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
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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