Big data, data analytics and effective tax administration in nigeria

Big data, Data analytics and Effective tax
administration in Nigeria
Patrick Nzeh (FCA, FCTI)
May 2019

. 2Big data, Data Analytics and Effective tax administration in Nigeria
Outline
1. Overview of big data and data analytics
2. Tax justice in Nigeria and government tax revenue
3. Big data and effective tax administration
4. Taxpayers’ data and tax compliance level in Nigeria
5. Conclusion and Next steps

Benefits,
challenges
and possible
solutions
About the
Speaker
6
Key take-away
The key takeaways:
• Gain an understanding of the concept of big data and basis for
data analytics and challenges involved in processing data
• Understand how data analytics can help tax administration in
Nigeria
• Understand the relationship between government tax revenue
and tax justice in Nigeria

4Big data, Data Analytics and Effective tax administration in Nigeria.
Overview of Big data and Data
analytics

Benefits,
challenges
and possible
solutions
Going
forward
Overview of Big data and Data analytics
What is Big data?
• Data is a set of values, facts, statistics
collected for further analysis
• Data is variables, quantities, values or
symbols on which operations are carried
out by a computer and capable of being
transmitted through electric signals.
The three Vs of Big data
• High Volume,
• High Velocity,
• High Variety
• Big data refers to large, complex and
unstructured data sets that create
significant challenges for traditional data
management and analytic tools in
practical timeframes.
• It refers to data sets whose nature or size
creates significant challenges to record,
manage and process
• Big data is massive and huge
• It exists in three forms: Structured,
Unstructured and Semi-structured.
• Tax authorities deal with large amount
and data analytics becomes a valuable
tool in modern tax administration

Characteristics of Big Data
• Source:xenonstack.com

Sources of Big Data
Public
dataSensor
data
Social
media
Networks
Transactional
applications
Audio/
video files
Online
log files
Web
application
s
Big
Data
• Source:datafloq.com

Data analytics
• Data is becoming disruptive and data
analytics has become a critical business
decision tool.
• Data-focused businesses are more efficient
and their customers are more satisfied.
• Data analytics is only effective when it leads
to decision making.
• It could be carried out in four forms:
‒ Descriptive analytics
‒ Exploratory analytics
‒ Predictive analytics
‒ Prescriptive analytics
• The process of examining raw
data by the application of
mechanical process with the
purpose of drawing conclusions
about the information.
• It is the practice of using data to
drive business strategy and
performance.
• Big data analytics filters useful
information from large data and
transform it into useable form.

Data analytics techniques and tools
• Major data analytics tools include:
‒ HDInsight,
‒ Hadoop,
‒ Skytree,
‒ Talend,
‒ Splice machine,
‒ Apache stark,
‒ R programming,
‒ Rapidminer,
‒ Knime,
‒ Qlickview,
‒ Splunk
‒ Etc.
• The process of data analysis
involves predictive data and text
mining analytics, predictive
analysis, data optimization and
forecasting.
• Specialized tools and techniques.
are used in analysing large
volumes of data.
• Data analytic techniques are
created by an integration of high-
performance analytic function and
processes.

Challenges of big data analytics
Selecting the right data
analytic tool for the
organization
Synchronisation of
separate data sources
Getting data into the
big data platform
Getting the human data
analyst expert

Tax justice in Nigeria and
government tax revenue

Tax justice in Nigeria and government tax
revenueTax justice in Nigeria
Any action that will
reduce the amount
of tax revenue is
injustice to the tax
system
Tax justice ensures
level playing
ground between
foreign investors
and local entities in
similar businesses
Tax justice is a
global
phenomenon
based on providing
equitable tax
system
Tax justice is an
extension of
principle of equity
by ensuring that
taxes are equitable
and taxpayers pay
what they ought to
pay

revenueResponsibilities for tax justice
Responsibility
Tax
Administrator
• Collect tax revenue
raised efficiently
and equitably
• Stimulate the
interest of
taxpayers and be
truly accountable
to the citizens.
Tax PayerTax Professional
• Provide
professional tax
advice to tax
payers in
accordance with
the law
• Pay the right
amount of tax

revenueTax justice initiatives in Nigeria
Country-by-
Country
Reporting
Regulations 2018
– greater
disclosure
requirement by
MNCs
Signing up
for
establishmen
t of Beneficial
Ownership
Register
Whistle
blowing to
discourage
all forms of
bribery and
corruption
Improvement
in data mining
to capture
more
taxpayers in
the net
Launch of
integrated Tax
Administration
System (ITAS) to
optimize tax
collection and
increase
compliance
Revised Income
Tax (Transfer
Pricing)
Regulations 2018
– strict
implementation of
the tax laws
Automatic
exchange of
information
to
encourage
tax
transparenc
y
VAIDS to
increase
compliance,
increase tax net,
reduce incidence
of tax avoidance
and increase tax
to GDP ratio
VOARS for
Nigerian tax
defaulters to
voluntarily
declare
offshore
assets
Review of
tax
incentives
(PSI) to plug
revenue
leakages

Big data and effective tax
administration

Data Analytics and Effective Tax Administration
All jurisdictions are
striving to improve
tax administration –
OECD
Efficient tax
administration is
measured by the
cost of tax
collection to
revenue
Effectiveness is
measured by the
level of tax
compliance
Technology is
driving the
paradigm shift in
business models
and reshaping
taxpayers
expectations from
Tax Authorities
Big data technology
offers Revenue
authorities the
opportunity to
obtain unstructured
data of taxpayers for
efficient and
effective tax
administration.
Efficiency is achieved
by properly
structured tax
administration
system, use of
information/commu
nication technology
& e-government
initiative to reduce
cost

Ways Tax Authorities can use data analytics to
achieveeffectiveness
Proactive,
check fraud,
tax evasion
and
avoidance.
Risk
manageme
nt
(risk based
audit)
Analyzing data
for better
understanding
of taxpayer
profile
Mining data to
improve tax
collection, target
compliance initiative
and improve overall
efficiency
Validate the
returns file
and determine
tax and audit
assessments
Uncover non-
compliant
taxpayers. Verify
and detect
inconsistencies in
filed returns
Understand
taxpayers for
proper
designing of e-
services, new &
improved
services
Real time or near
real time data
capturing and
assessment can be
prepared in the
same manner

Big data and effective tax administration
Ways Nigerian Tax Authorities are using data analytics
to achieve effectiveness
FIRS request
for
documents
and
information
to build data
base of
taxpayers
2
Data shared
from exchange
of information
Automation of key
stages of FIRS
compliance processes
(Integrated Tax
Administration System
(ITAS)
‒ e-Registration
‒ e-Stamp Duty
‒ e-TaxPayment
‒ e-Receipt
‒ e-Filing
‒ e-TCC
3 41
Data mining
– Project
Lighthouse

Taxpayers data and tax
compliance level in Nigeria

Taxpayers data and tax compliance level in
Nigeria
70%
23%
7%
NOIPOLLS NATIONAL
TAXATION SURVEY
No evidence of taxpayers' money at work
Unclear tax rules and complex compliance process
Poor enforcement by tax authorities
Developed
nations
30-32%
Nigeria
6%
Tax compliance level

Conclusion and next steps

Conclusion
Data is the new gold
for tax administration
Technology is driving
and reshaping
businesses and
taxpayers’ expectations
are changing.
Big data and analytics
is the foundation of
the new digital tax
world
It is not all about data in
FIRS’ possession but the
analysis to be derived
from the data in its
possession

Next steps
Most tax authorities have embraced advanced analytics.
Revenue authorities in Nigeria must innovate to improve tax
revenue collection
For Nigeria to achieve its projected tax to GDP
ratio there is need to key into endless
opportunities that are offered by big data and
analytics
Armed with the right information on
taxpayers, tax authorities would be
able to focus attention on tax
defaulters and arrest instances of non-
compliance and tax evasion

Big data, data analytics and effective tax administration in nigeria

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