The chairman of Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami has envisaged a fall in government’s revenue expected from petroleum profits tax in 2022 following the Petroleum Industry Act (PIA) enactment and subsequent assent by President Muhammadu Buhari.
Nami stated this when he had a session with the House of Representatives Committee on Finance at its ongoing 2022-2024 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF & FSP) Interactive Session with MDAS at the National Assembly Complex, Abuja.
He said the agency had the agency had projected some N10.1 trillion revenue generation for the country in 2022, but reckoned that the PIA would now affect the projection.
However, he said with certain investigations being carried out as well as an audit, he was certain that 2023 hold better fortunes for government in terms of revenue generation.
The FIRS chairman said of the total amount projected, N2.053 trillion would be remitted to the federal government while the balance would go to the states and local governments of the federation.
He said FIRS generated N4.9 trillion in 2020, which was about 98 per cent of its set target for the year, said there was the possibility of surpassing the set target for revenue generation in 2022.
He assured the lawmakers that after some investigations and audit, which would be carried out by the agency in 2022, government’s revenue might increase significantly in 2023.
He also disclosed that the FIRS has taken cognisance of the coming into effect of the digital economy in the country and was taking advantage of it to increase revenue generation, adding that Twitter and other social media platforms were already registering with the service for the purpose of tax payment.
“We expect that with the new Petroleum Industry Act there are some reconciliations that will be carried out that might affect the projections for 2022. We expect that there are new expenditures that will be rolled over to the new regime.
“So, what we are trying to do is to ensure that we adjust those expenses for the year 2022. We know that if we do that, it is going to affect our ability to collect more revenue in that area. There are currently some allowances they have been able to use; but they will use it because this will be a new regime.
“It is not going to be the one that has investment tax allowance any more. It is going to be based on actual performance. But we are going to recognise whatever they have now as a cost before you arrive at the actual profit they are going to generate. So, what we have planned to do is to aggressively conduct audit and investigations in the year 2022. So, we are projecting that by 2023, the result of that audit will begin to manifest. That is why we have projected 2023 to be N6.2 trillion,” he said.
