IN Nigeria’s capital city, Abuja, thousands of business owners are on the brink of financial failure owing to illegal and arbitrary taxes demanded by officials of Abuja Municipal Area Council (AMAC), The ICIR investigation reveals.
Russell Ogbonna’s current job is to take care of real estate property on behalf of their owners for a fee. One of his key specialties is remodelling vacant buildings for their owners, which he puts up for sale or rent at higher prices.
He manages two blocks of six-unit office spaces located in Wuse, Abuja, which he leases out to renters, while four rooms serve as his office building. The commission he gets from the facilities he supervises helps to cover his 15-member staff salaries, tax payments, and other personnel costs.
But over time, Ogbonna has watched profits fall, though renters in his buildings pay conformably. He cannot figure out why he is losing money.
His financial statements have shown that the tax payments he has made to AMAC over four years have put holes in the firm’s coffers.
Between 2019 to 2021, he has been charged a total of N1.2 million on yearly basis to get a certificate of fitness for continual habitation from AMAC on the property in Wuse. A breakdown of the tax payments shows he was charged N500,000 in 2019, N250,000 in 2020, and N450,000 in 2021.
A certificate of fitness for continual habitation is issued by AMAC revenue officials yearly to commercial buildings in the area council as part of its periodic assessment of the sanitation of landed properties.
The Abuja Bye-Laws does not recognise a ‘certificate of fitness for continual habitation’ as a yearly tax payment, but AMAC revenue officials demand it. In Lagos State, the certificate of completion and fitness for habitation is issued once by the Lagos State Building Control Agency after completing a new building to ensure it complies with the state’s safety provisions.
There is no flat rate on the ‘certificate of fitness for continual habitation’ taxes charged by AMAC officials, but overtime, they indiscriminately assign figures without proper assessment. Ogbonna resorts to negotiating with AMAC officials who would cut down the tax fee in exchange for a bribe as a form of compensation.
In July 2020, he received a letter of notice from AMAC stating his certificate of fitness was due and asked to pay N250,000 within 14 days or risk his property sealed. Ogbonna called the AMAC revenue officer whose phone number was on the letter -after haggling with the officer for a few minutes. They settled for an amount before money exchanged hands.
“Sometimes, AMAC enforcement teams can visit my office three times a week to demand taxes they imposed on us, and if we don’t comply by giving them money, they just ground our businesses to a halt,” he says.
Eventually, he deposited N150,000 into the FCMB bank account of Bridge Numerics Ltd, a technical partner with AMAC (Environmental Services Department) responsible for collecting taxes from sanitation levies in the council.
Ogbonna pays at least N2 million in taxes yearly to the Abuja Municipal Council alone. If he combines other levies his firm pays to different authorities in the council, it adds up to N2.5 million each year.
Despite Ogbonna’s tax obligations to AMAC, which puts his business on a tight rope, he says the local council has not accounted for the millions of naira he pays in taxes and levies.
“I don’t understand what AMAC’s specific duties are apart from collecting taxes because I have not benefited from the taxes I have been paying all these years, and my business is suffering,” he says.
Ogbonna’s experience is hardly unique among business owners operating in Abuja Municipal Council, as their businesses become stifled from paying illegal taxes and levies enforced by officials of AMAC.
Nigeria is ranked 131 out of 190 countries based on the World Bank 2020 Ease of Doing Business report. The ranking measures the ease of paying taxes, protection for minority investors, access to credit, amongst other indices.
However, this reality does not reflect on business owners in Abuja Municipal Council, constantly faced with officials of AMAC enforcing illegal taxes that suffocate their businesses.
Where The Trail Starts
To investigate the illegal operations behind AMAC’s tax collection system and the regulatory failures that facilitate arbitrary tax rates slammed on business owners, The ICIR reporter went undercover as a last resort to hold officials involved in the act accountable.
Posing as a business owner asked to pay N500,000 to obtain a certificate of fitness for continual habitation from AMAC, The ICIR reporter sought to negotiate with an AMAC’s revenue officer to ascertain if he could waive off 50 per cent of the tax payment.
Nigeria loses about N100 billion every year to tax-related fraud, according to data obtained from the Human and Environmental Development Agenda (HEDA), a Nigerian-based non-profit that promotes transparency and accountability.
An AMAC revenue officer, whose phone number appeared on one of the notices sent to business owners in the council, was contacted on the phone. TrueCaller, a calling identification application, revealed his name as Pius Jaltha Betso. Pius said he could help reduce the tax payment. He brokered a meeting with the reporter to adjust the tax payment at AMAC’s secretariat in Garki, Area 11, Abuja.
How long does it take to seal a tax fraud deal?
The ICIR reporter met Pius at the gate at 10:13 am on Tuesday, June 15. After exchanging pleasantries, he asked the reporter to walk him to his car while enquiring how much AMAC had charged the reporter.
After listening to the reporter’s tale, who stated the initial tax payment of N500,000 was too high and wanted a reduced fixed price of N250,000, Pius requested the demand of notice on the property, which the reporter could not provide.
AMAC issues demand of notice letters to remind business owners to pay taxes and levies before its enforcement teams shut their businesses down.
“If you had brought the demand of notice with you, I would have reduced the bill for you right now from that N500,000 and say the bill has been negotiated to N250,000, and I will sign on it so that nobody will disturb you,” he said.
Pius explained how writing off taxes worked, saying that he would immediately issue the certificate to the reporter if he received the money. However, he did not indicate any interest to supervise the property in question.
“Assuming you have the money with you, I would have given you the certificate, but since you don’t have the money with you, then there is nothing I can do,” he said.
He said the reporter could transfer the money to his GTB bank account number bearing Pius Jaltha Betso or bring it for him in cash to his office at AMAC’s secretariat in Garki, Abuja.
“I will send my account details to you so you can make cash payment by bringing the money to my office or transfer, then you can get the certificate. Try to make the payment before Friday so that the enforcement team will not disturb you,” he said.
When The ICIR reporter left the premises of AMAC’s secretariat, the time was 10:17 am. Hours later, Pius sent his GTB bank account number:0529285220 in a text message to the reporter urging him to pay the tax into his account before the end of the week.
The failure to remit monies collected as taxes by tax officers constitutes an offence of embezzlement if a tax official diverts tax monies from the treasury or a portion of it, according to Section 22(b) of Nigeria’s Direct Tax Ordinance.
Pius is just one among the thousands of revenue officials who enforce predatory taxes on Nigerian businesses.
According to the Carnegie Endowment for International Peace (CEIP), Nigeria is likely to have lost an estimated $1 billion between 2014 and 2018 to tax-related corruption facilitated by tax officials.
You Will Pay AMAC Tax, For Using a TV or Radio
In April, AMAC revenue officer Moses Akaaza served a Television/Radio licence tax bill to a retail store specialiseing in selling floor tiles in Wuse district to pay N500,000 as its yearly tax for using a radio.
Findings by The ICIR revealed last year that AMAC charged small companies N50,000, medium companies N100,000 and big companies N200,000 for owning radio or television. Duplex occupants were required to pay N20,000; flat, N10,000; bungalow, N5,000; and small apartment, N3,500.
The ICIR contacted Akaaza on June 16, assuming the role of the business owner who was charged N500,000 for Television/Radio tax, to ascertain why the current amount was two times what was taxed last year.
Without consulting any records to confirm the reporter’s story, Adaaza said Abuja Bye-Laws backed the tax, but he could help negotiate a reduction to ease the ‘burden.’
“The Abuja Bye-Laws back the television and radio tax, so there is little we can do about it but give me ten minutes, and I’ll call you back to see how much you can pay from the N500,000,” he replied in a phone conversation.
Section 7 (fourth schedule) of the 1999 Constitution provides legality for AMAC Radio/ Television tax in the Abuja Bye-Laws, stipulating that both residential and commercial buildings should pay AMAC yearly for using any electronic device that includes radio or television.
There are no official rates fixed on the taxes and levies charged business owners by AMAC, which facilitates an illegal tax negotiation racket for revenue officials to exploit.
A few minutes later, Akaaza called back, saying he could not go lower than N250,000, asking the reporter to pay the agreed amount using cash or cheque to AMAC after generating Remita, a platform used by the government for making such payment .
“I just confirmed that you could pay N250,000 using a cheque or bank draft, but it cannot be less than that amount when you have paid, then I can bring the receipt to your office,” he said.
Two days later, the reporter sent a text message to Akaaza, asking him why there was no account number on the demand notice letter. He offered to help process the payment and deliver the official documents of the evidence of charge directly to his shop.
Akaaza sent his Access Bank account number:0101328060 for the reporter to make the payment to facilitate the process faster.
Staggering under heavy burdens
According to 2o2o data released by the Nigeria Bureau of Statistics (NBS), the Federal Capital Territory (FCT) ranks the second most preferred investor-friendly destination in the country, attracting $1.3 billion for the period under review.
However, the figure does not do justice to business owners operating in AMAC who are asked to pay arbitrary multiple taxes. They spend 34.8 per cent of their operating revenue on taxes, compared to 33 per cent in 2014, according to a 2020 World Bank Doing Business report.
Nuhu Ahmad, a fashion designer in Gwarimpa, bought a motorcycle in 2020 to take his customer’s orders and send them faster. However, after registering the bike, AMAC tax officials confiscated it two months later for not paying for mobile adverts and signage fees.
After paying N18,000 to retrieve his bike in December 2020, officials of AMAC seized his motorcycle in February 2021 for not renewing mobile and signage fees for the current year. All his explanations fell on deaf ears After doling out N16,000 to them, he stopped using the bike.
“It’s been challenging for my business to cope with the excessive taxes AMAC charge. It is a serious concern for me these days because we don’t know what to expect. I had to keep the motorcycle for my business to save unnecessary costs by AMAC,” Nuhu, the owner of Wamball Clothing, said.
Commercial businesses like Nuhu’s in Abuja Municipal Council contend with 15 different taxes and levies: Inspection/Certification fees, Land Use Charge, Mobile advert, Signage fees, Tenement Rate, Vehicle documentation Operational Permit, Sanitation Levy, Fumigation Levy, Fire Service, Parking Lot, Online Registration, amongst others.
President of the African Development Bank Akinwunmi Adesina, at the Federal Inland Revenue Service Tax Dialogue meeting in January, said Nigerians paid one of the highest implicit tax rates in the world.
“When governments or institutions fail to provide essential services, the people bear the burden, especially taxes that are paid but are not seen or recorded. Nigerians pay one of the highest implicit tax rates in the world — way higher than developed countries,” he said.
Price Waterhouse Coopers (PWC) carried a survey of over 1,600 businesses in Nigeria and found out that 57 per cent said multiple taxes and levies, lack of coordination of federal and state agencies, and the absence of technology platforms posed a challenge to paying taxes.
Speaking to The ICIR, Husseini Ahmed, a real-estate developer in Lokogoma, Abuja, said arbitrary taxes AMAC collected from his firm had exposed it to financial liabilities.
“I spend between N400,000 to N600,000 in different taxes to AMAC every year. Early this year, AMAC officials visited my office, saying my office tenement rate was due and charged us N400,000. When I asked them how they arrived at that sum, they told me they counted the number of air-conditioners in the building, which meant we were a big firm.
“I had to negotiate with them to get it reduced until we settled for N200,000. It is tough to cope with the financial stress these exorbitant taxes by AMAC make business owners go through,” he said.
A virtual tax haven
Data obtained from the Nigerian Communications Commission (NCC) show that over 100 million Nigerians are connected to the internet, as 250,000 new subscribers joined in the last quarter of 2019.
A 2020 data from WorldWideWorx said 52 per cent of Nigerian businesses advertised on social media platforms to help them meet or achieve their sales goals.
For Aisha Vatsa, a food vendor in Gwarimpa, Facebook and WhatsApp provided her business with an online market connecting her to a growing customer base, making her free from being taxed by officials of AMAC.
“The cost of getting a shop for a small business in Abuja is challenging for me because AMAC taxes will frustrate it out of existence. I prefer to stay online and keep making profits tax free than risk that for people (AMAC) who are after your money with nothing to show for the levies or taxes they collect,” she said.
A 2018 World Bank report put Nigeria’s economically active population at 65 million people. Despite the rising numbers of taxpayers in recent years, it still accounts for less than 30 per cent of Nigerians who pay tax in the country.
A Senior Lecturer at the Lagos Business School Adi Bongo,a doctorate degree holder, said Nigerians would continue to look for possible ways to dodge taxes until they began to see the effect of the levies and taxes collected by the government.
“Compliance with tax payments is supposed to be automatically driven when the government chooses to do the needful by providing the dividends of good governance to its citizens, but Nigeria’s case is very different. Every public utility expected to benefit Nigerian taxpayers rarely functions from public water access to quality education in public schools.
“For example, people in the informal sector trying to lift themselves through their bootstraps pay huge taxes and levies through their noses and then the government swoops in like a scavenger to reap where it did not sow. Why won’t they look for ways to circumvent the system?” he asked.
Reaction From AMAC
In February, the World e-governance and Smart Cities, WeGo, approved AMAC’s application as the first local government in Nigeria reckoned as a smart city, alongside New York and Tokyo.
At the announcement, Chairman of AMAC Abdullahi Candido expressed joy, saying AMAC would be on the world map.
“We have already computerised some components of our revenue drive. The council for the first time now has what is known as AMAC Business Directory, which captures data of all business operators within the Area Council.
“This will promote the image of AMAC globally and rebrand AMAC as an e-government with the rest of the world,” he said.
However, findings by The ICIR revealed that most of the revenue collection drive by AMAC was not captured digitally or electronically which createed leakages and embezzlement by some officials of the council.
When The ICIR confronted the information officer, saying it had evidence of officials of AMAC diverting monies from its taxes into their personal accounts .
The spokesperson of AMAC Dayo Lawal said, “I am not aware of incidents of multiple taxations and corruption in the council by our staff because what you are telling me is still alleged unless the people involved are proven guilty in the court.”
Speaking further, “There is no reason for you to come to my office when you can present your evidence to us for us to carry our investigation, that is if you have any,” he said.
At the time of filing this report, the reporter was still receiving calls and text messages from Pius, who was interested in knowing when the tax for continual habitation would be paid into his bank account.