Brief History of The Federal Inland Revenue Service

The Federal Inland Revenue Service started as part of a colonial tax organisation under the name the Inland Revenue Department of Anglophone West Africa. The department's scope of administration covered Nigeria, Ghana, Sierra Leone and the Gambia. In 1943, the Nigerian Inland Revenue Department was carved out of the Inland Revenue Department of Anglophone West Africa and established as an autonomous body under the supervision of the Commissioner of Income Tax. The Nigerian Inland Revenue Department consisted of:

1. the Resident;
2. chiefs and elders in each district;
3. any native authority, which by native law and custom was recognized as a tax collection authority;
4. any native council or group of persons appointed by the Governor.

An official of the United Kingdom Inland Revenue Department, W.A.B. Carter was appointed as the first Commissioner of Income Tax of the new agency, a position he held until 1951 when he was succeeded by Fraser G. Selby. In 1958, as one of the recommendations of the Raisman Commission, the Income Tax Administration Ordinance No. 39 1958, was passed. The ordinance, among other things, provided for the establishment of The Federal Board of Inland Revenue. However, full effect was only given to this provision under the Companies Income Tax Act (CITA) 1961.

The Federal Board of Inland Revenue, FBIR, as created under CITA 1961 consisted of:
1. a Chairman;
2. a Deputy Chairman;
3. the Senior Assistant Secretary with responsibility for revenue matters in the Federal Ministry of Finance;
4. the Legal Adviser in the Federal Inland Department;
5. two other members being Chief Inspector of Taxes or Officers of equivalent rank; and
6. one further member appointed by notice in the Gazette by the Minister.

The chairman of the FBIR was also chairman of the Federal Inland Department, which was the executive arm of the FBIR. In line with the new statutory structure, Ephraim Osindero was appointed as the first chairman of the FBIR on 29th April 1961. In 1977, the re-organization of the FBIR and its executive arm, the Federal Inland Department was formally approved by the federal government.

The highlights of the reorganization were as follows:
1. the posts of Chairman and Deputy Chairman of the Federal Inland Department were re-designated Director and Deputy Director of the Department respectively;
2. there was an increase in the number of Deputy Directors from three to four with specific functions assigned to each Deputy Director;
3. the membership of the FBIR was increased from seven to ten;
4. ministries and other organizations whose mandates had bearing on the functions performed by the Board were to be represented on the Board;
5. there was an increase in the number of posts of Chief Inspectors and other established senior posts;
6. upgrading of the post of the Board Secretary;
7. creation of an Intelligence Section

In 1991, about twelve years after the 1977 reform as mentioned above, the Federal Government set up a Study Group whose terms of reference included a review of the country's tax administration. The report of the Study Group led to the promulgation of the Finance (Miscellaneous Taxation Provisions) (Amendment) Decree No 3 of 1993. This Decree was a landmark statute in the history of tax administration. Some of the salient provisions of the decree included:
1. reconstitution of the FBIR by expanding the number of members of the Board to fifteen inclusive of the Board Secretary;
2. the establishment of the Federal Inland Revenue Service (FIRS) as the operational arm of the FBIR;
3. the re-designation of the Board Chairman as Executive Chairman; and
4. establishment of a Technical Committee of the Board

In spite of the above reforms introduced by decree No. 3 of 1993, tax administration still remained a function of the civil service and the Chairman of the Federal Inland Revenue Service was appointed from among the Directors of the Federal Ministry of Finance. The first non-career civil servant to be appointed Chairman of the Board was Mallam Balama Manu, a private sector banker who assumed office on the 3rd of September, 2001.

In 2002, the government set up a Study Group headed by Professor Dotun Phillips to examine the Nigerian tax system and make appropriate recommendations. Further to the Study Group's recommendations, a Working Group headed by Mr. Seyi Bickersteth was constituted. The re-aligned recommendations of the two groups had far reaching impact on tax administration and the implementation of the recommendations commenced in late 2003.

The most far reaching outcome of the reforms from the view point of tax administration was the passage of the Federal Inland Revenue Service (Establishment) Act 2007. The Act established the Federal Inland Revenue Service as a body corporate with perpetual succession, a common seal and the power to sue and be sued.

In addition, it created the Federal Inland Revenue Service Board. The major distinction between this arrangement and what existed hitherto is that whereas under the pre-2007 scenario, corporate personality was vested in the FBIR and the FIRS functioned merely as an operational arm of the FBIR, since the passage of the 2007 Act, corporate personality is now vested in the FIRS. The FIRS Board has responsibility to provide strategic policy for the Service.

Another major feature of the FIRSEA 2007 is that it granted autonomy to the Service. This autonomy manifests at two levels. First, administratively speaking, the Service is no longer dependent on the Federal Civil Service Commission in the areas of recruitment, promotion, welfare and discipline. These issues are now determined by the FIRS Board. Second, the Service is now funded by the cost of collection mechanism whereby a certain percentage of all non-oil revenue collected by the Service is appropriated by the National Assembly for the operations of the Service.

The autonomy granted the Service has greatly improved its operations and enhanced efficiency in its processes. Investment in ICT and modern work tools has led to automation of key processes including collection. This has blocked leakages in the system and boosted government revenue profile. The Service also underwent structural reorganization within this period and new offices were created. In 2010, the Service recruited more than 1800 new staff to fill these new vacancies with relevant skills and competencies.

Overall, since 1943 when the Nigerian Inland Revenue Department was established, it has undergone series of modification within a period of 69 years of existence to attain its present form. At every turn, these modifications are aimed at enhancing the efficacy of the organization. The reforms which gave birth to the current structure of the Service, and which are on-going are also geared towards this objective. Specifically, there is a deliberate drive to reposition the Service as a 21st century agency in order to achieve its stated mission and vision objectives.