FIRS: States Mull Digital Tax Technology As Revenue Shortfalls Hit 40%

Heads of Inland Revenue Service (FIRS) of the 36 states of the federation on Monday gathered in the Federal Capital Territory (FCT), Abuja, to consider ways of adapting new technology and Innovations available to improve revenue collection in their various states.

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The new development is prompted by the findings by the Nigerian Governors’ Forum (NGF) that tax collected from contact-intensive taxes fell by an average of 40 per cent across all states in Nigeria during the period of the lockdown.

The Secretariat of the Forum organized a programme tagged: NGF’s Technology and Tax event to help facilitate the scale up of modern, taxpayer-friendly, and technology-driven revenue administrations in all States of the federation that will be capable of providing world-class services; characterized by efficient, paperless operations, and equipped with ICT-enabled risk-based enforcement capable of optimising their revenue mobilization strategies.

Director General of the Nigerian Governors’ Forum Secretariat, Asishana Bayo Okauru hinted that the figure was the outcome of research conducted by the Secretariat last year.

He said the result was a big lesson which exposed the criticality of internet-based business support systems and payment platforms for the automation of all back-end operational processes and payments across all revenue streams.

Okauru also noted that the lessons learnt from the research showed that most contact-intensive taxes are at risk, adding that all revenue administrations need to move to a digital future.

“Lessons of the COVID-19 pandemic have pointed to one direction – that all revenue administrations need to move to a digital future.

“Specifically for tax authorities, one big lesson that we have learnt is the criticality of internet-based business support systems and payment platforms for the automation of all back-end operational processes and payments across all revenue streams.

“From our research last year, we already know that most contact-intensive taxes are at risk, given the lessons we learnt during the period of the lockdown where taxes collected from contact-intensive taxes fell by an average of 40 per cent across all States in Nigeria.

“Coupled with a weak environment for tax policy and tax legitimacy, low technological integration in tax administration has undermined efforts to mobilise domestic revenues in the country.

“This has undermined the capacity of tax authorities to collect taxes efficiently and the ability of taxpayers to meet their tax responsibilities conveniently” he said.

Also speaking, Mohammad Nami, the Chairman, Federal Inland Revenue Service (FIRS), stressed the need to look inwards on how to improve the revenue of the states to augment the shortfall of allocations from the Federation Account, insisted that taxation all over the world has always been the most reliable and sustainable source of government revenue if well harnessed and effectively administered.

Nami regretted that the reliance on oil revenue in the previous years has exposed the country to huge revenue challenges and resulted in poor budget implementation across the three tiers of government.


nion Bank

Union Bank grows full year pre-tax profit by 2.8% to N25.4bn

Union Bank has released its audited financial statements for the year ended December 31, 2020. The bank’s results on the Nigerian Exchange (NGX) Limited for the full year period shows sustained growth in key income lines and significantly improved fundamentals notwithstanding a constrained operating environment largely due to the impact of the Covid19 pandemic.

Union Bank’s investments in technology and building a progressive work culture over the past eight years, enabled a swift response to the pandemic that allowed our workforce transition to remote working while maintaining the productivity required to deliver these strong set of results in 2020.

Here are the bank’s financial highlights

Profit before tax: up 2.8percent to N25.4billion (N24.7billion in FY 2019); Gross earnings: down 1.9percent to N156.9billion (N159.9billion in FY 2019); Net operating income after impairments: up 8.3percent to N103.4billion (N95.5billion in FY 2019); and Net interest income before impairment: up 10.1percent to N56.9billion (N51.7billion in FY 2019) due to reduced interest expenses.

Non-interest income: up 1.6percent to N44billion (N43.3billion in 2019) driven by growth in net trading income as well as revaluation gains; Operating expenses: up 10percent to N78billion (N70.8billion in FY 2019) due to an increase in regulatory and technology expenses; andGross loans: up 23.8percent to N736.7billion (N595.3billion in FY 2019) driven by targeted lending to key sectors of the economy.

Also, Customer deposits went up 27.6percent to N1.13trillion (N886.3billion in FY 2019) reflecting the bank’s agility in delivering a compelling range of products to our customers during the pandemic and increased adoption of our digital channels; non-performing loans ratio: down to 4percent from 5.8percent (FY 2019) driven by a disciplined recoveries strategy (N7.2billion in 2020), a more robust loan book and key restructurings to support customers during the pandemic.

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Subject to shareholders’ approval, a dividend of 25 kobo per 50 kobo share is being proposed.

In December 2020, the bank’s Chief Executive Officer, Emeka Emuwa announced his retirement effective March 31, 2021. Following a successful search process, the Board has appointed Emeka Okonkwo, an Executive Director currently leading the Bank’s Corporate Banking business, to succeed him. Emeka Emuwa served as CEO for eight years and led the Bank’s transformation and repositioning as a key player in the Nigerian financial space.

Commenting on the results, Emeka Emuwa, CEO said: “The Bank has delivered a strong set of results notwithstanding the impact of COVID-19 on our operations and the wider economy, enabling the Board of Directors to continue to return value to shareholders with a proposed dividend payment for the second year in a row. This demonstrates the strong foundations we have built, as we continue to deliver against our target of becoming a leading financial institution in Nigeria.

“For the full year, we grew across key income lines. Net income after impairments grew 8.3percent from N95.5billion to N103.4billion and translated into 2.8percent growth in Profit Before Tax to N25.4billion from N24.7billion.

The core of this performance is driven by the growth in our loan book, with 23.8percent increase in gross loans, to N736.7billion from N595.3billion in 2019.”

Speaking on the FY 2020 numbers, Chief Financial Officer, Joe Mbulu said: “We are pleased with both our top and bottom-line performance in 2020, in light of the impact of the pandemic and economic challenges.

Significant inflationary pressures and the translation of currency depreciation drove growth in our cost base, however we maintained strong control, limiting operating expense increase to 10percent (N77.9billion from N70.8billion), well below the rate of inflation. Consequently, we saw marginal increase in our cost to income ratio to 75.4percent from 74.1percent.

Our customer deposits hit a milestone during the year, crossing the N1trillion mark to N1.131trillion from N886.3billion in FY 2019, an increase of 27.1percent.

Low cost deposits were up by 17percent, constituting 68percent of total deposits helping to push cost of funds down by 1.4percent.