 Welcome back. Time for a first major conversation right here on the breakfast. My name is Kofi Bartels once again. I guess it's starting by to be justice to the topic, but let's quickly remind you that the Federal Inland Revenue Service has announced that it collected over 10 trillion Naira in tax revenue last year, 2022. This is said to be the highest in the history of the Federal Inland or Internal Revenue Service. Now the service made this known in its FIRS 2022 Performance Update, FIRS 2022 Performance Update, a report signed by its Executive Chairman Muhammad Nami and released to the public yesterday after his briefing with President Muhammad Buhari. He gave reasons why the service did not meet its targets, interestingly, even though this was the highest in its history. He said that he pointed finger rather at distractions and waivers as being responsible for the failure of the Federal Internal or Inland Revenue Service to meet its target. He also lamented that distractions from several government agencies through instituted court cases, petitions and judgments granted to these petitioners contributed to the service not meeting its target. He, however, expressed optimism that the service will do better in 2023. Now joining us this morning to discuss the issue of revenue generation within the borders of Nigeria, we have Gabriel Fulusho Fasoto. He's the managing director, a partner of Gabe Fasoto and Co. He's also the past president of the Chartered Institute of Taxation Nigeria. Good morning, sir. Thank you very much for your time. Good morning viewers. Good morning. Thank you very much. How do you receive this news that the FIRS is raking the largest revenue in a calendar year in the history of the Federal Republic of Nigeria? It is a news that the tax industry received with great joy gladness. The reason being that we are going where we ought to be about 20 years ago. We are heading for that destination. That is a good news. From 2020 revenue of $4.9 trillion of a generated by FIRS. So $6.4 trillion generated in 2021. So $10.1 trillion generated in 2022 is a very large news. Who just looked at that? The head of the body is lamenting the fact that they couldn't meet their target of $10.44 trillion. He cited certain factors. In your opinion, was this target realistic? Looking at where Nigeria is coming from as far as revenue for the year 2021 was concerned. In my opinion and in the opinion of most tax experts, $10.44 billion is done under the statements when it comes to tax revenue again for FIRS. Why? So many things contribute to high yield in terms of tax revenue. Government has budgeted $10.44 billion. The fourth thing we have to ask is what was the basis of even the $10.44 trillion budgeted for revenue from FIRS. I believe that it didn't follow the expected scientific approach. It's just like oh, you have achieved this in the last year, this year you should achieve this. Did we take into consideration so many micro economic situations? No. Now the chairman cited two issues that the body is unable to achieve the target. The first one is what he described as distraction and Nigeria should address this issue promptly. If there is no law, there cannot be tax. So it means that the starting point for any good tax and efficient tax system in any country should be from the law set up in the tax system. And that law starts from the constitutional provisions. We are aware that not all our tax types currently are backed up by reliable tax provisions and that has led to some litigation in court. VAT, for example, that's value-added tax. I think governments should not shy away from the responsibility of providing good constitutionality for our all types of our taxes in the country. Once we have good laws backing up all our taxes, then government is good to go to be able to raise enough revenue. And we have to know the basis for being anxious to make tax as the real base of revenue generation of government. All over the world, we have elected people with the governance of our country. They need to provide us certain services. How do they fund it? Tax is the only sustainable way of funding government expenses. And if the tax system is not okay, government will find it difficult to actually deliver its promises. So that is why we must ensure that the tax system is okay for the country. Once we are able to put the constitutional framework in the proper perspective, the second issue mentioned by the chairman in the waiver that were granted to some tax payers and he cited 1.8 trillion being lost in court, lost in court to waivers. Waivers are there in every good tax system. But the problem with it's also in Nigeria is that you do not monitor the utilization, the utilization of the waiver granted. That is why you are having so many companies that were granted waivers and pioneer companies for only four years and you knew for another three years or so. Obviously now some of them are still enjoying those tax waivers because of lack of money. Thank God we felt it was so that that agreement was being monitored and then government will look into that and do its justice to that. So if we monitor the waiver granted properly, so carry out cost-benefit analysis, we will be able to know to have good use of tax waivers. I've said that for the distraction mentioned by the chairman, once we overhaul the laws, all the laws governing transition in the country, we'll be able to cement that. So with those two being out of the way, we say that Skype is the limit for FRS to be able to raise enough revenue for government. And if I may add this, we are quick to look only at the federal government when we are looking at tax revenue. Nigeria is a federation and it comprises of federal government and sub-national. That's the state government and even the local government. We have to realize that the performance of each of the state domain contributes to the performance of Nigeria at the old. Whenever tax is collected at federal level, it is shared among all the specific states of the federation, including Abuja, as well as the 700 and 74 local government countries. So we should look at tax in totality, how we are using it at federal state and local government level, and how we generate the added performance. All right. Mr. Fashato, are you there, please? Can you hear us? Mr. Fashato, are you there, please? Hello, sir. Okay. Well, all right. I'm told that the network has interrupted our guest. We would aim to get him back online so that we can have this conversation. Very interesting are points that he had been making. I was going to ask him next what is responsible for this record. Of course, we're talking about the factors that stopped or prevented the FIRS from achieving its target of 10.44 trillion naira. I mean, it got 10.1 trillion naira, but it's not too far. Now, this is the second time, the second kind of executive here, that the Federal Inland Revenue Service will be beating and breaking its record. In 2021, they broke the record of 2022. In fact, they achieved the over 100 percent target performance in the year 2021. Okay. They achieved the target in the year 2021, beating the record of 2020. Sorry about that. And this is quite interesting, coming from the Federal Inland Revenue Service. I think it was in 2020 that they crossed the 6 trillion, 2022, right, 2021, sorry, that they crossed the 6 trillion naira mark for the first time in history. All right. For the first time, 6 trillion naira had never been reached. And you look at 2021, things are going, you know, not too, not better off, let's say with the economy, if you want to call it that. But they are making more money. They've got into costs across the 10 million, 10 trillion naira mark for the first time. And with all the economic difficulties, the inflation in country, you know, the wars of the naira, people losing jobs, you know, no petrol, businesses suffering in GDP, I don't know the latest figures, interest rate hikes, how come the Central Bank is able, sorry, the Federal Inland Revenue Service is able to make such an amount of money and break their record by a huge gap. I'm told we have a guest back online. Mr. Vashato, are you there, please? Yes, I'm here. All right. All right. Sincere apologies, sir. Sincere apologies, please. So what in your opinion is responsible for this record set by the Federal Inland Revenue Service? Whilst you were off the air when we lost you for a bit, I did remind our viewers that this is the second consecutive year the FIRS will be breaking its record. In 2021, they collected more than 6 trillion naira for the first time in the history of the country as far as revenue is concerned in performing, recording over 100% performance of their target, achieving their target. So what's responsible despite the hostile, you know, economic climate achieving this record? What are the factors responsible for this? The number one reason is stated by the chairman and which is known to every tax payer. All over the world, we are automation as an introduction to the tax system. The increase in tax revenue you get is always more than job. And in Nigeria, there is no exception to that. So automation has contributed a great deal into this good performance. Then number two, as recommended by the study group on reform of tax system in the year 2000 and 2003. Federal Inland Revenue Service is now taking the tax payers, treating them as costumers and private sector would treat costumers. They are beginning to treat tax payers as costumers and the normal balance is that costumers are always right. Say, they are paying to the tax payers the end, cut your play and then they took them through the system. They are by encouraging the tax. They also cited the issue of data centric tax system, whereby they mind data about the tax payers and they are using that data to be able to manage the health care of the tax payers. Even though, personally, I believe that FRLC needs to do a lot in this area. It's only tax system when it was introduced in 1999. The purpose is to use data of different tax payers who have never known the offices of the tax offices to be able to bring them to tax me. But this area is not yet being effectively used by the tax authorities, including Federal Inland Revenue Service. I would urge them to make good use of this data mining and be able to use it effectively. A lot of people, they don't pay taxes, but they carry out transactions that attract taxes whereby the taxes, certain percentage of whatever they pay, would have been deducted at first. So they would have received information related to this tax payers. That will be another new for bringing them into the tax net. So if they use that one, it will be helpful. Then we also wish to also have data intelligence. That is, before you ask somebody to come for tax audit or tax investigation, you must have certain information, which is not probably known to that tax payer, that tax office is aware of. Some people, they throw party lavish, some companies, they do celebrate 100 years of service and some other things. There will be intelligence reports for the Federal Inland Revenue Service. Once they gather this information, they can now invite such tax payers for them to show the tax payment status. If it's below what the law says, then they will be able to raise more revenue for the government. So that is the part of the reasons why I believe that the FRA is a good report. All right. The activities of the Federal Inland Revenue Service are not without controversy. I mean, I've had the opportunity to speak to some business men and women in Nigeria, so entrepreneurs and private sector people, who are led victimization and victimization by officials of the FIRS. You know the ease of doing business reforms that were implemented from the presidential initiative led by the vice president when that was really, really, really happening and was being implemented as well as they should have. We saw that there were some reforms and it was easier for businesses to relate with the FIRS. These days, I hear, you know, one or two complaints from the business community of victimization and they receive an email, a letter, a notice saying that they're supposed to pay XYZ amount of millions of Naira. They can't reconcile, you know, and then they claim that, okay, if you come, you don't want to pay that, just give us something to settle us and then we will clear it or reduce it for you. Now, these are unsubstantiated claims or unverified because we've not reached out to the FIRS, you know, for their response on this, but I would like you to talk about this because you're an expert and a stakeholder in the sector. I quite agree with you and some of those claims, some of them I tell you, but you also know that out of every 12, there must be a Judas. In every tax system, there are bad eggs and I believe that FIRS is working with them to remove the bad eggs from amongst its staff. I agree that the level of customer support or taxpayer support still needs to be upgraded at FIRS level. A lot of complaints that once you show your face at the tax office, then you have brought it to yourself on yourself, so many problems. In terms of you sitting down at home, not going to the tax office, you are better off doing that than going to the tax office and saying you want to pay your tax, but I believe that FIRS is actually addressing that. This will be improved upon by training and retraining of the staff of the Relative and Tax Authorities, that is FIRS and State Internal Revenue Studies. Once they train them properly, it will ask the tax profession it will assist them in being able to hand you tax payers. Even if you supply a type of tax, there are provisions in the law on how you can bring them to the tax net and how you can optimize the tax collection from them. On the tax of the tax payers, I will urge them to make use of tax professionals because most people will just go to the tax office and they will give their tax that they want to pay, without even having cognizant of the provisions of the law. But if you make use of tax professionals, they will be able to guide you out against some tax payers before, whereby they have paid them and they are organizing so the tax offices, and when we came in, we told them that you know you can pay less than this and you will still be covered legally. That is what we call tax planning and tax avoidance under the law, as different from tax evasion. Tax evasion is where you are not paying tax and you are breaking the provisions of the law whereas tax avoidance is where you are residues in the quantum of the taxes you are paying and you are still within the law. There are provisions in the law which a tax effort can take advantage of on your account as a tax payer. So I urge tax payers to make use of the tax professionals. Every member of the Charter and Socialization of Nigeria, they are tax professionals. If you engage some of them and even if you engage the tax institutes itself, you will not have enough money to pay high amounts of money to pay a tax effort. But if you approach the institutions, they will be able to assist you in getting you a tax effort. Who will assist you? Just like some small and medium-sized enterprises are currently doing and they are taking advantage of that early way introduced by the institute. On the part of the government, they are now putting human pay into the tax system and I urge them to improve upon that. The tax program introduced by the Charter is a laudable project. But a lot seems to be done because we are still having issue of bleaching where you are, where you are, of course, where you are making use of the tax program. So if the tax effort is going to be reduced, the government will be able to make use of the tax effort and the tax payers will also be able to make use of it. Very quickly because we are out of time and a few sentences. How can the FIRS meet its targets for 2023? Are we looking at maybe, for instance, widening, improving the tax net and dragging more Nigerians into the tax net? A lot of people don't pay taxes, don't believe in paying tax, for obvious reasons. Very quickly, please. All right, thank you very much. It's been a through having you. We should have you soon again on the program and we sincerely appreciate your time and, of course, your expert analysis as always on this issue of taxation and revenue in Nigeria. Mr. Gabriel Folusio Farshato is a emerging partner of Gabe Farshato's company. He is the past president of the CIT and the Charter Institute of Taxation Nigeria. He joins us via Zoom from Abuja. Thank you very much for your time, sir. Have a nice day. Thank you for having me. All right, it's still the breakfast and plus CVF car. January is cervical cancer awareness month. We'll be back after the short break to talk cervical cancer awareness and prevention. Please stay with us.