‘Thank You for the Opportunity to Serve You’

‘Thank You for the Opportunity to Serve You’

The full text of the letter written by Mrs. Ifueko Omoigui Okauru to the staff and Board members of the Federal Inland Revenue Service of Nigeria at the end of her 8-year tenure as the Chairman of the Service

Seven years and eleven months ago, on May 3, 2004 I was given the opportunity to serve our country. The then President and Commander in Chief of the Armed Forces, Federal Republic of Nigeria, President Olusegun Obasanjo appointed me as the Chairman of the Federal Inland Revenue Service, FIRS for a 3-year term in the first instance. I was also charged with the responsibility for driving the implementation of the tax reforms as identified at the time by the twin reports of the Presidential Study Group and Private Sector Working Group on the reform of the Nigerian Tax System.

After the passage of the Federal Inland Revenue (Establishment) Act (FIRSEA) 2007, in April 2007, and as required by this new Act, I was re-appointed first by President Olusegun Obasanjo and presented to the 5th Senate for confirmation just before the lapse of his administration but this was not concluded at the end of that Senate.

The late President Umar Musa Yar’Adua at the onset of his administration reaffirmed my reappointment by his predecessor and resubmitted my name to the 6th Senate in June 2007 for confirmation. The 6th Senate under Senate President David Bonaventure Mark, confirmed my appointment as Executive Chairman for a 4-year term on April 10, 2008.

During this second term, I served the late President Umar Musa Yar’Adua, and our current President Goodluck Ebele Jonathan.

April 9, 2012, therefore brings my second term as Executive Chairman of the FIRS to an end.

It has been a long, interesting and challenging journey but through it all, commitment, courage and determination, coupled with the support received from far and near, got us all to this point. All I can do today is to thank you all. I thank you for your support, your frank views, your forthrightness and wise counsel, the quality of your thoughts, the passion for your job, your ideas and creativity. I also, thank you for your disagreements and criticisms, all of which has enabled us as a Service, to get to the point we are today.

On behalf of myself and my family, I wish to thank the three Presidents, under whom I served for finding me worthy of service and for the confidence they reposed in me to serve our nation.

Let me use this opportunity to thank the Board, Management and Staff for their continued and renewed commitment to an improved Service in our journey to build the FIRS into an institution that is at par with other institutions globally.

My sincere gratitude also goes particularly to members of the two FIRS Boards, with whom I served, for their support, ideas, hard work, energy, perseverance and for all that we were able to achieve through the years.

As I salute the Board and Staff of FIRS, may I also use this medium to express my deep gratitude to His Excellency, Mr. President, the Vice President, the Secretary to the Government of the Federation, the Coordinating Minister for the Economy and Minister of Finance, the Minister of State for Finance, other Members of the Federal Executive Council, National Economic Council, Members of the National Assembly, the Judiciary, Ministry of Finance and related Agencies/Ministries, and all our esteemed partners and stakeholders for their unflinching support.

I wish to especially thank all former and serving State Governors, all serving and former Ministers of Finance, all serving and former members of the Federal Executive Council, FEC, and all serving and former heads of parastatals for their support, advice and encouragement.

Special thanks go to all serving and former colleagues in the Ministry of Finance with whom we related especially well.

My sincere gratitude equally goes to the Senate President, the Deputy Senate President and their colleagues in the red Chambers and all their predecessors as well as the Honourable Speaker and Deputy Speaker of the House of Representatives, all honourable members of the House of Representatives and all their predecessors.

I thank all past and present Chairmen of the Senate and House Committees of Finance for their support and close working relationship. I equally wish to thank the Chairman of the Revenue Mobilisation, Allocation and Fiscal Commission, RMAFC, Engr. Elias Mbam, all commissioners and their predecessors, State Commissioners of Finance, State Accountants-General, and Chairmen of the State Boards of Inland Revenue.

The members of the Judiciary have played a strong role in the reforms by enabling the enforcement of due process resulting in the convictions we have recorded to date. We thank them all.

We also thank members of the Tax Appeal Tribunal who have played their role in enabling a quasi-judicial appeal process in a cost effective manner.

To those on whose shoulders we stood to achieve all that we have done – all members of the 2002 Study Group, 2003 Working Group, Presidential Advisory Committee on Taxation and all its Sub-Committees, all members of the Committees on the “Review of our Tax Laws”, “Development of the National Tax Policy”, “Private Sector Funding of the Nigeria Police”, the Nigeria Extractive Industry Initiative (NEITI), the Nigeria Economic Management Team (NEMT), and everyone with whom we have worked to achieve all that we have done, I say Thank You.

The various professional associations – Chartered Institute of Taxation of Nigeria, Institute of Chartered Accountants of Nigeria, the Nigeria Bar Association, the Chartered institute of Secretaries and Administrators amongst others, played a strong part, and I thank them.

Our international partners also played an important role in the progress made to date: the Open Society Initiative (OSI); the World Bank; the Fiscal Affairs Department of the International Monetary Fund. the United Kingdom Department for International Development (DFID); the Office of Technical Assistance of the United States Department of Treasury; Organisation for Economic Cooperation and Development (OECD); African Development Bank (ADB); the Japanese Government; United Nations Development Fund; the German Society for International Cooperation, GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit); United Nations Committee of Experts on International Cooperation in Tax Matters; New Rules for Global Finance Coalition, South-South Sharing of Successful Tax Practices (S4TP) – a UNDP special unit for South-South cooperation, Economic Community of West African States (ECOWAS) etc. Thank you very much indeed for all the advice and assistance received.

Without a doubt, the media established itself as a strong partner in the tax system and I thank them for keeping us true to what we should be. I also thank the general public that listened and voluntarily complied with our sensitisation messages.

As we look back on our efforts, those of our partners and the unique contributions of everyone, that has made the FIRS a major point of reference locally and internationally, we should commit to doing all that is necessary to uphold and surpass the achievements made to date.

Even as we recognise the fact that a lot still needs to be done, we did achieve quite a bit. I will highlight below just a few of the many things that we achieved together these past years.

Internationally, we improved the profile and reach of the FIRS and Nigeria on tax matters. We created strategic relationships, which we must continue to leverage on for the benefit of the Nigerian tax system.

We engaged in discussions aimed at ensuring increased focus on domestic resource mobilisation for sustainable development. We contributed to the development of a new United Nations Model Convention for Avoidance of Double Taxation between Developed and Developing countries.

We contributed to discussions aimed at improving the methods for transfer pricing and exchange of information between countries. We negotiated and signed a number of Agreements for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with other countries.

Nigeria was on the front row with other African countries in the establishment of the African Tax Administration Forum, (ATAF) and the West African Tax Administration Forum (WATAF). Nigeria represents the West African Region in the ATAF Council, and Chairs its Finance and Audit Committee. Nigeria Chairs WATAF whilst also acting as its Secretariat.

Nigeria was invited and joined the Organisation for Economic Cooperation and Development (OECD), Global Forum on Transparency and Exchange of Information for Tax Purposes in 2010. In this regard, Nigeria will be assessed and ranked in 2013 for its compliance with global standards for transparency and exchange of information

Nigeria’s membership and participation in these international organizations and activities have begun to lay the foundation for improved cross border learning, capacity building, peer review, exchange of information and best practices.

Nigeria actively participates in the Commonwealth Association of Tax Administrators (CATA) activities. During the period, we resumed the process of sending staff on an annual basis to its Commonwealth Tax inspectors Course (CTIC) and its Advanced Management Programme (AMP) with Nigeria representing the largest delegation to these programs. Nigeria also hosted the Annual Technical Conference of CATA in 2010 (for the second time in the Association’s 34-year history), in Abuja. Nigeria also holds the position of North African Regional Director of CATA and has in consecutive years been a member of the CATA Management Council.

The Value Added Tax Administrators in Africa (VADA) Conference (where value added tax administrators from across Africa gather to discuss issues relating to VAT administration and practices) was hosted by Nigeria twice, in 2004 and in 2010. We also held the Chairmanship of this Association twice.

More recently, we held a Tax Treaty Strategy Workshop involving international speakers working with us to develop a clear strategy for the negotiation of avoidance of double taxation treaties/exchange of information agreements with other countries.

Domestically, we made a lot of progress.

Within this period, we worked with the Ministry of Finance to draft, obtain approval for and launch a National Tax Policy, the first of its kind in the history of Nigeria.

On the legislation front, we were involved in various processes leading to the development of a comprehensive legal framework for the reform of the Nigeria tax system in 2005. This led to the passage of the following Acts between 2007 and 2011: the FIRS (Establishment) Act 2007; Value Added Tax (Amendment) Act 2007; Companies Income Tax (Amendment) Act 2007; National Automotive Council (Amendment) Act 2007; and the Personal Income Tax (Amendment) Act, 2011.

We continue to amend tax laws and have made progress in the following revisions/amendments: development of the Petroleum Industry Bill in collaboration with other government agencies; development of a new Value Added Tax Act to repeal the existing Act; development of a Tax Administration Code; development of a comprehensive and consolidated Income Tax Act; and amendment of the Taxes and Levies (approved list for collection), Stamp Duties and Capital Gains Tax Acts.

In like vein, we developed and worked with the Federal Ministry of Justice to gazette the regulations clarifying companies eligible for tax deductible donations, the Self-Assessment Regulations, the Presidential and Ministerial orders granting exemption for investments on bonds and related instruments, regulations for incentives to Nigerian companies which provide employment and infrastructure, amongst others.

We are working on gazetting regulations guiding Transfer Pricing and for the use and issuance of the Taxpayer Identification Number (TIN). We have also made progress in the development of regulations on International Financial Reporting Standards (IFRS), Non Interest Banking amongst others. We have issued several technical circulars, the most recent of which was that for Banks interested in Holding Company structure arrangements. We continue to work on other circulars aimed at improving understanding of the law.

Within the Service, we obtained approval for a new funding model of the Service based on cost of collection to enable the various activities required for reform to be adequately funded.

We reorganised the Service introducing new functions and structures aimed at building and institutionalising a modern revenue authority with focus on meeting the needs of the different segments of the tax paying public. In this regard, we amongst others accomplished the following:

– Created “one stop” integrated tax offices

– Created departments and increased focus around the following taxpayer market segments:

o Large taxpayers – oil and gas

o Large taxpayers – non-oil

o Medium tax payers

o Micro and Small tax payers

o Individual and Enterprise Income

– We created a model structure for tax offices encompassing all tax administration functions including registration, returns and payment processing, risk profiling, audit, filing and debt enforcement and tax payer services

– Created the Standards and Compliance Group to ensure standards, processes and systems are in place to guide tax administration with focus on the following functional areas

o Debt Management and Enforcement

o Registration, Returns and Payment Processing

o Tax Audit

o Taxpayer Services

– Created the Tax Policy & Legislation department domiciled in the Standards and Compliance Group

– Created the position of nationwide taxpayer advocate to provide an avenue for channeling taxpayer complaints and acting as advocate on behalf of the taxpayer

– Established the following departments

o Facility, Security and Safety Management

o Communications and Liaison

o Revenue Accounting

o Tax Investigation and Special Enforcement

o Procurement

– Appointed a Risk Management Expert to assist the Service in setting up a Risk Management Department

We replaced the erstwhile Body of Appeal Commissioners and Value Added Tax Tribunals with the Tax Appeal Tribunals as required under FIRSEA 2007, in eight locations nationwide, for appeals of all tax disputes.

We introduced new strategic management techniques. We managed the Service with corporate wide medium term and group annual plans, working with Key Performance Indicators (KPIs) at the group, department and individual levels to instill a strong result orientation.

We leveraged on the FIRSEA 2007 to ensure a smooth transition from the “old” to the “new” Service and introduced new remuneration structures, welfare packages and career development practices. We cleared the backlog of promotion and are working to conclude promotion early rather than later in the year.

We have automated our bank based collection operations with improved tracking abilities. We provided and continue to improve on Service-wide backbone for communication. We continue to strengthen our internal processes and improve intra-FIRS Communication as well as overall communication with taxpayers.

We commenced and continue to work on several modernisation projects. These include the Records Management and Data tracking project, Human Resource, Finance and Accounts Reengineering project, the unique Taxpayer Identification Number project implementation (in concert with the Joint Tax Board), the Integrated Tax Administration System (ITAS) project implementation, and the self–assessment project implementation.

Other projects conceptualised and in progress include data integration with the Nigeria Customs Service, Corporate Affairs Commission et al, various Information and Communications Technology projects, VAT Collection Automation, Contact Management Centre, ISO Certification, Internal Management Document System and the Business Process Reengineering of Tax and Non-tax processes. In this regard, manuals are been developed for various tax administration functions in the Service.

We commenced work on our new Corporate Headquarters building with the approval of a winning design. We also progressed on all other projects designed to secure an improved working environment for all our staff and taxpayers.

With respect to our core mandate of tax collection, tax revenue grew astronomically from slightly below N1.2 trillion (about $7.9bn) in 2004, to over N4.6 trillion (over $30bn) in 2011 (over four times the collection figure of 2004). This represents growth in both oil and non-oil revenue as follows: