Business & Economy - News - May 5, 2021

FIRS to deduct outstanding tax liabilities directly from defaulting MDAs’ bank accounts

Gives 30 days ultimatum for defaulters to pay up all outstanding tax liabilities or risk assets seizure by the government

Ministries, Departments and Agencies (MDAs) as well as companies, corporations, and other revenue collection agencies wilfully and illegally withholding taxes collected on behalf of the Federal Government risk having such debts recovered directly from their bank accounts, the Federal Inland Revenue Service (FIRS) said on Wednesday.
The FIRS Chairman, Muhammad Nami, said in a public notice to defaulters revelaed plans by the FIRS “to recover taxes due from the defaulters’ assets in the custody of any person, including but not limited to sums standing to its credit with a financial institution in Nigeria”.
The notice to all companies, corporate entities and other agents of revenue collection on behalf of the Federal Government said they were required to pay all outstanding tax liabilities to the FIRS within 30 days from the date of publication of the notice.
Previous notice not complied with
Previously, the FIRS issued a similar notice to MDAs demanding payment of all outstanding tax liabilities to the Service within 60 days from the date of publication of the notice.
“It becomes clear, following these notices, that any MDA, company, corporation and other revenue collecting agencies that fails to comply with the directive stands the risk of having all outstanding tax liabilities deducted directly from their bank accounts or statutory allocations, or have their other assets seized by the FIRS and turned over to the Government of the Federation in lieu of the withheld taxes.
The FIRS said the move was in line with the Section 31 of the Federal Inland Revenue Service (Establishment) Act, 2007 (as amended).
The FIRS, in the notices, said:  “Sections 78, 79, 80, 81 and 82 of the Companies Income Tax Act (CITA) Cap. C21, Laws of the Federation of Nigeria (LFN), 2004 (as amended) and Sections 14, 15 and 16 of the Value Added Tax (VAT) Act Cap. V1, LFN, 2004 (as amended) imposed obligations on companies, corporations and other relevant persons as agents of collection, to collect, deduct or withhold taxes (as the case may be) on supply of goods and services or payments and to remit same to the Federal Inland Revenue Service (the Service) within stipulated time frame.”
The notices further emphasized the determination of the FIRS to, “without further notice, apply the provisions of Section 31 of the Federal Inland Revenue Service (Establishment) Act, 2007 (as amended) to recover taxes due from the defaulters’ asset in the custody of any person (including but not limited to sums standing to its credit with a financial institution in Nigeria).” 
To prosecute defaulters
Also, the FIRS said it would take all necessary steps to ensure defaulters are prosecuted for “wilful negligent, tax evasion, unlawful conversion of government property,” etc. as the case may be.Apart from taxes, over the years the government has always lamented the refusal of MDAs and other government-owned revenue enterprises (GOEs) to remit over N10 trillion operating surplus as at the end of August 2018In December 2018, the Director-General, Unremitted operating surpluses by MDAs
Budget Office of the Federation, Ben Akabueze, named the Petroleum Products Pricing Regulatory Agency (PPPRA) as the worst culprit with unremitted operating surplus of over N1.3 trillion; Central Bank of Nigeria (CBN) with about N801.2 billion and Nigeria Ports Authority (NPA) with N192.1 billion.
Others include the Nigerian Maritime Administration and Safety Agency (NIMASA) – N66.1 billion; Federal Airport Authority of Nigeria (N51.99 billion); Nigeria Postal Service (N37.7 billion); Nigeria Communications Commission (N30.9 billion); National Inland Waterways Authority (N30.8 billion); National Information Technology & Development Agency (N30.7 billion); Nigeria Airspace Management Agency (N22.8 billion) and National Examination Council (N16.3 billion).Also owing are the Nigeria Television Authority (N15.6 billion); National Agency for Food, Drugs Administration & Control (N12.3 billion); Nigerian Shippers Council (N12 billion); National Health Insurance Scheme (N8.8 billion); National Pension Commission (N8.7 billion); Corporate Affairs Commission (N7.7 billion); Tertiary Education Trust Fund (N6.1 billion) and Nigerian Civil Aviation Authority (N6.1 billion).
Others include Standard Organisation of Nigeria (N5.6 billion); Securities and Exchange Commission (N5.5 billion); Federal Radio Corporation of Nigeria (5.4 billion); Bureau of Public Enterprises (N4.8 billion); Oil & Gas Free Zone Authority (N3.6 billion); Nigerian Communications Satellite (N3.5 billion); National Automotive Council (N3.4 billion) and Raw Materials Research & Development Council (N2.9 billion).
The Nigerian Export Processing Zones Authority (N1.72 billion); National Insurance Commission (N1.03 billion); Nigerian Nuclear Regulatory Commission (N892.4 million); Financial Reporting Council (N833.8 million); National Centre for Women Development (N346.6 million); National Film & Video Censors Board (N326.9 million); National Office for Technology Acquisition Promotion (N164.5 million); Nigeria Export Promotion Council (N70.6 million) and News Agency of Nigeria (N28 million) were also included.
The records also showed the Nigeria Film Corporation has not remitted about N11.9 million; Cross River Basin Development Authority (N18.5 million); Investments and Securities Commission (N62.2 million); National Sports Commission (N784 million); Asset Management Corporation of Nigeria (N81.8 million); Nigeria Drug Law Enforcement Agency (N85.7 million); Nigeria Investment Promotion Council (N983.9 million); Nigerian Export-Import Bank (N1.23 billion); Federal Government Landed properties (N2 billion); Joint Admissions & Matriculation Board (N2.13 billion); National Sugar Development Council (N3.7 billion); Properties (N4 billion); National Broadcasting Commission (N5.7 billion) and Nigerian Deposit Insurance Corporation N21.8 billion).The provisions of the Fiscal Responsibility Act 2007 require all government agencies to compulsorily remit their operating surpluses to the federation account, annually.
Sections 21 and 22 of the Act, states: “(1) The Government corporations and agencies and government-owned companies listed in the Schedule to this Act (in this Act referred of as “the Corporations” shall, not later than six months from the commencement of this Act and every three financial years thereafter, and not later than the end of the second quarter of every year, cause to be prepared and submitted to the Minister their Schedule estimates of revenue and expenditure for the next three financial years.“
“(2) Each of the bodies referred to in sub-section (1) of this section shall submit to the Minister not later than the end of August in each financial year: (a.) An annual budget derived from the estimates submitted in pursuance of subsection (1) of this section; and (b) Projected operating surplus which shall be prepared in line with acceptable accounting practices.“
“(3) The Minister shall cause the estimates submitted in pursuance of subsection (2) of this section to be attached as part of the Appropriation Bill to be submitted to the National Assembly.”Section 22 (1) states, “Notwithstanding the provisions of any written law governing the corporation, each corporation shall establish a general reserve fund and shall allocate thereto at the end of each financial year, one-fifth of its operating surplus for the year.(2) The balance of the operating surplus shall be paid into the Consolidated Revenue Fund of the Federal Government not later than one month following the statutory deadline for publishing each corporation’s accounts.”
Coronavirus and pressures on economy
Of late, with crude oil revenue declining as a result of the impact of the coronavirus on the global economy the Federal Government has been under intense pressure to mobilize revenues to strengthen the economy and meet other obligations, particularly funding the Federation Account to disburse the monthly statutory allocations to the three tiers of government.
In April, the government was accused of secretly printing about N60 billion to fund its debt obligations, an allegation repeatedly denied. On Tuesday, the Minister of Finance, Budget and National Planning, Zainab Ahmed, hinted the government was planning to cut down on workers’ bloated salaries to reduce its running cost and expenditure.     

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