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Nigerian crackdown on firms that avoid taxes

Nigerian crackdown on firms that avoid taxesNigeria has hunted down 700,000 firms that have never paid taxes as the country seeks new revenue sources to offset low oil prices that have pushed Africa's biggest economy into its first recession in more than 20 years, Reuters reported, citing its tax chief said.

Tunde Fowler, executive chairman of the Federal Inland Revenue Service (FIRS), said in a rare interview that he also expected 10 million individuals to be discovered by December and made to pay taxes for the first time.

The OPEC member slid into recession in the second quarter and militant attacks on oil facilities in its Niger Delta region have cut crude production, which provides 70 percent of government revenues, by around a third.

The government, struggling to fund a record 6.06 trillion naira ($18.6 billion) 2016 budget that aims to stimulate growth by tripling capital expenditure, set FIRS a target of raising 4.95 trillion naira in taxes, up from 3.73 trillion last year.

Persuading Nigerians to pay tax is no easy task. FIRS does not appear to be on track to meet its target for tax collection so far this year, but experts believe it can do better in future.

"We collected a little over 2.3 trillion, so far - from January to 31 August. It is almost at par with last year but take into consideration that the economy is going through a little slowdown," said Fowler.

He said revenue from value-added tax (VAT) had increased by 25 percent year-on-year and corporate income tax held steady over the same period but petroleum profit tax was expected to have halved, mainly due to low oil prices.

Fowler, appointed last year after a stint as tax chief in Lagos where monthly tax revenues surged by 70 percent in the four years to December 2012, said FIRS expects to generate 5.2 trillion naira in 2017.

The tax chief said a new unit created at the start of the year had deployed inspectors armed with laptops to update databases, registering businesses and individuals who are then tracked to check whether they have paid taxes - business executives say they get "aggressive" visits from tax inspectors.

"We have been able to add about 700,000 companies and we expect to add about 10 million individuals across the nation (by December)," said Fowler, adding that this would bring the total of registered individuals to 20 million.
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