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FIRS to improve revenue from VAT collections

By BusinessNews Staff on June 4, 2014

The Federal Inland Revenue Service says it has begun moves to improve its revenue collection from Value Added Tax especially in the financial services sector.

The Acting Executive Chairman, FIRS, Alhaji Kabir Mashi, said this at the opening session of the Association of Tax Administrators Forum on Monday in Abuja, adding that the move became imperative owing to the rapid expansion of the sector.

The seminar, which focused on how to build capacity in the area of VAT in the financial services sector, was attended by delegates from 12 African countries.

Mashi, who was represented by the Coordinating Director, Modernisation Group, Mr. Osy Chuke, explained that tax treatment of financial services was one of the most debated issues among countries.

He said most African countries exempted financial services sector from VAT because it was technically difficult to measure the value added on financial services on a transaction-by-transaction basis.

He urged the forum to come up with workable solutions on how best to apply VAT on financial services.

The FIRS boss listed some of the areas for consideration as financial intermediation service (lending and deposit taking), fee-based services such as electronic banking, agency services, advisory and consultancy services, asset management and other margin-based financial services.

He said, “Financial sector in most African countries is rapidly expanding and undergoing significant reforms. The reforms are improving service delivery and bringing on new financial products, services and intermediation architecture.

“The tax treatment of financial services is one of the most debated. One reason for this hinges on the characteristics of financial services, which tend to allow the object of a financial transaction to undergo easy and rapid changes over time.”

The Director, Institutional Development, ATAF, Mr. Kennedy Onyonyi, said the seminar was organised in order to address the needs of members in the area of VAT in financial services

He said, “We are facilitating capacity building to help our members to carry tax administrative reforms that will be beneficial to them. VAT is important for us and we want to give it due attention owing to its revenue generating potential.

“It is, however, problematic when it comes to international trade owing to its potential for double taxation and this is why there is a need to come up with global standards to ensure there is an element of uniformity to enable counties to align their statutes with global standards.”

[Punch]

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