- MDAs Remittance is now expected to be a major pool of tax revenue for the administration
Federal Inland Revenue Service (FIRS) of Nigeria has demanded that the ministries, departments, and agencies (MDAs) make a refund of over ₦1 trillion in taxes that they have generated on behalf of the tax body and have refused to remit over the years.
According to a source at the FIRS in a viral report, these taxes include Value Added Tax (VAT) and Withholding Tax (WHT) generated from the states and businesses they engage with and then serve as collection agents that remit to the tax body afterwards.
Federal Inland Revenue Service: More on the New Direction
It was reported in 2017 that many MDAs generated ₦20.676 billion in taxes but refused to remit the money to the Federal Government. It has since then accumulated to over ₦1 trillion and the sudden need to raise funds has forced the Federal Government to strongly demand that the MDAs remit these funds.
The source revealed that the tax body is in the process of implementing a nationwide compliance exercise to engage the MDAs and ensure full remittance.
During his speech at the Nairametrics Economic Outlook webinar, Fiscal Policy Partner and Africa Tax Leader at PwC, Taiwo Oyedele attested to this fact by stating that the National Assembly, Presidency, and EFCC do not remit taxes, according to the audit report of the Auditor-General.
He urged MDAs to remit taxes of staff and appealed to the Federal Government to harmonize taxes by reducing the taxing agencies which should work in tandem with blocking leakages.
Africataxreview.com also gathered that the FIRS is also going after unremitted taxes from states and local governments, according to the Executive Chairman of the FIRS, Muhammad Nami who recently vowed to go after erring states and local governments who have failed to remit WHT and VAT deductions from payments made by contractors and service providers as required by law.
Due to the refusal of states and local governments to remit the deducted taxes, the FIRS warned that it would implore the Federal government and the Minister of Finance, to henceforth not approve any request for the issuance of state bonds or other securities in the capital market.
Nami said the FIRS would demand that requests for external borrowings and approvals for domestic loans from commercial banks or other financial institutions by any of the states and local governments that have not remitted tax deductions be denied.
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