Granting tax waivers to big companies indiscriminately do not only erode government’s revenue base, but also hinders the Federal Inland Revenue Service (FIRS) from meeting its target, the agency’s boss has said.
Muhammad Nami, the FIRS Chairman, made the disclosure Thursday at a senate interactive session with revenue-generating agencies in Abuja, saying random tax waiver alongside factors like illicit financial flows abroad and outrageous overhead costs cause the country enormous revenue leakage regularly.
“Nigeria loses a lot of revenue through tax waivers granted to big companies which otherwise would have been taxed to buoy up government revenue.
Read also: NSE: Bank stocks dominate trade as index rises further
“Also, illicit financial flow is a major cause of revenue loss to Nigeria. Coupled with this is the operational cost of the FIRS which is also high compared to the statutory provisions for the running of the organization,” Mr Nami said via a statement by the FIRS Director of Communications and Liaison.
The service has been facing a major challenge of meeting its revenue target over the past years, resulting in a cumulative deficit of N4.88 trillion.
It made a sobering revelation last Friday when the agency’s chief said the country lost N3.635 trillion ($10 billion), translating to more than one-third of its 2020 budget, annually to profit-shifting activities of multinationals, who move profits from Nigeria to lower-tax countries in order to avoid paying taxes on the profits made in the country.
