RAMPING UP REVENUE IN PLATEAU USING A SMART REVENUE AND TAX SYSTEMPRESENTED BY BARNKSFORTE GROUP

1BARNKSFORTE GROUP “Your Reliable Solution Provider”

BARNKSFORTE GROUP LTD

OUR PRESENTERS

• Mr. Temitope Paulson – Protocol• Mr. Eric Sonnenburg – Chief

Technical Officer (CTO) Presenter • Mr. Mr. Henry Ajere – Director SDG /

Demonstration• Mr. Adedayo Bankole - Managing

Director / CEO

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SMART Revenue and SMART TAX / Agenda1. About Barnksforte

General Overview of ICT division Our Vision – Human and Tech Transfers to Africa Mission – National development objectives

2. Why our strategic Positioning and IGR Strategy provides unique value Company is purposed towards developing solutions that take into account, the

operating environment and conditions of Nigeria Why others fail? Resuts and strategy in Lagos not necessarily the same as Kano,

Plateau Local and human factor criticality – A solution is only as good as the human capacity that

implements it Best world class systems are only successful where all hands fully engaged, stakeholder

involvement, and human capital development are critical factors – This is the difference3. Solutions – Our unique approach

SMART Revenue and SMART TAX solutions, tackling the informal and formal sectors So effective because follow the established revenue up front model of major telcos Plugs government into the liquidity of the massively untapped informal sector Expands the net and revenue base, easy accessibility, far superior to POS model

4. Benefits

3BARNKSFORTE GROUP “Your Reliable Solution Provider”

BARNKSFORTE GROUP LTD

INTRODUCTION Incorporated in Nigeria with domestic and

international business portfolios and trade links.

We offer development solutions in Africa and internationally.

BG is a purpose-driven organization with the products and services, development concepts and intellectual capital, and business solutions required for developing the Nigerian economy.

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PRODUCTS AND SERVICES• HR/Payroll/Accounting

(ERP)• Biometric Solutions• Document

Management Systems• Unified

Communications• Tax Solutions• Infrastructure and

Equipment

PRODUCTS

• Advisory services• Business and Systems

Integration,• Project Management

and Training services• Forensic auditing and

accounting

SERVICES

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OUR EXISTING PARTNERS AND CLIENTS

• Development Clients- World Bank, USAID, DFID, and Federal and state governments and various MDA’s with our affiliates.

• ERP Partners- SAP, Oracle, Microsoft

• Technology Partners- IBM, HP, Microsoft, Cisco

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ICT driven E-Governance initiatives improve IGR, increase transparency (accountability), and improve service delivery and effectiveness of government

Post implementation recovery figures for states range from 10% to 50% or more improvement in revenue recovery. Conservation of resources across the value chain

This is not new thinking: This is a must have in a post-oil economy, cannot afford not to evolve and adapt to economic climate/conditions to survive

Thousands of direct jobs created, more than those displaced and cleanup of informal and improperly managed workers (local council/area touts enforcing unsanctioned collections and fines etc…)

10’s or 100’s of millions or even billions per month improvement in revenue generation and conservation for state economy, Billions saved during a tenure

Conserved revenue sustains hospitals, roads, schools, women and youth empowerment initiatives, and develop state infrastructure to become the envy of the most effective governors

A skilled, efficient and motivated workforce focused on serving the citizens, businesses and visitors

Effective integration between existing operational applications Increased efficiency and productivity and reduced paper generation Improved processes and workflows to meet new efficiency standards Enhanced automation and decentralization of the budget preparation process Standardized databases to facilitate information sharing to key stakeholders and decision

makers across different levels of government Standard tools for analysis of organization wide information to ensure data integrity Tight Financial Controls across purchasing, receivables and payables Streamlining of functions performed at the department level and duplicated at the financial

service level Elimination of duplicate data entry between systems

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SMART REVENUE SYSTEM OVERVIEW• 3 simple system elements

– Smart Revenue Card • Ties tax payers in the state to a universal

Taxpayer Identification Number (U-TIN) and their personal information to a record in database

– Smart Revenue Terminal• We train thousands of employees to operate the

cashless equipment to collect revenues – Central Database

• Contains the personal information records, account and U-TIN information and any credit or debit on the account holder. Coordinates transactions

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Why Internally Generated Revenue (IGR) Repositioning

To align with the economic direction of your administration as stated;

‘Engendering sustainable economic growth in the face of the present dwindling revenues’

Current Realities Plateau State Internally Generated Revenue (IGR) Summary

Year 2010 Year 2011 Year 2012 Year 2013 Year 2014

3,398,815,261.07 4,520,622,617.37 6,927,858,653.07 8,486,806,640.08 Est. (8.2Bn) Monthly Average 283,234,605.09 376,718,551.45 481,101,101.76 707,233,886.67 Est. 683M

*Data source: National Bureau of Statistics

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It is clear from the above, especially with the recent falloff in State Revenue in 2014/2015 and the high percentage (near 70%) coming from a single source (PAYE) in the formal sector -- we can do much together to cast a greater tax net, improve transparency and efficiency of government operations, stop leakages, provide greater oversight, and create a tremendous positive impact by implementing internationally recommended solutions and best practices as found herein.

Projected Revenue (very conservative model, we expect to succeed much farther) Plateau State Internally Generated Revenue Projections based on 50% annual improvement

Year Year 2015 Year 2016 Year 2017 Year 2018

Gross Annual Est. Est. 8B Est. 12B Est 18B Est 27B+

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Other benefits• Dashboard controls for decision makers, enhanced reporting and data

mining. Transaction level (level 2 NIBBS muti-view) views, Dashboard real time data down to MDA/Department/Service

• We are a NIBBS Integrator/Aggregator• High scalability, highest security (US Gov. accepted)• Easy Deployment, Flexible (works both formal/informal and across all

MDA’s)• Massively Expands Tax net w/o increasing ind. Taxes• Accessible and convenient to all taxpayers• NGN50/DAY X 30 DAYS x 1M taxpayers (informal) = NGN 1.5B in

revenues a month we can capture!

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Other benefits contd.,• Boost internally generated revenue, eases collections, and automates processes• Internal governance• Drives efficiencies in government administration, blocks leakages: Cashless• Compliance

– Strengthen transparency and accountability• Service delivery

– Government responsiveness and accountability• Regulation and policy

– Formation and enforcement of regulation and policy• Employment opportunities

– Skills acquisition and training enhancement for hundreds of existing state employees to administer and manage system. Thousands more employed in revenue collection activities, sales of revenue recharge card, and supporting roles

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3 MAIN OBJECTIVES

• To assess, collect and account for all taxes and revenue due to Plateau State, penetrating informal sector thoroughly and improving formal sector performance

• To supervise the collection and accounting for all other local revenue by all collecting ministries in Plateau State with the provision of section 85(B) PITA

• To execute appropriate advisory services to integrate ICT with IGR for superior performance and inward revenue flow

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Revenue is simply money received

Revenue is the breath and life in the nostrils of all Governments

No Government however laudable its programs can excel without adequate and regular in-flow of revenue

PREAMBLE: INCREASING REVENUE

Sources of Revenue of Governments:

1. Statutory Allocation.

2. Internally Generated Revenue (IGR) i.e. Internal Taxes, Fines, Fees, User Charges.

3. Business Investment.

4. Foreign Aids.

Why the Emphasis of Governments on IGR:1) It is the most dependable, most

sustainable, and most veritable singular source of Revenue.

2) Dwindling distributable Revenue from the Federation Account

3) The importance of IGR can therefore not be over-emphasized.

Situational Analysis of IGR in Plateau State: What is the current situation of IGR in Plateau State?

What is the Trend Analysis of IGR in Plateau State?

What is the comparison between IGR in Plateau State and other States?

Prerequisite for Optimal Performance of IGR in Plateau State

Explore yet-to-be-tapped high revenue potentials within the territory

Generate and maintain an accurate database of taxpayers, tax payment and collection within Plateau State

Automate assessment procedure to ensure it is adequate and effective

Automate revenue collections to ensure adequacy of remittance and accurate reporting

Establishment of an effective enforcement machinery

OUR OBJECTIVES:

To double the present IGR collection of the Plateau State Government within the first 12 months of engagement.

To achieve a minimum of 300% increase over a period of 36 months over and above the present collection.

Institutional Restructuring of the Plateau State Internal Revenue Service.

PERFORMANCE TARGET TIMETABLE

PERIOD % REVENUE INCREASE AMOUNT

First 6 Months 50% 750,000,000.00

12 Months 100% 1,000,000,000.00

24 Months 150% 1,250,000,000.00

36 Months 200% 1,500,000,000.00

48 Months 300% 2,000,000,000.00

OUR IMPLEMENTATION STRATEGY

For our objectives to be fully accomplished, we believe appropriate implementation strategies must be designed and vigorously pursued for a 100% accomplishment.

Critical among our strategies are as stated below:

INSTITUTIONAL RESTRUCTURING OF Plateau STATE INTERNAL REVENUE SERVICE [Plateau IRS]

• Guided by the PITAM no 104 of 2012, the Board of Internal Revenue, Board of Internal Revenue is the relevant tax authority.

• The Board therefore occupies a key position in the Revenue Generation efforts of Plateau State

• We will address some key areas of operation of the Board.

Relevant questions here are: 1) What should be the total number of employees in the

Board?2) What should be the level of qualification of each staff?3) How many departments should the Board have?4) How many staff should be in each department?5) What does each department do?6) How many tax stations should be located outside the

Board Headquarters?7) What should be the total cost of running the Board?8) What percentage of total Revenue is this?

9) There should be established training programs, which would add value to the staff

10) Promotion should be based on the ability to meet set targets, rather than the number of years spent on a seat

11)The remuneration of the Board should be better than the civil service

12)There should be special incentives for staff who meet their targets

• These issues should be addressed with a view to positioning and strengthening the Plateau State IRS.

• Performance based remunerations will be recommended.

• Targets will be given and Key officers shall be held accountable to such targets as a performance reward system.

• Our focus should be a Target-driven revenue administration.

• Regular training will be organized, e.g on the job training, seminars and workshops.

• Automation of Revenue Administration of Plateau State, including Assessments, collections, certification and report system.

• Full automation of all forms and other security documents.

• Development and adoption of a vision statement by all the Board Staff.

• Carving out a respectable image for the Board and empowering the Public Relations arm.

• Recommendation of the establishment of a ‘Revenue House’ i.e. a corporate headquarters for the Board.

• Recommendation of the establishment of Revenue complaints and Information Unit.

ENUMERATION (WIDENING OF TAX NET)

The power to charge/impose or increase rates of the major taxes rests in the National Assembly (see items 58 & 59 of the Executive list in schedule 2 of the 1999 constitution). Therefore appreciable increase in IGR can only be achieved through the expansion of the Tax Net.• The Tax Population of the state should be determined

through enumeration for an effective database for both tax and non tax revenue.

• The enumeration exercise shall be carried out from Local Government to Local Government, town to town, street to street, and sector by sector.

• Enumeration of houses, shops, schools, hospitals, offices, petrol stations etc on all major streets will be carried out such that the owners and their employees are brought into the tax net.

• The number of Taxpayers in each Sector will be determined e.g. number of Legal Practitioners, School Proprietors etc.

• Our enumerators shall be adorned in Board of Internal Revenue flash jackets, face caps, ‘T’ shirts, to give the exercise instantaneous state-wide acceptance.

ASSESSMENT• This is the first leg in the tripod of Revenue Administration.

• It is therefore a critical aspect of any effective tax administration

• For any assessment to be effective, there must be adequate information about the taxpayer, hence the importance of ensuring effective data collection about the taxpayer.

• Some statutory forms shall be made available on-line to taxpayers to encourage self assessment process.

• Our focus is to fully automate the assessment process of the Board.

• Review of the assessed amount if necessary shall be jointly carried out by the Board and the consultant to encourage effectiveness and efficiency of the system.

• The approach will be to collate and maintain useful information about the taxpayer electronically.

• Due to the time gap between raising an assessment and actual collection of tax, we should ensure that assessments are raised promptly on both the formal and informal sectors.

Formal Sector – PAYEPAYE Tax accounts for the largest single source of

Tax Revenue.

 How many companies are registered for PAYE?

Roughly how many should be registered?

How many remit monthly deductions regularly?

Non- deduction

Under deduction

Non- remittance

Under remittance

Late remittance

Limited Coverage (Tax net should be widened)

Problems commonly plaguing PAYE.

OUR SOLUTION STRATEGYA. Setting up of task forces on complianceB. Sectorial categorization of companiesC. Monitoring Tax stations through revenue centresD. Correspondence; Issuance of :

• Non-remittance letters• Reminder letters• Intention to prosecute letters• Trend analysis• Warning letters to companies not registered for

PAYE

E. Engagement of Tax Monitoring Agents (TAMA) for enumeration and tax audit.

F. Tax AuditG. Tax InvestigationH. Dollar AuditI. Deemed Income J. WITHHOLDING Taxes

Action Plan for Informal Sector1) Widening of Tax Net. Implement SRS2) Engagement of TAMA for enumeration3) Collation of list of high net-worth individuals4) Creation of database on individual tax payers 5) Classification of individual taxpayers into:

Professional groups Trade groups and associations Artisans

6) Establishment of minimum tax payment levels for professionals , trade groups and artisans

7) There shall be no governmental patronage without evidence of payment of tax.

7) Certain infrastructure within the state shall not be enjoyed without presentation of a tax clearance certificate.

8) Physical presence in major markets9) Strengthening/sustenance of self assessment

scheme10) Introduction of new operational units

Self Assessment Review unit Traffic/ENS IRS Unit Judiciary Unit Religious Unit

Non – Tax RevenueLands: Monitoring of land and special duties section to evaluate the assessment of people dealing in land matters e.g C of O, Consent, Ratification e.t.c.

• Review of Rates, Levies etc. all Fees, Levies and Rates under the ambit of the state shall be reviewed as some of them are presently obsolete.

• Facilitation of LOCAL GOVERNMENT LEVIES (approved List for collection) Law as against the Taxes and Levies (Approved list for collection) Decree No. 28 of 1998.

SOME TAXES AND REVENUESTaxes P-A-Y-E (Pay As You Earn) Direct Assessment Withholding Tax Rent Income TaxRevenues Motor Licensing Administration Business Premises Levy* MDAs Polls betting* Stamp duties Development levy

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SOLUTIONS

1. State Integrated Tax Administration System (SITAS)

2. Bank Excess Charges/Loss Recovery (Forensics)

3. Smart Revenue

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State Integrated Tax Administration System (SITAS)

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Tax Collection and Administration Software for Public Sector• Data Processing – Import and processing of tax data (tax

returns, taxpayer statements and audits)• Individual Taxpayer Accounts – Calculation of liabilities

by taxes and representation of figures in different ways (tax cards, balance, reports etc)

• Payment Processing and Tracking - Automatic tracking, import and processing of taxpayer payments

• Registration of Taxpayers – Registration of taxpayers• Central Database – A central database for storing data

gathered from taxpayers, users etc

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State Integrated Tax Administration System (SITAS) – Cont.

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Tax Collection and Administration Software for Public Sector• Reports and Analysis – Pre-defined/On-the-fly reports and

drill down analysis • Payment Reconciliation – Reconciliation of taxpayer

payments • Notification System – E-mail and SMS notifications to

taxpayers• Self-Service – Online submission of tax returns and other

documents• Third Party Integration – Integration with third party

systems• Workflow – Business process automation• Messaging – Messaging between users

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State Integrated Tax Administration System (SITAS) – Cont.

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Tax Collection and Administration Software for Public Sector• Centralized and Web based• Integrated (Interswitch, JTB)• Extendable architecture (software and hardware)• Built-In Redundancy• Fail-over• In-built security• Off-site backup• User-friendly interface• Customizable• Drill-down analysis

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State Integrated Tax Administration System (SITAS) – Cont. The E-Portal

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E-Portal Tax Calculator Self Assessment

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E-Portal Billing Details (Assessment)

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E-Portal Payment Page

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SMART REVENUE SYSTEM (SRS) Cont.,

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BENEFITSBarnksforte solutions improve the following in Plateau State• Boost internally generated revenue, eases collections, and automates processes• Internal governance

– Drives efficiencies in government administration, blocks leakages: Cashless• Compliance

– Strengthen transparency and accountability• Service delivery

– Government responsiveness and accountability• Regulation and policy

– Formation and enforcement of regulation and policy• Employment opportunities

– Skills acquisition and training enhancement for hundreds of existing state employees to administer and manage system. Thousands more employed in revenue collection activities, sales of revenue recharge card, and supporting roles

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BENEFITS CONTINUEDBarnksforte solutions improves the following in Plateau State• Leakages: Billions saved in lost revenue and leakages during remittance of cash• IGR

– Billions of naira in improved revenue collections in the informal sector every month, casting a wider tax net (without increasing taxes). Formal sector improvements also considerable, stopping leakages during assessment and payment cycle, halting tax avoidance loopholes and redefining processes

• Time– Short implementation time (can start improving IGR fast!)

• Diversification– Begin to diversify state revenue, reduce dependency on oil sector, Federal

Allocation etc… and gain independence• Helps to refocus Government of Plateau on efforts to improve Infrastructure,

Security, Commerce, service delivery and welfare of public by giving them the revenue, time, and management capabilities freed up when we implement this program and take on the challenges of delivering state revenues for Plateau

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Revenue Agents from Barnksforte’s Team EDO at work on 08/10/2015 Central Hospital, Benin

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4 CRITICAL SUCCESS FACTORS1.Absolute government support and

timely approval2.Access to stake-holders and

availability of supporting information3.Availability of Funding where

required4.Deployment of training and capacity

building

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53BARNKSFORTE “Your reliable solution provider”

Barnskforte GlobalNo 5, Atakpame StreetOff Adetokunbo Ademola StreetWuse II - AbujaTel: 09 291340, 08099990715, 07033556611E-mail: info@barnksforteglobal.comWebsite: www.barnksforteglobal.com