Nigerian Govt. generates N4.09 trn as Petroleum Profits Tax returns in 2022

Oredola Adeola

The Federal Inland Revenue Service (FIRS) has revealed that Nigeria collected a total of N4.09 trillion as Petroleum Profits Tax returns, being part of the over N10 trillion tax revenue generated in the year 2022, compared with N2.008 trillion (PPT) it generated in 2021.

This was revealed in a statement released by Johannes Wojuola, Special Assistant (Media Communication) to Mr. Muhammad Nami, Executive Chairman, FIRS, in the agency’s “FIRS 2022 Performance Update,” report released on Monday.

EnergyDay’s check showed that the oil tax collection for 2022, stood at 41% of the total collection, compared with 31.36% of the total collection for 2021.

According to the statement, the over N10 trillion in tax revenue in the year 2022, made up of both oil (N4.09 trillion) and non-oil (N5.96 trillion) revenues, was the highest tax collection ever recorded in its history.
FIRS said, “Oil tax collection stood at 41% of the total collection, while non-oil taxes contributed 59% of the total collection in the year.

The report further clarified that included in the total revenue sum for 2022 tax year, was the sum of N146.27 billion which is the total value of certificates issued by the Service to private investors and NNPC for road infrastructure under the Road Infrastructure Development Refurbishment Investment Tax Credit Scheme created by Executive Order No. 007 of 2019.

It also noted that the N10.1 trillion is exclusive of tax waived on account of various tax incentives granted under the respective laws, which amounted to N1,805,040,163,008.

Wojuola in the report revealed that the unprecedented tax collection was predicated on that the Muhammad Nami-led management upon assumption of office came up with a four-point focus, namely: administrative and operational restructuring.

Part of the focus also includes making the service customer-focused; creating a data-centric institution; and automation of administrative and operational processes.

He  further noted that over the period of 2020 to 2022, the management of FIRS introduced reforms bordering around these four-point focus which was instrumental to the impressive year-on-year results.

The FIRS Chairman’s Special Assistant (Media Communication) said, “By the close of 2022, the Service had fully restructured the administration of the Service for maximum efficiency and achieved internal cohesion such that all functional units are working in unison towards the achievement of set goals.

“As a result of the conducive environment created for staff, officers of the Service are pulling their weight on the global stage with international recognitions and awards.

“The Service had also automated most of the administrative and operational processes. A major leap was the full deployment of the TaxPro Max for end-to-end administration of taxes in June 2021. The module for the automated TCC went live 1st January 2023 while taxpayers had already downloaded over 1,000 TCCs this year without having to visit the FIRS office,” he noted.

Executive Chairman of the FIRS, commenting on the N10.1 trillion record tax collection achieved under his leadership stated that this was made possible through “dogged implementation of strategic reforms over the past two years; a renewed commitment by officers of the Service, accompanied with a boosted morale; as well as the innovative deployment of technology for automation of both tax administration and operational processes.

“This collection was possible through collaboration with our stakeholders, from our colleagues at the Executive branch of government, to the members of the judiciary, to our brothers and sisters at the National Assembly, as well as the tax advisory committee, professional bodies, unions, and most crucially our taxpayers.

Speaking on the outlook for 2023, Mr. Nami stated that the Service would build on the current reforms, achieve full automation and continue to establish a resilient Service that would continue to provide sustainable tax revenue to fund the government.

“We intend to maintain, and even improve on the momentum in 2023,” Nami said.

The FIRS Chairman disclosed that the 2022 collection represents an over one hundred percent leap from the tax collected by the Service in 2020—the first year of the current management of the Service.

The National Assembly had on December 28, 2022, passed Nigeria’s Finance Bill 2022, amending the Petroleum Profits Tax Act (PPTA) to align with the Petroleum Industry Act (PIA) including penalties for making incorrect or late returns, recognition of the Nigerian Upstream Petroleum Regulatory Commission, tax-deductibility of contributions to approved decommissioning and abandonment fund.

The Bill approved decommissioning and abandonment funds, schemes, etc. are tax deductible under the Petroleum Profits Tax Act.

The Finance Bill, which was expected to be applicable from January 2023, is however awaiting President Muhammadu Buhari’s assent.

Experts have suggested that the Petroleum Industry Act has lowered oil companies’ taxes, adding that the act is to be considered as only the first step towards creating an atmosphere conducive to investment in the oil and gas industry.