The Federal Inland Revenue Service would lose an estimated sum of N92bn which it is expected to earn as cost of collection if the judgement of the Federal High Court asking states government to collect Value Added Tax in their domain is upheld by the Appeal Court.
The Act that created the FIRS empowers the agency to a percentage, as determined by the National Assembly, as its cost of revenue collection from non-oil taxes before remitting same into the federation account.
A report on FIRS official website revealed that the service collects four per cent as cost of collection for non-oil revenue collected.
In the 2016 fiscal period, the FIRS received the sum of N85.99bn as cost of revenue collection, while it got N100.3bn as the cost of revenue collection in 2017.
In the 2018 fiscal year, the service got N114.1bn as the cost of revenue collection out of the N5.32tn actual revenue it generated for that year.
According to documents obtained from the Budget Office, the FIRS received an estimate of N112bn and N121bn as cost of revenue collected in 2019 and 2020 respectively.
With a projected VAT pool of N1.3tn in 2021, the FIRS is expected to earn N68bn in the 2021 fiscal period based on the cost of collection rule.
Based on the Medium-Term Expenditure Framework/Fiscal Strategy Paper 2022-2024, the Federal Government is proposing to generate the sum of N2.3trn from VAT in 2022.
With the FIRS entitled to four per cent as cost of collection, it implies that the service is expected to earn N92bn in 2022 as cost of revenue collection.
