FIRS Sounds Alarm On Financial Crime, Unites Experts In Bold New Offensive

To curb Nigeria’s staggering revenue losses due to illicit financial flows (IFFs), the Federal Inland Revenue Service (FIRS) is preparing to host a high-level national conference aimed at boosting inter-agency collaboration and building institutional capacity.

The initiative, according to iReporter Online, is part of a larger national strategy to counter the exploitation of tax loopholes, particularly by multinational corporations engaging in aggressive tax avoidance.

Statistics indicate that Nigeria loses an estimated $88.6 billion annually through illicit financial activities disguised as legitimate trade—mostly through commercial transactions.

On a continental scale, Africa is believed to lose about $1.6 billion daily, or $587 billion annually, to IFFs. These mind-boggling figures, as highlighted in a recent Channels Television interview with Professor Bolaji Owasanoye (SAN), Coordinating Director of the FIRS’ Directorate on Proceeds of Crime and Illicit Financial Flows, represent one of the gravest threats to development financing on the continent.

Professor Owasanoye, speaking on the upcoming conference, emphasized that FIRS cannot shoulder the burden alone. “If we cannot track properly, we cannot collect,” he noted.

According to iReporter Online, the purpose of the conference is to forge synergies among agencies, encourage seamless data sharing, and strengthen Nigeria’s institutional capacity to detect and prevent capital flight.

In recognition of the severity of the issue, FIRS recently established a dedicated Department for Proceeds of Crime and Illicit Financial Flows.

This development aligns with Nigeria’s obligations under the Proceeds of Crime Act, 2022, reinforcing the FIRS’ mandate to combat financial crimes that increasingly blur the lines between tax evasion and money laundering.

Owasanoye identified commercial transactions, particularly those involving multinational corporations, as the primary source of capital leakage.

“A major source of loss is aggressive tax avoidance by multinationals through methods such as trade mispricing and transfer pricing,” he explained.

These schemes often involve internal corporate transactions where a Nigerian subsidiary inflates costs—such as the price of bottle caps sourced from a related foreign entity—thereby shrinking its taxable profits in Nigeria while shifting profits abroad.

According to iReporter Online, many of these manipulations go undetected due to lack of expertise, insufficient comparative data, or, in some cases, collusion between company staff, auditors, and tax officials. Owasanoye stressed that while foreign investment is welcome, Nigeria must draw a line between beneficial and exploitative capital. “We need investment, but not toxic investment,” he warned.

Citing a report by former South African President Thabo Mbeki, Owasanoye noted that over 60% of Africa’s illicit financial losses stem from commercial activity, especially in extractive industries, while the rest are linked to criminal activity and corruption.

Nigeria’s active participation in the OECD’s Base Erosion and Profit Shifting (BEPS) framework signals the country’s intent to align with global efforts to ensure fairer taxation of multinational companies. Owasanoye observed that the very countries where these companies are headquartered are also grappling with the same challenges.

He also addressed domestic tax policy, highlighting recent reforms designed to promote equity. Small and medium enterprises (SMEs) below a defined revenue threshold will now be exempt from taxation, a move aimed at stimulating economic growth. “The government does not want to tax poverty, it wants to tax wealth,” he clarified.

Owasanoye emphasized the importance of accessing international data through automatic exchange of information agreements to expose discrepancies in cross-border corporate filings. “That’s how you detect anomalies and pinpoint profit shifting,” he stated.

Ultimately, the FIRS’ initiative—according to iReporter Online—is a robust push to equip Nigerian institutions with the tools, knowledge, and alliances needed to safeguard national revenue from sophisticated financial manipulation schemes that continue to undermine the country’s economic foundation.

”IREPORTER REPORTS”