In a bid to raise its non-oil revenue profile in 2014, the Federal Government on Wednesday approved the services of a consultant to assist the Federal Inland Revenue Service (FIRS) raise additional N75 billion within 12 months.
This is sequel to approval granted by the Cabinet at its weekly meeting presided over by President Goodluck Jonathan.
The decision to engage a tax consultant was to enable the FIRS meets its N2.2 trillion revenue target in 2014.
Briefing State House correspondents after the Council meeting, the Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, said the services of a consultant would assist in plugging several of the leakages experienced in the tax collection system and boost national non-oil revenue.
For his services, the Minister said the Consultant, MacKinsey and Co will pocket 1.75 per cent of the money collected as commission.
Oknonjo-Iweala, also explained that Nigeria’s tax to GDP ratio currently is relatively low at seven per cent compared to other countries of the world.
Her words, “Our aim is to move from seven percent to 22 per cent over time in the medium term. We are hoping over the next five years, the country will move gradually to this ratio.
“We want to do that through blocking all the loopholes and leakages in tax collection. That is why we sort to find avenues to support the FIRS”.
The Minister lamented the rising rate of tax evasion by corporate organisations and businesses, including those which pay less than they are supposed to pay or have continued to claim tax exemptions even when such incentives initially offered by government had lapsed.
She further disclosed that 65 per cent of registered tax payers have not filed returns in the past two years while about 75 per cent of medium and small businesses currently in the tax system were also not paying tax at all, even as about 30 per cent of the companies operating under pioneer status abuse the incentives and evade tax.
“The essence of the contract is to assist the FIRS to increase non-oil tax revenue. After deliberations, Council ratified the President’s anticipatory approval for the award of contract for the provision of technical support for non-oil revenue enhancement and capacity building services to the FIRS in favour of Messrs Mckinsey & Company in the sum of N1.47 billion (inclusive of all taxes equivalent to $8.75 million) with a completion period of 12 months,” she announced.
