FIRS Generates N23bn Unpaid Taxes From Corporate Firms After Accounts Suspension

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The Federal Inland Revenue Service (FIRS) has generated over N23billion in unpaid taxes from the recently suspended substitution exercise on corporate bank accounts, marked by the imposition of restriction on the accounts of tax-defaulting organisations.

The Chairman of FIRS,
Mr Babatunde Fowler revealed this in Lagos yesterday at the
Manufacturers Association of Nigeria (MAN) Interactive Forum on Tax
Matters. He said the focus of exercise was 3,000 frims deducting Value
Added Tax (VAT) and Withholding Tax (WHT) on behalf of the Federal
Government without remitting such.

He said the companies 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 stated that the suspension of the exercise for 30 days,
announced last weekend, was occasioned by the deluge of corporate
taxpayers visiting FIRS offices to regularise their tax affairs and make
payments, a situation that stretched the service administratively, as
it could not lift the lien on their accounts as quickly as it wished.
Thus, the FIRS directed banks to lift restrictions on such accounts to
allow affected tax companies regularise their tax status within 30 days
and begin to make arrangements for the liquidation of their tax
liabilities.

According to the FIRS chief, the Service’s decision
to restrict bank accounts of businesses, corporate organisations and
partnerships with an annual banking turnover in excess of N1billion, but
without tax identification, was announced at a stakeholders’ meeting
last September.

Fowler said: “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. 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.

Service
made some administrative errors, which made banks place restrictions on
accounts of a few companies with tax identification. This, he
explained, arose from wrong information from the banks. But restrictions
on such, he added, were lifted within 24 hours in addition to tendering
of formal apology to those impacted.

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