Why FIRS Awarded Telcoms’ VAT Calls Audit Contract To A New Firm -Fowler
The Chairman, Federal Inland Revenue Service, (FIRS) Mr. Tunde Fowler, has dismissed the claim that the Service, awarded huge contracts to a young company, Active Solution Integrated Synergy without following procurement process.
Speaking while appearing before the House of Representatives Ad-Hoc Committee on Procurement, Fowler said FIRS’ vote for the company was on account of the national revenue emergency, which demands that FIRS thinks outside the box to generate enough revenue for the nation.
“The proposal from Active Solution Integrated Synergy Ltd, came at the nick of time when FIRS tax revenue collection was nose-diving as a result of the recession in the economy and the perpetual fall in crude oil prices which exerted more pressure on non-oil revenue. Government set high revenue targets which FIRS was expected to meet,” Fowler told the Reps.
He stated further, “FIRS was determined to pass the litmus test set by the high revenue target and is poised to provide succour to government funding challenges. This, FIRS did by declaring state of emergency in tax revenue collection. The strategy adopted by FIRS to boost tax revenue collection was to deploy more automation in the tax revenue collection machinery to deepen the already existing automated platform and catch transactions which may have escaped the tax view before now.
“This trend prompted FIRS to adopt automations that facilitate handshake with some specific sectors of the economy. As we are all aware, telecoms sector is an area that the transactions are not very open to many and there has been no lucid knowledge about revenue presentations in-spite of the much accountants have been able to report. This is attributable to the total automation of their operations. The only way to crack into such systems was to allow for operators who understand the terrain to lend a helping hand with a view to achieving more tax revenue.
In continuation of this drive for automation, Fowler said FIRS launched the following solutions recently e-Registration; e-Stamp Duty; online payment: e-tax pay, Remita; e-Receipt; e-filing and online Tax Clearance Certificates (TCC).
The FIRS Chairman however explained that it acted in the national interest on a contract that will give Nigeria more revenue, yet was at no cost to the nation.
“In other words, if Active Solution Integrated Synergy generates no revenue from its VAT recovery efforts, it is not paid a dime,” Fowler declared.
He explained too that it was for a company that had the sole expertise on the technology and telecoms calls audit that had never been done in Nigeria.
The company also had a track record in United Kingdom and about 10 countries in Africa, including Ghana.
The contract was at no cost to the nation, as it had no financial commitment or upfront payment to the consultant.
Rather, Fowler told the committee, companies given contracts on recovery of VAT on International calls on telecoms were to be paid only 1 per cent of the value of the money they generate.
This, he noted was better than the old practice, where consultants were paid for such jobs either they pull in money or not.
“What we did was that we sought out companies with history and demonstrated expertise in ICT sector for which there is no demonstrable expertise available locally.
“The proposed solution is an intellectual property of Active Intelligence Ltd and the company has exclusive rights over the solution. FIRS engaged the company given its expertise and experience to deliver and also given experience of the Directors and Technical Partners of the company
“The company went through a process of six months before we agreed that it has value and experience to add value to our job. The company showed us what it had done in Ghana. It was novel and it had not been done in Nigeria. The UK Company is called Active Intelligence Limited. It has established itself as a leading ICT company in Africa and has a presence in Ghana and 10 other African.
Fowler told the committee that the Nigerian arm of the company was registered on 2 December 2016 and was awarded the contract on 23 January, 2017 to deploy IT solution to deduct VAT on Telecom companies.
“In agreeing that the company should handle the VAT audit of telephone calls, we also considered other benefits like technology transfer and development of local knowledge. We then insisted that the company must be registered in Nigeria which it did.
“We took them through the Procurement process. It was a technology exclusive to them. And Section 42 (1) a & b of the Public Procurement Act allows us to do that.
The Ad-Hoc Committee Chairman, Hon Olusola Oke, commended FIRS’ effort to generate more money into the treasury so that the nation could spend its way out of recession.
He however advised FIRS to always liaise with the Bureau for Public Procurement, so that it will not violate the Procurement Act.
Some weeks ago, the House had raised an ad-hoc committee headed by Hon. Oluwole Oke to probe alleged infraction of the Procurement Act by FIRS.
This followed a motion by Deputy Minority Leader, Hon. Chukwuma Onyeama claiming that the FIRS awarded a contract to a very young company.