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UNDERCOVER INVESTIGATION: How Enugu state internal revenue officers steal tax money
Investigative journalist, KELECHUKWU IRUOMA, presented himself as an unemployed Nigerian youth to expose corruption at the headquarters of the Enugu State Internal Revenue Service (ESIRS). To undertake this investigation, Iruoma adopted the pseudonym — Chinonso Ignatius Ezugwu — who just concluded the National Youth Service Corps (NYSC) and needed a Tax Clearance Certificate (TCC) to apply for a grant and was charged a prohibitive amount of money by the revenue officers. In this report, he uncovers how the revenue officers extort taxpayers and steal tax revenues collected.
It was a sunny Monday afternoon, I arrived at the headquarters of the Enugu State Internal Revenue Service (ESIRS) in the Government Reserved Area (GRA) of Enugu, a state in southeast Nigeria. It was past three, ESIRS staff were preparing to close for the day. I approached the reception and met a young lady seated opposite the entrance with a black bag placed on a reception desk. She brought out a plastic containing brown powder, poured a little on her left palm and rubbed on her oily face.
We exchanged greetings. Her politeness was quite exceptional considering the rude behaviour of some front desk officers in government establishments. I told her I had visited the revenue office to get a Tax Clearance Certificate (TCC). A friend who had visited the office a few months back had told me the name of the revenue officer — Chidera — who issued him a TCC at N20, 000. I requested the receptionist to direct me to Chidera. Unfortunately, she was out of the office.
Beside the reception is a waiting hall with an aluminium door. I entered the hall and saw two revenue officers discussing with a young man, who also wanted the TCC. I had been referred to them by the receptionist. Negotiation was ongoing regarding the amount of money he was to pay. I sat until they concluded their discussion. He had been charged N100, 000 for it. There was no conclusion as the young man promised to return the next day. He left the hall.
The receptionist then introduced me to the female tax officer while the other male officer listened. I sat alone on a long couch. She joined me and we faced each other. Discussion soon began. At this point, the receptionist returned to her desk.
“What do you need the TCC for?” she asked me. I replied: “I am an unemployed youth who just concluded the mandatory National Youth Service Corps (NYSC). I am applying for a grant and a TCC is required to complete the application.” I made her to know how important the grant was.
“It’s N150, 000 to get a TCC,” she quickly responded. “That is the amount we collect. If it is for visa application, it is also N150, 000. We used to charge more than that. It was N200, 000 last year .”
I told them about my friend who got his TCC at N20, 000 at the same revenue office. They claimed TCC could not be done at that amount. The male officer interjected and explained the supposed tax reforms in the state and how difficult it would be to get TCC at N20, 000.
“You will get Enugu State Social Benefit Number (ESBN), which will be a number that will be assigned to you. You will use the ESBN to always pay. We started it last year. Before it was easy for us to bypass senior officers. But now, taxpayers must go to the bank and deposit the payment.”
Unfavourable tax assessment
I explained I could not pay such a huge amount of money to get a TCC. Later, they reduced the amount to N100, 000, which I refused to accept. According to them, it is compulsory for individuals to pay a four-year tax before they can be issued a TCC and it is not less than N90, 000.
This is an unfavourable assessment by the tax officers. It was apparent I just concluded NYSC as and had not had any work experience to have earned an income. Yet, I was told to pay the Personal Income Tax (PIT) of N90, 000.
PIT is a compulsory tax charged on the income earned by an individual. The rate of tax paid by individuals is not fixed. It all depends on employees’ gross income.
According to Accounteer, “The rate of Personal Income Tax payable depends on the amount of taxable income which the person is liable for. Taxable income refers to the base upon which the income tax system imposes and decides on how much tax a person is to pay in a given calendar year.”
This is either paid through Pay-As-You-Earn (PAYE), which is how people in paid employment pay their taxes, whereby the employer deducts the tax at the source and self-assessment by self-employed persons. Self-employers are allowed to assess themselves and pay the due tax to the revenue office.
Tax plays a significant part in revenue generated by the state governments. According to Transparency International, taxes are crucial for mobilising revenue to fund public services, infrastructure and other development and poverty reduction goals.
Many states, including Enugu want to increase revenue to raise funds to address various issues in the states. Hence, the insistence by the tax officers for me to pay N90, 000.
“You will transfer the money to my account so that I can go to the bank to pay,” the female revenue officer told me. I refused.
Meeting another and final revenue officer
I left the waiting hall and went to the reception. I pleaded with the receptionist to find Chidera’s number so I could speak to her. I succeeded in getting her number, called and explained to her that I needed a TCC urgently. She charged me N90, 000.
I brought her attention to a friend she helped to get a TCC at N20, 000 and told her I only had that same N20, 000 to pay.
“I only collected N20, 000 from someone for the tax clearance and there was a way I did it to get him a PAYE tax clearance,” she admitted. She was able to manufacture figures showing the salary the person earned every year from 2016 to 2018 and the taxes that were being deducted.
As an unemployed Nigerian youth without work experience, I expected the revenue officer to provide the TCC for free showing nil salary. “The nil salary is for students and those who have retired. Unemployed youths have to pay,” she said.
Forging a payslip
I kept pleading with her to provide the TCC at N20, 000. She said she could do it at that amount but it would be difficult for her to forge a payslip because the system is now automated. She asked that I go to any cyber cafe to forge a payslip and bring it to her so she could maneuver her way and process the TCC. I told her I could not manufacture a payslip.
“I want us to do it in any that it will show that you are working with a bank because we need a name of a company. We need a payslip to present to the office. The N20, 000 you are going to pay will be used to sort my way through my boss to easily get the TCC.”
I insisted I could not forge a payslip myself and I would be glad if she could do it. “If you depend on me to get the payslip, I will charge you N50, 000,” she told me. I told her to go ahead with it but she still said it would not be easy.
“If it was before, I could easily manufacture figures for you. Now I have to submit a document [pay slip] before I can process the TCC. When you get the payslip, I will help you get the tax clearance certificate immediately,” she told me.
I reiterated I would not be able to forge a payslip. At this point, she said I must pay N90, 000 to get the “business TCC”. She revealed the business TCC can be used to obtain anything and I was not going to provide any other document and the N90, 000 would be for a four-year tax payment beginning from 2016 to 2019. I agreed to pay her the N90, 000.
Lack of verification from the revenue office
It was already past four. I could not start the registration process. I returned to the revenue headquarters the next day to begin the process of getting an ESBN and TCC. I went into the revenue office and seated on a white chair facing another revenue officer on hijab. Seated beside her was Chidera, booting the desktop computer to start the registration.
She wrote out questions on a white plain sheet and handed to me to fill. I filled my name, place of residence, date of birth and gender. All details submitted except gender were wrong. She then electronically took a snapshot.
At this point, I was nervous. I was expecting my details to go through some processes of verification but it was not. No international passport, national identity card or voters card were demanded from me for verification. There were no online checks to confirm if I submitted the right information. No biometric registration also. She never cared if I was a fraudster trying to get a TCC to dupe some persons or engage in illegal businesses.
A few minutes after taking my snapshot, my phone vibrated. I had just received my ESBN. “Keep that ESBN well,” she told me. “That is what you will be using whenever you want to pay tax to the Enugu State government.”
How tax officers steal tax money collected
She had completed the online registration. Payment was next. I requested her to generate the Enugu State Payment Retrieval Reference (EPRR) for me so I could go to any of the approved banks to pay the N90, 000.
As written on the revenue’s office website “The EPRR is s a unique electronic code that helps track and secure your transactions.”
I was surprised she refused to generate an EPRR, demanding I pay her cash. I informed her that the only payment option approved by the state board of internal revenue was through bank deposits, cheques or electronic transfers.
“It is not as if there is no account to pay into; that is the way I do my own [cash payment]. You have to withdraw, give me the money and I will be the one to go and complete the process,” she said.
I insisted I was not going to pay her cash until she generated an EPRR I would use to pay in a bank but she said she would back off if I did not give her cash. “Only if you bring the money, I will proceed.” she said.
“The money you are giving me is sand and dust,” she stated. I was pained to hear this. How can N90, 000 be sand and dust? I asked myself. “I do more than the amount you want to pay. You will pay me N90, 000, I will do an assessment and backlog it. My own gain is that I am the one doing everything; that is you’re coming through me. When I am done, I will keep your receipt in my own file,” she continued.
I proceeded to a First Bank branch located at Bank Avenue and withdrew the money. I gave her a cash of N90, 000 and recorded the process the money was being given to her without her knowledge. She knew I was pained as I gave the money to her. It was not possible to get the payments receipts and TCC that same day so she asked me to return the next day.
Unverified payment ID: Extortion of taxpayers
It was rainy that Wednesday afternoon. I arrived at the revenue office and sat in the waiting hall. I called Chidera, she picked and said she was not on seat. She directed me to her boss, who she said would give me the receipts and TCC.
I proceeded to the office. I saw a dark man seated on a chair teaching a corps member and the revenue officer on hijab something on the desktop. I was to seat while I wait for them to finish. After some minutes, the man left the office.
Soon, Chidera arrived and waited for her boss to return, but he did not. Her boss apparently knew about the deal. She went to his desk and brought out some documents, which she handed to me. She gave me four receipts containing my tax payments from 2016 to 2019 and a TCC with a blue paper written “income tax clearance certificate.”
The income tax receipts revealed how I was assessed. For the 2016 income tax, I was charged N10, 000; 2017 tax payment was N14, 500; 2018 was N25, 000 while 2019 was N40, 500 totaling N90, 000. This is too much for an unemployed youth to pay just because I needed a TCC to apply for a grant.
The receipts issued to me were supposed to be the same but they were not. The tax payment receipts from 2016 to 2018 issued were the same while that of 2019 was completely different.
2016, 2017 and 2018 receipts have spaces written “signature of payer” where the taxpayer can sign but she did not bother to give them to me to sign. Three receipts except that of 2019 had signatures of different individuals with the same writing and colour of pen. The 2019 tax receipt was issued by Nkechi Chibueze with her signature on it. Others have no name of issuer. This is unusual. I knew something was wrong. I could not ask questions immediately since I could verify the receipts on ESIRS website.
I logged onto the website. First, I verified the TCC with the certificate number on it. It was successfully validated as all details appeared showing taxes paid in 2016, 2017 and 2018 as calculated by Chidera. I tried to verify the 2019 EPRR, it was successfully verified as it showed all details.
2016, 2017 and 2018 receipts do not have EPRR, which is unusual. They only have receipt numbers. There is a space on the website to verify that. To my surprise, 2016, 2017 and 2018 receipt numbers could not be verified. They were not available.
The message read “Payment or receipt ID could not be found.” What this means is that the tax officer in cahoot with officers she settled only paid the 2019 tax payment of N40, 500 and took the rest of the money issuing unauthorized 2016, 2017 and 2018 receipts.
Revenue officers involved will be investigated and prosecuted- ESIRS Chairman
When contacted, the Chairman of the Enugu State Board of the internal revenue service, Emeka Odo, described the act perpetrated by Chidera and colleagues as “criminal offence.” When I explained to him that I paid N90, 000 just to be issued a TCC, he sighed.
“She obtained money from you under a false pretence. We have told everybody in our offices not to collect cash. We are automated. We do not collect cash. You can make it a police case because it is a criminal offence,”
Corruption is a challenge in tax administration in Nigeria. Due to the lack of knowledge of taxpayers regarding tax laws, tax officers take advantage by using their power and threats to extort illicit payments from tax-payers.
Taiwo Oyedele, PricewaterhouseCoopers (PwC) Fiscal Policy Partner & West Africa Tax Leader said corruption in tax administration impacts negatively on trust, dampens taxpayers’ morale and discourages voluntary tax declaration.
According to Oyedele, “In a recent survey of Nigerian households and small businesses on Citizens’ Tax Perception by the Nigerian Economic Summit Group, nearly one in every three adults taxpayers said they were asked to pay a bribe in their dealings with tax authorities. Corruption in tax administration thrives because of opportunities created by lack of transparency, complex compliance processes, and weak institutions.”
Transparency International said tax administration and law enforcement institutions in Africa often suffer from high levels of corruption, making the collection and management of public resources very challenging.
A survey conducted in 35 African countries by Afrobarometer to measure social, political and economic atmosphere, perceive corruption among tax officials to be high. 35% of respondents perceive that most tax officials are involved in corruption, and close to 40% believe that at least some of them are involved in corruption.
The survey revealed that corruption among tax officials are highest in Cameroon and Nigeria (59% each), followed by Sierra Leone (57%), and Benin (54%), whereas only 9% in Mauritius, 11% in Cape Verde and 13% in Botswana.
Odo knew there were corrupt tax officials in the revenue service but finds it difficult to identify and nail them.
“What she did was that she extorted money from you, paid a small amount of money to the board of internal revenue and put the rest in her pocket. We will appreciate your cooperation so that we can apprehend those who did it and the appropriate measures will be taken against them. It is not our normal practice. If you have all the evidence, we will take them to the police to tell us where she put the money.”
He reiterated that the board does not accept cash from taxpayers. All tax payments transactions should be done in the bank.
To address this problem, Oyedele said the state government needs to simplify tax compliance, de-personalise processing of tax clearance certificates, constantly educate taxpayers and clearly communicate legitimate taxes and payment channels.
“Cash payments should be outlawed and a whistle-blowing framework should be established to enable taxpayers report corrupt tax officials and their principals for appropriate sanctions as provided in the law.”
Odo is furious. He believes punishing corruption officers would be a huge discouragement to others and has promised to make sure all officers identified get their slice of his wrath.
“I promise you, we will investigate it and whoever is involved will face the Police,” Odo assured me. “We will properly discipline them. Whoever is involved in this will be punished.”