The Federal Inland Revenue Service (FIRS) says it is taking steps to recover unremitted tax deductions from some states and local governments in the country.
Muhammad Nami, the executive chairman, FIRS, in a public notice, said most states and local governments have 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.
Nami, in the notice, cited relevant portions of the Companies Income Tax Act (CITA) and the VAT Act, which state that ministries, departments and agencies of government, parastatals and other establishments were mandated by law to deduct certain taxes while making payments to third parties and remit those deductions to the FIRS.
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“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), mandate MDAs, parastatals and other establishments to deduct WHT and VAT while making payments to third parties and remit same to the service.
The notice further reads that “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 decision to enforce the collection was reached because most states and local governments have failed to comply with these provisions of the law, despite appeals from the FIRS, he said.
The service, therefore, called on defaulting states and councils to remit all tax deductions within the next 30 days.
