Tax Management at Bp Holdings: Expert says, use of consultants for tax collection by all tiers

Use of consultants for tax collection by all tiers of Nigerian government illegal, says expert Mark Abuh described the use of tax consultants as an aberration. A tax expert, Mark Abuh, on Friday, said that the use of consultants by different tiers of the Nigerian government to collect taxes and levies was illegal. The federal government, several states, and local governments engage consultants for tax collection. Mr. Abuh, who is the Tax Adviser to Growth and Empowerment in States (GEM3), a Department for International Development (DFID) sponsored programme, made the disclosure in an interview with the News Agency of Nigeria in Abuja. He said that the use of consultants in tax collection had become a trend, but described it as an aberration, which was being done at the detriment of appropriate government officials. He added that Decree 21 of 1998 prohibits the use of consultants for assessing and collecting taxes and levies by any tier of government. Mr. Abuh also said that the use of consultants by some state and local governments was one of the factors that led to multiple taxation of citizens and organisations. Section 1(1) states that notwithstanding anything contained in the Constitution of the Federal Republic of Nigeria 1979, as amended, or in any other enactment or law, no person, other than the appropriate tax authority, shall assess or collect tax or levy. He stressed that nobody, other than appropriate government agency and officials, shall on behalf of government, collect tax or levy as listed in the Schedule to this decree. Sub-section 2 states that no person, including a tax authority, shall mount a road block in any part of the federation for the purpose of collecting any tax or levy. The tax expert pointed out that the Tax Act provides that the Board of Internal Revenue in a state could delegate some of its non-core functions to tax consultants but not for the assessment and actual collection.

The core functions of assessment, collection and enforcement of tax are functions you cannot delegate to consultants but many state governments have gone outside the law to do so. Revenue consultants are multi-disciplinary professionals with expertise and resources in revenue generation, financial, taxation, management and advisory services. Abuh said that consultants had often used means other than what the law prescribed to collect taxes and levies in local government areas. He observed that many state governments spent between 10 per cent and 50 per cent of their revenue on consultants and failed to improve the capacity of their revenue staff. Currently, the Personal Income Tax (Amendment) Act specifies that every Board of Internal Revenue is entitled to about five per cent of all collections to run its own activities but the states prefer to spend more on consultants, he added.