THE PROSPECT AND CHALLENGES OF THE JOINT TAX BOARD TAX IDENTIFICATION NUMBER REGISTRATION SYSTEM IN NIGERIA
By Kilanko Ewaoluwa.
Death and taxes they say are the only certain things in life, but uncertainty lies beneath the Nigerian tax system. The uncertainty stems from double taxation, the dearth of statistical data, ineffective tax administration and conflicting tax jurisdiction. These challenges create uncertainties in minds of taxpayers as to the amount of tax payable, the convenience of payment, the body to remit the tax to and tax administration which in turn leads to the low rate of tax compliance in Nigeria and a higher rate of tax avoidance and evasion. This uncertainty seems to be cured by the newly introduced taxpayer identification number registration system.
The Joint Tax Board taxpayer identification number registration system was inaugurated by Vice President Yemi Osinbajo on the 1st of July 2019 in Abuja. The Tax Identification Number (TIN) is a unique identification number for individuals or companies for tax remittance. The TIN is prepared by the tax office and issued to individuals and registered companies for proper identification and verification. Individuals automatically get a tax identification number based on their bank verification number or their national identity number and companies can get their tax identification number by registering online. As a registered taxpayer, you are entitled to have a tax identification number at little or no cost at all. The Joint Tax Board(JTB) identification number system is an initiative for building and consolidating the national unified taxpayer database for individuals and corporate entities. Fowler, the immediate past chairman of the JTB and FIRS while addressing the press said that the system brings innovation, convenience, and transparency to tax authorities and taxpayers by enabling tax authorities to effectively manage their taxpayer base and enabling taxpayers to view, retrieve and update their tax profiles at their comfort and convenience.
Due to the various challenges facing Nigeria’s tax system such as double taxation, a dearth of statistical data, ineffective tax administration and the conflict of tax jurisdiction, Nigeria has decided to join the train of electronic taxation through the introduction of the TIN. The prospect of this new initiative also runs through the fact that the dearth of data in Nigeria made it difficult for tax officers to properly ascertain all eligible taxpayers and the amount and type of taxes they are to pay. The FIRS in collaboration with Corporate Affairs Commission (CAC), Nigeria Customs Service (NCS), Nigeria Immigration Service (NIS), Federal Road Safety Corps (FRSC), Central Bank Of Nigeria (CBN), Nigeria Interbank Settlement System (NIBSS), Nigeria Identity Management Commission (NIMC) and the Nigerian Communication Commission (NCC) will have access to data of all taxpayers and businesses.
Also, the tax identification system will facilitate the ease of doing business which will help Nigeria achieve its economic objective in line with the Economic Recovery and Growth Plan (ERGP). The new initiative will reduce incidences of tax avoidance and tax evasion, late filing of tax, double taxation, and corruption. Instead, it will lead to integration and uniformity of tax system in Nigeria, greater efficiency, sharing of tax information among State Board of Internal Revenue Service (SBIR), it is also a prerequisite for the registration of vehicle, sale and purchase of immovable property, import and export license, application for plots of land, entry visas and registration as a contractor.
Since the prices of oil crashed in 2014 Nigeria has difficulty in financing her budget because crude oil is the main source of revenue in Nigeria and since the oil crisis started, the nation has been looking for various avenues to raise revenue for government operation. Much attention has been paid to the tax sector due to the fact that the government is beginning to realize that so many Nigerians don’t pay tax and that there are so many sectors of the economy that can be taxed. In a bid to widen the tax base of the nation and to make sure eligible Nigerians are in the tax net, the tax identification number if successful will go a long way in achieving this objective. If all taxpayers have tax identification numbers, it will be easier for them to pay tax and there will be fewer occurrences of tax avoidance and tax evasion.
Several counties apart from Nigeria use the tax identification number system, individuals have a Tax Identification Number System in the form of social security number while businesses are assigned with Employer Identification Number. In India we have Permanent Account Number (PAN), in Singapore, we have Unique Entity Number (UEN) and in Hong Kong, we have Business Registration Identity Card Number (BRID)
One of the main challenges of the tax identification number system is the question of the readiness of the country. As a nation, are we ready for this type of development? Does Nigeria have the technological capacity to operate digital taxation, especially bearing in mind the intricacies required for a transition to the digital tax system? A proper transition from a paper-based system requires access to the internet, well trained digital personal, availability of computer equipment for tax officers and access to electricity for the tax officials. Even if all of the above is present, adequate maintenance of these systems because the systems are machines that need to be maintained.
There is also the challenge of the security of data of Nigerian citizens. As it is well known, data is the new oil and a lot of governments and establishment needs data either to facilitate their operations or for some other unlawful purposes. Is it guaranteed that the data of every Nigerian citizen which the tax authorities have access to will not be used for unlawful purposes, it will not be a breach of the citizen’s right to privacy and it will not expose citizens to danger?
There is also the challenge as to how the FIRS intends to educate the masses about this new improvement. The FIRS has to give a blueprint on how they intend to educate the masses about this new improvement, how they intend the public to trust the efficiency and reliability of this new tax system.
In conclusion, with the introduction of the Tax Identification Number system, there will be proper administration of the tax system coupled will an increase in tax revenue.
ABOUT THE AUTHOR
Short bio: Kilanko Ewaoluwa is a 500 level law student at the University of Lagos. She is interested in Taxation, Intellectual property, and Entertainment law. She is an avid reader and writer. You can reach her via:
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