What FIRS needs to do is to increase its VAT collection mechanism so that it could reach out to all registrable VAT persons so that the effect of collection of VAT would be universal.
A former President of Association of National Accountants of Nigeria (ANAN), Dr Samuel Nzekwe, said the Federal Inland Revenue Service (FIRS) registered less than 50 per cent of VAT-able persons in the country.
Nzekwe stated this in an interview with the News Agency of Nigeria (NAN) on Monday in Lagos.
He said that the nation had lost a lot of revenue to evaders of Value Added Tax (VAT).
According to him, the major problem facing VAT administration is the inability of the FIRS to register all VAT-able persons.
"As a result of this, a lot of revenue has been lost over the years since the beginning of VAT Administration in Nigeria.
"What FIRS needs to do is to increase its VAT collection mechanism so that it could reach out to all registrable VAT persons so that the effect of collection of VAT would be universal.
FIRS had been lagging behind because it would wait until people come to the office looking for government job or tax clearance,’’ the accountant said.
Nzekwe said the problem as far as VAT is concerned, "is how to increase collection of the VAT revenue’’.
"Few people are registered as VAT agents while a lot of people are not registered and they are operating in the same environment selling the same commodities.
"The business of that person who registered as VAT agents would go down because of the charges on VAT, while people would buy at cheaper rates from those who are not registered VAT agents,’’ the ex-ANAN president said.
Nzekwe, however, commended the Federal Government for not yielding to pressure to increase the VAT rate.
He explained that the people who bore the burden of VAT were the final consumers of such goods and services.
The accountant said that the falling value of the naira to N300 to a dollar in the parallel market was a clear indication of the inflationary effect on the devaluation of the naira.
"If the effect of VAT is added, the rate of inflation will be very high and the common man, particularly those with fixed incomes would suffer so much hardship.
"A steady increase in the price of all goods and services with lack of adequate power, unemployment and basic infrastructure, if VAT is added, would add to the suffering of the people,’’ Nzekwe told NAN.
He urged players like tax consultants, accountants and even the tax payers to listen to suggestions.
"In most cases, the penalties which the FIRS invoked are more than the total assets of a company.
"FIRS should display human face with the penalty imposed over non-complaint with VAT law
"The penalty imposed is unnecessarily punitive,’’ the ex-ANAN president said.