InsideTax

Tax Administration in Nigeria & the Challenge of IT:

When is the bold play?
There is an urgent need to make a bold play and raise the anté in the process of fast tracking the transition or
migration of the systemic processes of tax authorities to appropriate application platforms that will deliver solutions
in identifying and capturing all taxable persons outside the tax net ...
The impact of advances in information raise the anté in the process of fast
and communication technology in tracking the transition or migration of
sectors such as transportation, the systemic processes of tax
communication, entertainment, authorities to appropriate application
education, banking, health care, etc, is platforms that will deliver solutions in
undeniable. identifying and capturing all taxable
persons outside the tax net and their
The upsides of yielding to automation, “hidden income” on which tax has
leveraging ever small innovative not been paid. Though the transition
gadgets and more efficient will not be cheap, the good news is
applications in the above areas far that the skills and other capabilities to
outweigh the attendant social ills. We drive and deliver on that project are
are indeed in a privileged era where available locally.
technology keeps simplifying hitherto
grueling tasks or making near Furthermore, the quest to access
'impossible' assignments possible. information on taxable persons must
be managed within the context of
In the area of tax administration, most the demands of data privacy and
developed countries have recorded security obligations to avoid
significant mileage in tax collection by unintended exposure to or unwanted
automation and leveraging law suits from aggrieved taxable
appropriate applications to: persons.
? identify tax payers;
?
? obtain financial information; and
?
? ensure taxes are paid to the
?
treasury.

This has led to increase in the level of store the information of tax payers appreciated, they barely scratch the to various smaller databases run by
tax compliance and ultimately, tax and is proposed to facilitate real surface of the fundamental different agencies (immigration,
collection, increase in delivery of social information sharing and data challenges that hinder the customs, health, financial, security
services, greater transparency and exchange among tax authorities optimization of tax revenues. These system etc.) which the tax system
better accountability. and stakeholders such as the fundamental challenges include in no can access for information as the
Central Bank of Nigeria, Nigeria particular order of importance need arises. This publication contains general
In the light of this reality and the Customs Service, Corporate Affairs information only and Akintola Williams
? Tracking hidden income: There
? Deloitte is not, by means of this
general realisation that it would be Commission, Nigeria Bureau of ? Identifying/capturing taxable
?
are instances of unidentified publication, rendering accounting,
foolhardy if Nigeria continues to solely Statistics amongst others. persons: There is the challenge of income earned by taxable persons business, financial, investment, legal, tax,
depend on oil revenues whilst lack of reliable, comprehensive and or other professional advice or services.
? Integrated Tax Administration
? by tax authorities. Though financial
neglecting other non-oil sources, inter-related suite of data to
System (ITAS): Implemented by institutions have a mandate to Deloitte refers to one or more of Deloitte
adapting the tax administrative increase the degree of capture of
the Federal Inland Revenue Service provide information, the reality is Touche Tohmatsu Limited, a UK private
processes to technology on a bigger potential taxpayers outside the tax
(FIRS) and billed to have been that the interface for exchange of company limited by guarantee (“DTTL”),
scale than it is currently becomes an net or track those within the tax
launched at pilot offices, this information between the financial its network of member firms, and their
imperative. net but which have defaulted related entities. DTTL and each of its
system aims to promote electronic institutions and the tax authorities
filing and payment of federal taxes. significantly in complying. One can be greatly improved. With the member firms are legally separate and
No doubt, tax authorities have taken element common to countries with independent entities. DTTL (also referred
This system is meant to reduce cashless policy fully operational in to as “Deloitte Global”) does not provide
certain “baby steps” to automate and advanced tax administration
physical interaction between tax Nigeria and the consequent services to clients. Please see
engage technology and its systems is the availability of robust
payers and the FIRS. integration of more tax payers in www.deloitte.com/about for a more
applications in the tax administrative database management system detailed description of DTTL and its
? Automated payment systems: the financial system, there is
process. Examples of such “baby step ? which at the minimum manages member firms.
The objective of this system was to palpable opportunity for tax
initiatives” include: the details of all persons
simplify the tax payment process, authorities to track unidentified Akintola Williams Deloitte a member firm
(companies or individuals, dead or income through integrating their of Deloitte Touche Tohmatsu Limited,
? Unique tax identification
? track payments made by tax alive) including date of birth, health systems with financial institutions'. provides audit, tax, consulting,
number (U-TIN) project: Funded payers, issue electronic receipts profile, work profile, educational accounting and financial advisory,
by the federal and state and withholding tax credit notes profile etc. whether or not he is a Thus to move forward in the revenue corporate finance and risk advisory
governments but overseen by the where applicable. citizen, a resident, or anyone who diversification agenda of which tax is services to public and private clients
Joint Tax Board (JTB), U-TIN is an has interacted with that country. a critical pressure point, there is an spanning multiple industries. Please visit
electronic system which is meant to Whilst the above initiatives are us at www.deloitte.com/ng
This system is seamlessly connected urgent need to make a bold play and

International capabilities with local delivery.

Oluseye Arowolo Fatai Folarin

Partner | Tax & Regulatory Services Lead Partner | Tax & Regulatory Services
oarowolo@deloitte.com ffolarin@deloitte.com
© 2015. For information, contact Akintola Williams Deloitte