Ibekimi Oriamaja Reports.
Ministries, departments, and agencies (MDAs) have received letters from the Federal Inland Revenue Service (FIRS) requesting that they repay nearly N1 trillion in unpaid taxes.
According to a source at the FIRS, MDAs are responsible for collecting specific taxes on the FIRS’s behalf.
“These include VAT (Value Added Tax) and Withholding Tax (WHT) that arise from contracts given at the states and enterprises they work with and operate as collection agents of these taxes for the FIRS before remitting same to the Service.”
Many MDAs neglected to pay these taxes, which over time amounted to nearly N1 trillion.
MDAs allegedly collected N20.676 billion in taxes in 2017, but they neglected to send the money to the federal government.
The Federal Government has been forced to pursue the unremitted cash since the amount of unpaid taxes has increased to almost N1 trillion since 2017 and the necessity to increase income.
“Recall that we previously stated that we will begin a VAT and WHT monitoring effort in this regard. We conducted the nationwide compliance exercise for this reason. We wrote to them; discussions are still underway, according to the FIRS source.
Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PwC, recently affirmed that MDAs had not been remitting withholding tax to the government, supporting this fact.
You’ll be shocked to learn that, per the Auditor-audit General’s report, the National Assembly, the Presidency, and the EFCC do not remit taxes, Oyedele remarked during the Nairametrics Economic Outlook webinar.
In addition to pleading with the Federal Government to “harmonise taxes by decreasing the taxing agencies which should work in concert with plugging leakages,” Oyedele encouraged MDAs to pay employee taxes.
States and municipal governments will be impacted by the FIRS’ unremitted tax gathering as well.
Muhammad Nami, the executive chairman of the FIRS, recently pledged to take action against negligent states and local governments that keep taxes intended for the Service.
He said that the majority of states and local governments had not made the legally required WHT and VAT deductions from payments made to contractors and service providers.
The FIRS forewarned that it would “consequently urge the Federal Government and the Minister of Finance, to henceforth deny permission of any request for the issuance of state bonds or other securities in the capital market” if states and local governments failed to remit the deducted taxes.
Nami stated that to emphasize the gravity of the situation, the FIRS would require that any state or local government with outstanding unremitted tax deductions be prohibited from applying for or receiving domestic loans from commercial banks or other financial institutions.
