The Federal Inland Revenue Service (FIRS) has announced that it will begin deducting unremitted Value-Added Tax (VAT) and Withholding Tax (WHT) by states and local governments from the allocations shared monthly by the Federation Account Allocation Committee (FAAC).
The Executive Chairman of FIRS, Muhammad Nami, in a statement says the punitive measure was resorted after all entreaties by the service get the money paid was unsuccessful.
Nami noted, “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.
“However, it is regrettable to note that most of the states and local governments have failed in their responsibilities of remitting WHT and VAT deducted from payments made to contractors and service providers as required by law”.
While stating that the action has led to huge tax debts owed by the states and local governments, Nami says it has advised the federal government and the minister of finance, to also decline approval of any request for issuance of state bonds/other securities in the capital market, request for external borrowing; and approval for domestic loans from commercial banks/other financial institutions.
“We will also publicly name and shame defaulting states and local governments with the amount of unremitted tax deductions; to ensure the remittance of the established unremitted tax deductions by the defaulting states and local governments,” he explained.