‘Build trust and sustain reforms to unlock tax compliance mystery’

Chief Cyril Ikemefuna Ede is the 13th President of the Chartered Institute of Taxation of Nigeria (CITN), who grew through systematic basic education to the pinnacle of intellectual and career development, having obtained doctorate degrees in Business Administration from All Saint University and Philosophy in Arts and Public Administration from California Christian University, both in the United States. Though a thoroughbred tax practitioner and administrator, his educational qualifications and practice cut across accounting, law, management, banking and finance and journalism. He was former Executive Chairman, Board of Internal Revenue and Accountant-General of Enugu State. He also served as the Chairman of Ikeja District Society of the Institute of Chartered Accountants of Nigeria and first Chairman of Enugu District Society of CITN, among others. In this interview with Assistant Editor, Finance and Economy, CHIJIOKE NELSON, the consummate professional says effective tax reforms, review of laws and pursuit of improved revenue and discussions must be sustained.

CITN has made case for an enabling Act on the taxation of luxury goods. What is the progress so far?
Our position is receiving due consideration by the Federal Government. Government has come to the realisation of the fact that it has to rethink the strategies in place to effectively mobilise needed revenue to fund the national budget by exploring options such as the taxation of luxury goods. This strategy would help mobilise resources from the lifestyle of the wealthy in funding critical infrastructure of teeming Nigerians.

How would you describe the Federal Government’s tax amnesty programme?
The programme has laid the foundation for the future of a better tax system for Nigeria. We may not have had a huge chunk of revenue realised from the exercise, but the awareness generated is indicative of the direction and seriousness this government has in addressing the low level of tax compliance among Nigerians. We cannot afford to be blinking in the dark and expect to be noticed. The Institute was part of the sensitisation drive that saw government crisscross the major business hubs around the country with a view to pitching the message of amnesty.

Tax revenue for the country is still low despite huge campaign and strategies. Why is it so?
Government must continue to do everything and all things to earn the trust of the people more. Beyond the legal obligation to declare incomes and pay the taxes thereon, citizens need to be assured that the government has their best interest at heart. We must understand that this effort is a journey with mutually reinforcing complements, that is, if the government does well, citizens are encouraged to comply and vice versa. It is, however, important to note that we will continue to grapple with huge budget deficits and accumulated debts if this situation is not reversed. The record of revenue performance of the Federal Inland Revenue Service (FIRS) last year at N5.32 trillion is a good indicator.
But government must also follow through on reforms efforts to sustain the successes recorded in revenue generation. CITN had advocated the review of our tax laws to address ambiguities and unfriendly investment provisions. We need to sustain investments in critical national sectors such as power, transportation, agriculture, education and security. These are required to stimulate productive activities and attract investments. On the long run, we would be able to ramp up tax revenue.

What is your recipe to increased flow of tax revenue?
Like I mentioned earlier, it should be noted that there is no quick fix or magic wand to increasing tax revenue. Without investment in critical sectors that can boost productive activities, Nigeria will continue to grapple with low revenue flows. I am delighted that decisive steps had been taken in this regard. The implementation of the National Tax Policy should be sustained and synergy and collaboration between FIRS and tax authorities at the state level should be taken further.

The proposed plan for increase in VAT rate is generating controversy. Where do you stand?
Nigeria’s VAT rate is still one of the lowest compared to other countries in West Africa. While it may be justifiable to increase VAT rate based on this premise and the need to increase revenue proceeds from VAT, the issue of time is of grave concern. The citizens are presently battling with low purchasing power, amid an economy that still has low rate of growth. The government needs to be wary of these realities and thread with caution.
Furthermore, there is also the need for a comprehensive review of the VAT Act to address pertinent issues, which had impacted on effective mobilisation of revenue through VAT.

How would you handle the persistent leakage in tax system if you were given the opportunity?
Detection is one effective deterrent strategy. Automation and availability of data is key to addressing revenue leakages. At the federal level, the FIRS had automated most of the processes including payments, filing of returns, use of big data to profile taxpayers, to mention but few. I would advise tax authorities at the state level to do the same.

How optimistic are you that this year’s conference will be knowledge-based and meet economic goals?
I am quite optimistic that this year’s conference would greatly impact on the knowledge of attendees and assist government with tailored solutions to our revenue mobilisation challenges. The choice of the theme and sub-themes resonates with current developmental issues in Nigeria. Therefore, I believe we would have robust discussions by our resourceful facilitators and attendees that would shape the economic fortunes of Nigeria.

How would the CITN academy advance the goals of the institute and contribute to the economy?
The CITN Tax Academy which was launched on 5th March 2015 is envisaged by Council to be the leading Academy for professional development and research on taxation in Africa and beyond, with a mission to raise the professional competency of the tax profession in Nigeria through up-to-date tax education. We have made significant progress in bringing this project to reality. The board of the Academy has since been inaugurated and courses have commenced at a partner Institution at Victoria Island, Lagos. We expect more courses to be available at other locations across the country in a short while.

In recent times, CITN has enlarged its partnership with various institutes- private and public. How has that paid off?
You would agree with me that no serious-minded organisation can exist without forging healthy and mutually beneficial relationship with likeminded bodies. The tax profession is a unique one that draws its membership from economics, accountancy and law. Therefore, we have an assemblage of membership from individuals who belong to other professional bodies. So, it may not be out of place to partner with such bodies to advance the profession and further our aims as an Institute. The partnerships we have entered into have benefited CITN in more ways than one. It has increased our membership strength and impacted on our visibility.

How has CITN monitored and handled issues of professionalism and ethics among members?
The Institute has in place a Tax Practice Monitoring Committee that is saddled with the responsibility of liaising with members in practice towards ensuring their professional affairs are carried out in line with the membership rules and practice guidelines. We also have the investigating Panel and the Disciplinary Tribunal, which were set up as provided for in the CITN Charter, to investigate and recommend disciplinary action to be taken when there are established cases of breach of ethics and membership codes by members. We regularly engage with our members to emphasise the need for professional and ethical conduct.

Has FIRS supported the new rules on CITN’s stamp and seal on tax returns?
FIRS has been supportive and had expressed its desire to work with the institute towards promoting professionalism in tax practice and administration in Nigeria. However, there are pending litigations at the courts by some individuals and organisations with regards to this approval.

What has been the response of members in obtaining the stamp and seal?
The response has been impressive. We are hopeful that when the legal issues around this new rule are resolved, we would have more members applying for the institute’s practising license.