A report by the Office of the Auditor General for the Federation (OAuGF) has exposed significant financial infractions of up to N75.5 billion in the revenue and economic sector, particularly the Federal Inland Service (FIRS).
The annual report was to check non-compliance and internal control weaknesses in federal ministries, departments and agencies (MDAs) in 2021.
The infractions included unrecovered taxes, unapproved payments, and overpayments, with notable cases in the South-East, South-South, Northern region, FIRS headquarters as well as several tax offices within the nation’s capital.
FIRS headquarters, Abuja
The audit showed that the FIRS headquarters in Abuja recorded a payment of N646.97 million for ICT equipment without approval from the National Information Technology Development Agency (NITDA) as provided for by the establishment circular. Also made, was an overpayment of reward for outstanding service of more than N7.2 million, contravening the FIRS human resource policy. These amounts totalled about N654.1 million
The audit said the infractions could be attributed to weaknesses in the internal control system of the agency, recommending strict sanctions accordingly.
South-East
A total of N3.7bn was uncovered in the South-East region. As of the end of December 31, 2020, Enugu failed to recover over N1.8 billion, being unrecovered tax liabilities of N243.45 million by the Micro and Small Tax Office (MSTO); N1.17 billion by the Government Business Tax Office (GBTO), and N388.15 million by the Medium Tax Office (MTO), all of the FIRS.
In Abakaliki, unrecovered taxes reached N140.79 million – the FIRS medium and small tax office did not recover N134.48m, and the government business tax office did not recover taxes of N6.31m. These were outstanding debts from Company Income Tax, Educational Development Tax (EDT), and Value Added Tax (VAT).
The audit moved to Abia State, where four FIRS offices failed to recover over N1.78 billion.
In the breakdown for Abia, unrecovered taxes by the agency’s medium and small tax office in Umuahia amounted to N48.28 million while N321.5 million was unrecovered by its government business tax office. Similarly, the medium and small tax offices in Osisioma and Aba failed to recover N1.38 billion and N31.64 million respectively.
The audit noted that these financial infractions could allow for irrecoverable debts and loss of government revenue.
South-South
The findings showed that regional offices in Akwa Ibom, Cross River and Bayelsa states gulped N26.3 billion in unrecovered taxes as well as N14.72 million, being the penalty for late returns. These states had unrecovered debts traced to their tax offices reaching up to N418,37 million. These amounts climbed to N26.7 billion.
Northern region
The auditor-general’s report found anomalies by FIRS offices in various states in the North amounting to about N1.27 billion. The report unrecovered tax arrears by the government business tax office in Lafia amounting to N473.69 million as well as N72.78 million unrecovered by the micro and small tax office.
The findings further revealed that Bauchi MSTO failed to recover about N43.7 million in tax liabilities. The state’s business tax office also failed to recover N699.1 million in outstanding debts.
Damaturu government business tax office defaulted to the tune of N16.1 million.
Abuja tax offices
FIRS tax offices in the nation’s capital failed to follow financial regulations, leading to infractions of N43.1 billion as of the end of 2021. According to details from the auditor-general’s finding, 16 issues were found across various tax offices.
Garki small and medium tax office of the FIRS did not recover over N769.98 million of outstanding taxes. It also failed in its duty of updating tax liabilities of up to N357.19 million, putting the country at risk of loss of revenue, irrecoverable or bad debt.
As of December 31, 2021, the Garki medium and small tax office had unrecovered tax liabilities of N33.46 million, the auditor general’s report revealed.
Garki medium tax office didn’t recover N4.13 billion, comprising monies owed as company income tax, education tax, and withholding tax among others. Also, unrecovered tax liabilities by MTO in Garki amounted to N5.97 billion, of which a large chunk were tax liabilities of 61 companies that had become perpetual debtors since 2012. A part of the unrecovered tax was a penalty for late return while the rest was declared as uncollectable arrears.
In Utako, N358.83 million was not recovered by the medium and small tax office. This included value-added taxes and others. Mabushi medium and small tax office also defaulted as it did not recover N72.7 million.
Similarly, Maitama, Central Area, Asokoro and Gwagwalada medium and small tax offices had unrecovered taxes of N805.1 million, N17.87 million, N580.8 million and N4.18 million, respectively.
The report further showed that the government business tax office in Abuja had not recovered N6.1 billion owed by 168 companies, $2.8 million which was N4.51 billion (based on the exchange rate as at the time of putting this report together) owed by 2 companies as VAT and withholding tax. Also €41,363, which was N70.27 million, was owed by a company as withholding tax as of 31st December 2021.
In Garki large tax office, N11.3 billion was unrecovered from several companies, being taxes owed as of 31st December 2021. The audit also found that the FIRS tax office did not recover over N7.9 billion from a company, an amount that was tagged uncollectable tax.
The audit went down to New Karu, where it was found that the medium and small tax office did not recover N4.8 million as VAT from companies.
The auditor-general’s report recommended that the executive chairman of the FIRS should be requested to appear before the Public Accounts Committees of the National Assembly regarding the infraction as they violate financial regulations.
The report also urged the agency to recover and remit all outstanding taxes to the treasury or face appropriate sanctions.
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