease compared to N1.4 trillion generated in the corresponding quarter of 2019.

The report also showed that company income tax, CIT, stood at N324.3 billion in the second quarter, while gas income tax was N77.7 billion.

Also, import value added tax, VAT, that was collected by the Nigeria Custom Service, NCS, was N81.62 billion, while non-import VAT stood at N245.6 billion.

Stamp duty generated during the period was N62.6 billion as against a target of N4.3 billion, while capital gains tax was N617.4 million.

Initially, the FIRS was not charged with the collection of stamp duty as this responsibility fell to the Nigeria Postal Service, NIPOST, until the amendment of the Finance Bill 2019 which shifted the responsibility to the tax body.

This, among other factors, established an intra-agency rivalry between both the FIRS and NIPOST who took to social media to fire shots at each other.

However, following the intervention of the House of Representatives, the brawl seems to have been settled and it has promised to clear the air over who collects the stamp duties moving forward.

It would be recalled that the federal government increased the VAT rate from five percent to 7.5 percent earlier in the year in order to help boost the county’s fiscal revenues amidst the global oil crisis.

This move led to VAT revenue of N651.8 billion in the first half of 2020, which indicates an 8.5 per cent increase compared to N600.9 billion generated in the corresponding period of 2019.

However, despite the increase in VAT remittances, major sectors of the economy recorded significant declines in VAT remittances during the period, attributable to the COVID-19 induced lockdown across the country, especially in the second quarter of the year.

Following the decline in the prices of oil in the global market, which has served as a major source of revenue for Nigeria, the country needs to rely heavily on taxes in order to fund its federal and state government expenditures.

To achieve this objective, it is necessary to broaden its tax base and devise more creative ways of collecting taxes and hope that economic activities pick up to be able to meet set projections.