The Federal Inland Revenue Service (FIRS) says it generated over N23 billion in unpaid taxes from the recently suspended restriction on the corporate bank accounts of tax defaulters.
Babatunde Fowler, FIRS chairman, was speaking in Lagos on Thursday at the Manufacturers Association of Nigeria (MAN) interactive forum on tax matters.
According to him, the focus of the suspension exercise was on 3,000 companies who had deducted Value Added Tax (VAT) and Withholding Tax (WHT) on behalf of the federal government but had not remitted them in due course.
The companies, he said, had no tax identification and therefore could not remit the deducted taxes to government, making them treat such deductions as part of their cash flow.
Fowler said the agency subsequently suspended the restriction exercise for 30 days as it was “stretched administratively” because a “deluge of corporate taxpayers” had visited FIRS offices to regularise their tax affairs and make payments.
On February 15, the agency had written to banks, directing them to lift the lien on alleged tax defaulters’ bank accounts for 30 days.
“Our position was that if you charge VAT, which is not your money; or deduct Withholding Tax from vendors and you have no tax identification, you cannot even pay tax to the FIRS because you can’t pay without tax identification,” he said.
“So these operators were defrauding the society and the nation by charging consumers VAT, by deducting Withholding Tax and not remitting on behalf of other taxpayers.
“We had over 3,000 of such and we said if they do not come forward, we’d follow the law and do what they call substitution.
“Now, what the Act actually says is that the banks should deduct the amount of taxes from accounts.
We, however, told the banks not to deduct the amounts, but put a lien on those accounts and let the taxpayers come forward.
“And till date, over N23 billion has been paid on those accounts.”
The FIRS chairman said the agency had received information that about 59,000 operators with banking turnover of between N100 million and N1 billion were equally guilty of not having tax identification and were therefore not remitting payments to the federation account.
Fowler disclosed that in the last 18 months, the FIRS has added over 1.2 million business accounts and one million individual accounts to the tax net through the Joint Tax Board.
He however admitted that as a result of wrong information from the banks, the service made some administrative errors, thereby placing restrictions on accounts of a few companies with tax identification.
He said such restrictions were lifted within 24 hours in addition to the tendering of formal apology to those impacted.
- THECABLE
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