Business
FIRS vows to publicly name, shame tax defaulting states, local governments
The Federal Inland Revenue Service (FIRS) has said it would soon begin to publicly name and shame tax defaulting states and local governments.
The agency also said it will commence the process of enforcement and recovery of unremitted tax deductions owed by the some states and local governments in the country.
This is contained in a public notice, signed by its Executive Chairman, Muhammad Nami, on Wednesday.
Nami regretted in the notice, that the tax authority noted that most states and local governments have failed to remit to the Service Withholding Tax (WHT) and Value Added Tax (VAT) deductions from payments made to contractors and service providers by them as required by law.
The notice, highlighting relevant portions of the Companies Income Tax Act (CITA) and the Value Added Tax Act (VATA), stated that Ministries, Departments and Agencies of Government, as well as Parastatals and other establishments, were mandated by law to deduct certain taxes while making payments to third parties and remit those deductions to the FIRS.
“The provisions of Sections 78(3), 79(3), 81 of the Companies Income Tax Act (CITA), and Sections 9(I), 13(1) of the Value Added Tax Act (VATA), mandate Ministries, Departments and Agencies of Government (MDAs), Parastatals and other establishments to deduct WHT and VAT while making payments to third parties and remit same to the Service,” the notice said.
“By the provisions of the relevant laws, States and Local Governments are statutorily mandated, as agents of collection, to deduct at source and remit to the Service, all taxes deducted, within twenty-one days.’’
According to it, “However, it is regrettable to note that most of the States and Local Governments have failed in their responsibilities of remitting WHT and VAT deducted from payments made to contractors and service providers as required by law.
“The implication is the huge tax debts owed by the States and Local Governments.
“All entreaties by the Service to ensure the remittance of the established unremitted tax deductions by the defaulting States and Local Governments have been unsuccessful as a result of lack of cooperation in adopting the e-payment platforms provided by the FIRS for a seamless deduction and remittance of these taxes.”
The service said it will advise the Federal Government and the Minister of Finance, to henceforth decline approval of any request for the issuance of state bonds or other securities in the capital market; as well as requests for external borrowing and approval for domestic loans from commercial banks or other financial institutions by any of any state and local government with outstanding unremitted tax deductions.
Nami added that it would also publicly name and shame the defaulting States and Local Governments while publishing the amounts owed in unremitted tax deductions.
He further stated that it would invoke the provisions of Section 24 of its Establishment Act which empowers the Accountant General of the Federation to deduct at source, from the monthly FAAC allocations, un-remitted taxes due from any government agency and to thereafter transfer such deductions to the Federation Account and notify the Service.
The FIRS called on all defaulting States and Local Governments to promptly remit all unremitted tax deductions within 30 days of the publication of the Notice to avoid it taking these enforcement actions
