The Federal Inland Revenue Service has disclosed that the Ministries, Departments and Agencies (MDAs) failed to remit over N1 trillion in taxes they collected on behalf of the FIRS.
FIRS noted that states and Local Government Areas (LGAs) also failed to remit certain taxes collected in their areas of jurisdiction.
“These include VAT (Value Added Tax) and Withholding Tax (WHT) that emanate from contracts awarded at the states and businesses they engage with and then act as collection agents of these taxes for the FIRS and afterward remit same to the Service,” a source at the FIRS disclosed.
According to the source, many MDAs failed to remit these taxes which had accumulated to over N1 trillion over the years starting from 2017 when MDAs reportedly collected N20.676 billion in taxes but failed to remit the money to the Federal Government.
The source added that since then, the unremitted taxes grew to over N1 trillion and the need to ramp up revenue has forced the Federal Government to go after the unremitted funds.
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“Recall we have announced that we are going to embark on a VAT, WHT monitoring exercise in this regard. That is why we did the nationwide compliance exercise. We wrote to them; engagements are ongoing,” TheNation quoted the FIRS source as saying.
Recently, Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PwC, asserted that MDAs had not been remitting withholding tax to the government.
“You will be surprised to know that the National Assembly, Presidency and EFCC do not remit taxes, according to the audit report of the Auditor-General,” Oyedele said at the Nairametrics webinar.
The FIRS Executive Chairman, Muhammad Nami, recently vowed to clamp down on defaulting states and LGAs holding on to taxes meant for the Service.
Nami said most states and local governments had failed to remit to the Service WHT and VAT deductions from payments made by contractors and service providers as required by law.
He advised that 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.”
Nami said the FIRS would demand that requests for external borrowings and approvals for domestic loans from commercial banks or other financial institutions by any of the states and local governments with outstanding unremitted tax deductions be denied.
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