Unremitted tax: No loan approval for defaulting states, LGs, says FIRS

The Federal Inland Revenue Service has said states and local governments that fail to remit tax deduction or collected on behalf of the Federal Government risk not getting their loans approved.

It also says as it begins the enforcement and recovery of such unremitted tax deductions, it may resort to naming and shaming the defaulters.

This was announced on Wednesday in a post via its official Twitter handle.

Already, the Federal Government said the tax agency had issued a public notice signed by the Executive Chairman of the FIRS Muhammad Nami.

“@firsNigeria will commence the process of enforcement and recovery of unremitted tax deductions owed by some states and local governments (LGAs) in Nigeria,” the tweet stated.

In the notice, the FIRS said most states and local governments had failed to remit withholding tax (WHT) and value-added tax (VAT) deductions from payments made to contractors and service providers by them as required by law.

The notice stated, “The provisions of sections 78(3), 79(3), 81 of the companies income tax act (CITA), and sections 9(I), 13(1) of the value-added tax act (VATA), mandates ministries, departments and agencies of government, parastatals and other establishments to deduct WHT and VAT while making payments to third parties and remit same to the service.

“By the provisions of the relevant laws, states and local governments are statutorily mandated, as agents of collection, to deduct at source and remit to the service, all taxes deducted, within twenty-one days.”

The FIRS further said that most states and local governments had failed to comply with these provisions of the law, despite its appeals.

The tax agency said it would advise the Federal Government and the finance minister, to henceforth, decline approval of any request for the issuance of state bonds or other securities in the capital market; as well as requests for external borrowing and approval for domestic loans from commercial banks or other financial institutions by any of the state and local governments with outstanding unremitted tax deductions.

The agency also vowed to publicly “name and shame the defaulting states and local governments” while publishing the amounts owed in unremitted tax deductions.

It further said that it would invoke the provisions of section 24 of its establishment act which empowers the accountant general of the federation to deduct at source, un-remitted taxes due from any government agency from the monthly federation account allocation committee (FAAC), and, to thereafter, transfer such deductions to the federation account and notify the tax authority.

The FIRS called on all defaulting states and local governments to promptly remit all tax deductions within 30 days of the publication of the notice to avoid stipulated enforcement actions.