Nigeria: Nigeria’s Federal Inland Revenue Service TaxProMax: A Critical Appraisal

Background 

On 4 June 2021, the Federal Inland Revenue Service (FIRS), the agency responsible for assessing, collecting and accounting for tax and revenue accruing to the Federal Government of Nigeria issued a public notice providing guidelines on the administration of its Tax Administration Solution (TaxPro-Max) e-filing platform.

Benefits/ Merits 

• The “platform” is a one-stop, online administrative tool introduced to enable seamless administration of taxes like: Company Income Tax (CIT), Value Added Tax (VAT), Withholding Tax (WHT), Stamp duty, Capital Gains Tax (CGT), Education Tax, National Information Technology Development (NITD) Levy, etc. 
• The “platform” also provides a single view to Taxpayers for all transactions performed with the Federal Inland Revenue Service. 

Current impact of Tax ProMax on Taxpayers with respect to Tax filings 

• To file tax returns electronically from the luxury of their comfort zone 
• To pay taxes online using electronic banking applications 
• To generate Tax Clearance Certificates without having to visit the Tax office physically 
• To respond to tax assessments raised 
• To communicate with the FIRS local tax offices on other tax matters 

Identified Challenges of TaxPro-Max 

Some issues that have been encountered with using the platform are:- 

• The “platform” is not yet configured for the filing of Company Income Tax returns for Insurance Companies and Upstream Oil & Gas Companies. 
• Some of the returns filing processes are repetitive. 
• TheplatformrecognizesonlyNaira(₦) as the reporting currency. While section 55(4) of the Companies Income Tax Act and section 10(3) of the Value Added Tax Act requires submission of tax returns in the currency in which the transaction was made. These categories of taxpayers will need to continue the practice of filing such tax returns manually pending enhancement of “TaxPro-Max platform”. 
• There is no provision for paying in instalments on the platform. 
• In order to file Capital Gains Tax (CGT), the Tax Controller has to be officially informed, as there is a back-end enhancement and adjustment that can only be done by the Tax Controller, thereby violating the plan to reduce human interaction. 
• Due to the issue of poor internet network connectivity, some taxpayers update form which have been submitted to the respective tax offices are yet to be updated, as a result of this, those categories of taxpayers can’t access the platform. 
• Absence of modules to handle complex tax reliefs e.g., investment allowance, loss relief, unutilized prior period withholding tax credit notes, etc. 
• Delays and glitches during usage 
• Need to visit the tax office over each need to modify the user account

Suggested Solutions 

• Taxpayers are encouraged to formally report technical glitches that they encounter while using the “platform” to the Federal Inland Revenue Service (FIRS). This will assist the FIRS to make the usage of the platform hitch-free.
• The Federal Inland Revenue Service needs to ensure timely resolution of technical glitches reported by taxpayers.
• There should be adequate measures put in place to sensitize Taxpayers on how to use the platform. 
• FIRS needs to design the platform in a way to discourage human interaction with FIRS personnel to forestall human interference and irregularities.

Conclusion 

The launch of the TaxPro-Max by the Federal Inland Revenue Service (FIRS) is a welcome and laudable development. The platform, if properly improved and managed, will reduce related costs, time and inconveniences that are known to be associated with manual filing of returns. 

Technology is being deployed to drive voluntary compliance and as such the revenue generated should witness a phenomenal increase. This will help the government fulfill its fiscal responsibilities in the face of a myriad of challenges faced in sharing of Government revenues to meet its ever-increasing budget deficit and the astronomic borrowing.

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