The Federal Inland Revenue Service, FIRS is implementing a unified communications platform enabling its staff to communicate seamlessly via data, voice, video, and chat enabling real-time communications amongst staff. Kola Okunola argues that ICT facilitates the establishment of an efficient and transparent tax administration, delivering quality services to tax payers while improving revenue collection and voluntary compliance.
Against the background of the resolve to modernise the FIRS in other to remain relevant and virile in the face of economic realities, the Service adopted a program of reforms along seven strategic flanks. These include: Funding FIRS/Acquiring autonomy; Strengthening investigation/enforcement; Auditing oil, gas and large taxpayers; Providing taxpayer education and services; Re-engineering and automate collections/tax administration system; Building capacity in the areas of structure, staffing and specialization; and, Re-engineering and automating human resource processes, finance and procurement.
In 2004, a new administrative structure was announced by the FIRS. As a first step, collection was integrated as a function of the ICT and PRS Division. Further, the different VAT and Area Tax Offices were collapsed into one-stop tax offices under the name Integrated Tax Offices (ITOs).
At the initial stage, the management of FIRS understands that without fully embracing technology it will be difficult to realise Nigeria’s dream of becoming one of the largest economies in the world by 2020. For instance, online filing and tax payment needs to be introduced to reduce the compliance time and the associated cost. In addition, it will also help reduce human interaction between the taxpayers and the tax officials which could also help in checking sharp practices. Indeed, Nigeria embraced technology in tax administration to support electronic remittances and filing of returns which will reduce the burden on taxpayers and make doing business easier.
To achieve the desired efficiency, the following enterprise business applications were deployed:
- The use of paydirect software to collect tax through all approved collecting banks
- A web portal for online, real time monitoring of collection
- A tax payer database with unique tax payer identification numbering capability
- Electronic access to FIRS domiciliary account held offshore by the Central Bank of Nigeria, via AutoShift
- Connectivity of revenue house and integrated tax office through Wide Area Networks around the country
- Business continuity and disaster recovery site in Lagos
- Online payment portal tax card
- Integration with third party databases (integration with NCS and CAC)
- Electronic document management system
- Connectivity of all FIRS office through fiber optics
- Unified communications
To give effect to these enterprise applications, it became clear that a robust WAN connectivity of the zonal/branches to the Head Office was of necessity.
Deployment of VSAT
In 2004, the FIRS embarked on a process modernization. One of the major outcomes was a change from a distributed processing model to a centralised processing platform. To this end, enterprise applications were deployed at the head office and were made accessible to the zonal offices through the WAN. This led to increased IT usage by users and also saw a sharp increase in bandwidth demand.
The connectivity of FIRS’s head office with all its zonal offices/branches nationwide through a Wide Area Network (WAN) was part of its modernization process. So, in order to meet increased demand for bandwidth, the FIRS in 2006 installed VSAT earth station at the head office which serve as the communication hub and the installation of another earth station at every zonal/branch that needs to connect to the FIRS network. A satellite transponder deployed by INTELSAT facilitates the communication between earth stations.
Accordingly, VSAT deployment enabled connection between the Head Office, with a fail over site in Lagos as well as other tax offices nationwide. This has enabled a real time communication and information sharing. It has enabled us quickly deploy WAN connectivity to remote locations where our offices are located.
Apart from upgrading the VSAT links, the need for faster network also became of immediate necessity. As a result of these, an additional WAN link, a fibre-based terrestrial WAN to each of the zonal offices in the star topology was installed. The VSAT and the terrestrial WANs are configured in auto-failover mode such that if any of the links is down, the other one takes over automatically.
The system was integrated with the payment platform PayDirect and our collecting banks. The system has greatly improved our ability to track and account for taxes paid and provides us with a central repository of taxpayer data. We are in the process of further enhancing our tax administration system with the deployment of the new Integrated Tax Administration System (ITAS). At the end of the process FIRS established an even more robust tax administration system and vastly improved capabilities to provide better service to taxpayers.
Automation of Key Processes
Project FACT (Friendly, Accurate, Complete and Timely) was conceived and implemented for the purpose of automating tax collection. Under the new system, taxpayers pay directly into collecting banks, which, in turn, remit to the lead banks, which then transmit the funds to the Central Bank of Nigeria. With the aid of appropriate software technology, the whole process is monitored real time by the Tax Revenue Accounting Department. This system has replaced the old system which was prone to abuse because tax payments were frequently done by way of negotiable instruments. In addition to tax collection, other processes such as finance procurement, human resources and payroll administration, which, because of the manual nature, were prone to abuses are also being automated to ensure system integrity. The Records Management and Document Tracking, RMDT, was introduced in 2006 to tackle the challenges that hampered efficient handling of records in FIRS which in turn impacted negatively on FIRS ability to meet stakeholders’ needs and expectations.
In addition, Nigeria has introduced unique Taxpayer Identification Numbers (“TINs”) as a means of ensuring registration by taxpaying units (whether individuals or corporates). This is a strategy facilitated by the development and spread of digitalisation and communication technologies. The existence of a TIN “forms the basic building block for revenue administration IT systems, as it allows connecting taxpayers to their returns, payments and major taxable transactions with third parties”. Field surveys to detect unregistered taxpayers, as well as extensive publicity campaigns, have often accompanied the introduction of TINs.