FCT-IRS activating tax initiative to rally IGR

There have been several expert interventions on the need to evolve strategies aimed at increasing the Federal Capital Territory’s internally generated revenue to cater to the growing population needs in the area of infrastructure.

The geometric increase in the influx of people from other parts of the country into the FCT has made it one of the fastest-growing cities in the world.

Today, one of the basic challenges in the FCT is its deficient transportation system. The residents, especially those in the suburbs, will require a robust transportation system to commute to the City Centre. Portable water supply is another challenge. These problems would require an innovative approach to revenue generation for the FCT to cope with the demands for a world-class federal capital.

The onus to make these infrastructural developments a reality lies vastly with the Federal Capital Territory-Inland Revenue Service (FCT-IRS), forcing it to dig deep and activate provisions that would enable it to meet the task ahead.

Speaking with Daily Trust, The Executive Chairman, FCT-IRS, Mr Haruna Abdullah, said going forward, residents of the FCT will need a Tax Clearance Certificate (TCC) to get any kind of service from the FCT.

Abdullah said: “About a month ago, there was a circular. I’m sure some of you might have seen it, where the FCT Minister, Nyesom Wike, approved the implementation of Section 85 of the Personal Income Tax Act and Section 31 of the FCT IRS Act.

“You must file your returns, you must get a tax clearance certificate because you cannot register your vehicle, DRTS will have to get a TCC and verify it.

“We are now collaborating with all relevant agencies, such that we just do our part, and then you receive an email from us to say, Yes, this TCC is ours; it’s fake, it’s valid, it has expired, and then it gives you the go-ahead.”

He further explained that the FCT-IRS Act empowers the minister to come up with a property tax regulation for the FCT.

He said after a long conversation, the FCT-IRS would come up with a draft regulation and the FCT minister has approved the initiative.

The move is not all that the FCT-IRS is coming up with, Abdullahi also disclosed that the service is taking it further to say there are huge revenue areas in FCT. “The FCT, if you look at it, does not get any revenue apart from its IGR. And so what is the IGR here? It’s the land and the properties that are here.

“So we have to make sure that everything is attached to that, and we have to give reasons for people to do that. And that is now where a lot of things are linked to your compliance with TCCs.”

Abdullahi also noted that Wike has also approved the full implementation of the capital gains tax in Abuja, adding that the implementation of the tax would increase the revenue targets of the FCT.

The term capital gain refers to the increase in the value of a capital asset when it is sold. Put simply, a capital gain occurs when you sell an asset for more than what you originally paid for it.

Almost any type of asset you own is a capital asset. This can include a type of investment like a stock, bond, or real estate, or something purchased for personal use like furniture or a boat.

Capital gains are realised when you sell an asset by subtracting the original purchase price from the sale price. The Internal Revenue Service (IRS) taxes individuals on capital gains in certain circumstances.

Abdullahi said, “Just recently, we inaugurated another committee, and we are now implementing the Capital Gains Tax law. Previously, people just voluntarily went and paid, so there was very little payment in terms of capital gains tax.

“But now we have briefed the minister, and he has approved the inter-agency collaboration, so we are now going to begin to implement the capital gains tax fully.”

The search for revenue by the FCT-IRS is both vertical and horizontal, which has seen the service take over responsibility from the Federal Inland Revenue Service (FIRS).

The FCT-IRS Act was passed in 2015, but operationally, it did not start until January 2018. “As of 2017, what FIRS used to collect was about an average of 40 billion per annum. As of today, we have done about 145. The last report was about 140, but that was two weeks ago, so it’s about 145. You know that is huge, and that is just even without these tax types that are not performing.”

He said at the time, the FCT-IRS was about number six nationally. Today, it is hovering between second and third.

When asked about citizens’ concerns about the lack of basic infrastructure in the FCT, Abdullahi noted that it’s a very valid question. “If you’ve been following the story of his excellency, the minister, you will see a lot of activities, and you hear a lot of his statements, talking about, look, we need revenue, we need this, we need that. If you look around the city, to be fair to him, you will see things are happening.

“But there are bigger issues than that. Of course, security, social services, health issues, and so many other issues. You’ll find today that when you go to some areas, they are the ones building roads to their estates. We see all of these issues. So, but for me, I’ve always said, look, we have a huge basket, and it’s a responsibility issue. Throw into the basket, first, your own obligations. We all have civic responsibility. But sometimes, we don’t do anything.

“And then we also go back to the government, to say the government is not doing this or that. But today, if you pay all your obligations, and file your returns, it gives you that sense of purpose, right? And then you can engage.”

Abdullahi also reiterated that the FCT can fund its budget 100% from IGR. “In one of the meetings with the minister, I told him that the FCT should fund or can fund its budget 100% from its IGR. And that’s no lie.’

He said the service is set to launch a self-service portal because it sees that the offices are not enough. “So we want to make sure you don’t go to the office; just stay in your room, go onto your phone or iPad, file your returns, make your payment and receive your TCC as an email. You don’t need to see us,” he added.