VZCZCXRO6756
RR RUEHMA RUEHPA
DE RUEHOS #0743 3190758
ZNR UUUUU ZZH
R 150758Z NOV 07
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 9589
INFO RUEHUJA/AMEMBASSY ABUJA 9345
RUEHZK/ECOWAS COLLECTIVE
RUEAIIA/CIA WASHINGTON DC
RUCPDOC/USDOC WASHDC

UNCLAS LAGOS 000743 
 
SIPDIS 
 
Sensitive But Unclassified--Handle Accordingly; SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV PREL NI
SUBJECT: NIGERIA TO HONOR HISTORICAL TAX WAIVERS 
 
¶1. (U) Summary: The tax reforms begun under the previous 
administration will be continued, according to the head of Nigeria's 
Federal Inland Revenue Service (FIRS). The government will stand by 
its commitments on historical tax waivers but will not grant new 
ones. The increase from 5 to 10 percent Value Added Tax will be 
accompanied by a reduction in income taxes. End summary. 
 
¶2. (U) Ms. Ifueko Omoigui, Chairman of Nigeria's Federal Inland 
Revenue Service (FIRS), told executives of U.S. companies at an 
American Business Council (ABC) meeting on October 31 that tax 
reforms begun by the previous administration would be sustained. The 
reforms, created with private sector input, seek to streamline 
taxes, diversify the country's revenue base, and reduce the tax 
burden on the people. Indirect, rather than direct, forms of 
taxation would ease tax administration, she said.  Omoigui said FIRS 
collects only about 50-60 percent of the amount of tax owed by 
corporations, but even less, only about five percent, of the amount 
owed by individuals. 
 
¶3. (U) Omoigui said the GON would not grant new tax waivers, but 
historical tax waivers would remain in force. This, she said, was to 
assure investors of the GON's resolve not to renege arbitrarily on 
its previous agreements.  ABC members noted Nigerian Customs 
officials at the ports have failed to abide by the provisions of 
historical waivers, suggesting they were not properly briefed. 
Omoigui responded that FIRS would address this issue. 
 
¶4. (U) However, Omoigui admitted Nigerians misunderstand the reforms 
and see them as a burden, particularly the proposed Value Added Tax 
(VAT) increase from 5 percent to 10 percent. The local press has 
misinformed the public, she said, by omitting the fact that the 
proposal to increase the VAT also proposes to reduce personal and 
company income taxes.  The FIRS also proposed a revised zero-VAT 
items schedule and correction of all VAT ambiguities, but this has 
also been downplayed by the press and gone unnoticed by the public. 
The omission, she said, has reduced people's willingness to consider 
indirect taxation and the VAT increase on the merits.  However, the 
FIRS is committed to going ahead with the reform by sensitizing 
stakeholders in all six geopolitical zones and the business 
community, particularly in Lagos. Omoigui urged the ABC to present 
to FIRS all tax-related issues encountered in their sectors so that 
they could be addressed. 
 
¶5. (U) On the ills of multiple taxation, Omoigui said the FIRS can 
only advise the states and local governments through the Joint Tax 
Board (JTB).  Omoigui, who is also the JTB chair, said federal level 
efforts to reduce multiple-taxation are ongoing. She also said four 
banks had been appointed to receive all of the FIRS's daily 
collections from 20 other banks, which will make reconciling 
accounts easier. 
 
¶6. (SBU) Comment: The new government's commitment to tax reform, its 
pledge to honor prior tax waivers, and the suspension of new waivers 
are commendable steps towards rationalizing Nigeria's tax system. 
However, the GON will face a huge public relations task in 
convincing the public to accept tax reform.  The local press has not 
made this any easier, and the glaring evidence of misappropriation 
of public funds at every level of government mitigate the average 
Nigerian's desire to pay any, let alone more, tax.  End comment. 
 
Hutchinson