In a concerning revelation, the Federal Inland Revenue Service (FIRS) has unveiled a pattern of asset under-declaration and tax evasion by affluent individuals and businesses in Nigeria.
This practice, the FIRS suggests, has led to a significant loss of tax revenues for both federal and state governments.
Johannes Wojuola, the Special Assistant for Media and Communication to the Executive Chairman of FIRS, highlighted this issue during a recent visit to The Guardian’s corporate headquarters in Lagos.
He revealed that notable high-net-worth Nigerians are systematically under-reporting their assets, thereby depriving the government of essential tax income.
Wojuola drew attention to a disconcerting contrast, pointing out that the total personal income tax paid by the second richest individual in Africa, who is based in South Africa, exceeds the combined internally-generated revenue of all 36 Nigerian states.
This incongruity raises concerns about the genuineness of tax declarations among wealthy Nigerians.
Ironically, Wojuola noted that the wealthiest individual in Africa is Nigerian, though a significant portion of the assets belonging to high-net-worth individuals are located outside the country.
He elucidated that the existing system allows state governments to collect personal income tax, rendering them unable to challenge under-declarations effectively.
Addressing these issues, FIRS is advocating for comprehensive tax reform that entails harmonizing data to enhance revenue collection and ensure equitable taxation.
Additionally, FIRS is pushing for the authority to tax high net worth individuals and their overseas assets, either by the federal government or through FIRS itself.
According to Wojuola, the goal is to eliminate the stark contrast where the second richest individual in Africa pays more tax than the aggregate internally-generated revenue of all Nigerian states combined.
The Taiwo Oyedele-led committee, dedicated to tax reforms, is working on streamlining the tax landscape by reducing the number of taxes collected in the country.
The focus will shift towards high-revenue earning taxes.
Olarinde Olufemi, the Technical Assistant to the Executive Chairman of FIRS, underscored the constitutional requirement for citizens to lawfully declare their income and fulfill tax obligations.
He emphasized that regardless of whether individuals earn income within Nigeria, engaging in business within the country—especially those operating from Europe—should entail tax responsibility. Such a requirement ensures a level playing field for local businesses, preventing unfair competition from untaxed foreign counterparts.
Olufemi appealed for media collaboration as a crucial stakeholder in promoting effective tax collection.
He urged the media to play a role in holding the government accountable for transparent allocation and utilization of tax revenues.
Martins Onoja, the Managing Director and Editor-in-Chief of The Guardian Group, brought attention to the discrepancy between taxation and infrastructure funding in Nigeria.
He noted that developed economies rely on taxes to drive infrastructure development and economic progress, a model that Nigeria should adopt for sustained growth.
Onoja emphasized the need for a more integrated tax collection system to encourage entrepreneurialism and industrialization, fostering growth beyond the oil sector.
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