The Federal Government has cleared the N135.8bn Pay-As-You-Earn (PAYE) tax liabilities owed by federal Ministries, Department and Agencies (MDAs) to state governments.
The PAYE tax liabilities owed to various state governments covered the period between 2002 and 2016.
The Executive Chairman, Federal Inland Revenue Service, Mr Babatunde Fowler, confirmed the payment on Monday in Abuja at the inauguration of the “Go- live” ceremony of Tax Identification Number.
The initiative, designed by the Joint Tax Board, was to consolidate the national tax database.
Fowler urged states to reciprocate government gesture by promptly remitting all Withholding Taxes and Value Added Tax due to the federation account.
He said within the last few years, tax administration had been strengthened, adding that there had been an expansion of the nation’s tax base from 10 million to 20 million taxpayers.
He said the country had the potential to increase the number of taxpayers to 45 million before the end of the third quarter of the year.
He said, “There is a growth in the Internally Generated Revenue of states by over 46.11 per cent from N800.02bn in 2016 to N1.16tn in 2018; growth of FIRS collections by 53.81 per cent from N3.3tn in 2016 to N5.32tn in 2018; with the 2018 total collection of N5.32tn being the highest collection ever in the history of the FIRS, while non- oil revenue, with a collection of N2.85tn, accounted for 53.63 per cent of total revenue collection.
“For the first time in the history of Nigeria, the Federal Government paid all outstanding PAYE tax liabilities owed by Federal MDAs from 2002 to 2016, totalling N135.8bn to the various state governments in May 2019.
“We hope that this gesture will encourage state governments to also promptly remit all Withholding Taxes and VAT due to the federation account.”
Vice-President Yemi Osinbajo while inaugurating the initiative said President Muhammadu Buhari had directed the Central Bank of Nigeria, the Nigeria Interbank Settlement System, the National Identity Management Commission and other relevant agencies critical to the successful implementation of TIN to accord their support to JTB by supplying relevant data of individuals, corporate bodies to the board.
Osinbajo said the TIN registration system and consolidated tax database reflected the dynamism of a changing world.
He said, “ The world is constantly changing, and along with it, the accepted ways of doing everything, including the management of economic and financial systems.
“As international boundaries dissolve under the reality of a globalising world, and as financial and economic activities increasingly transcend geographical limitations, tax administration itself, must of necessity continually adapt.
“Tax administration is built around data, without credible and comprehensive data, an efficient tax system would be an impossibility.”
He said that to function optimally, tax authorities had to be aware of important statistics such as numbers of eligible individuals and businesses, the volume of economic activities.
With this information, he said the tax authorities could design and implement strategies to boost tax revenue.
Earlier, the Executive Secretary of the JTB, Mr Oseni Elamah, said the new system leveraged existing data from relevant identity management agencies to reduce the burden of multiple registrations of taxpayers, promote the ease of doing business and paying taxes.