FIRS Threatens to Block States, LGs Access to Foreign, Domestic Loans over Failure to Remit Taxes

FIRS Threatens to Block States, LGs Access to Foreign, Domestic Loans over Failure to Remit Taxes

  • The Federal Inland Revenue Service (FIRS) has cautioned states and local governments about the dangers of failing to remit tax payments
  • FIRS threatens to deny loan access and publicly name and disgrace tax defaulting states and local governments in a warning notice
  • In a note on Wednesday the tax agency urged defaulting states and LGs to repay all unremitted tax deductions within 30 days or face the consequences

The Federal Inland Revenue Service (FIRS) has threatened to block states and local governments from accessing loans due to their failure to remit Withholding Tax and Value Added Tax (VAT) to the tax agency.

The unremitted tax is from contractors and service providers, which the FIRS said the law mandates states to remit into the coffers of the tax administration, but the states rejected the implementation of the e-payment platform.

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According to a statement signed by its Executive Chairman, Muhammad Nami, to enforce the tax deduction, FIRS said it would compel the Federal Government against accepting state and local governments' requests for the issuance of bonds or other securities.

FIRS, States, LGs, foreign, domestic loans
Muhammad Mamman Nami, Executive Chairman of Nigeria's Federal Inland Revenue Service Credit: Statehouse
Source: Facebook

FIRS also plans to sanction the defaulting states and local governments by blocking their request for external loans, and applications for domestic loans from commercial banks, Ripples Nigeria reports.

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Part of the tax administrators' effort to recover the tax debt includes a plan to deduct unremitted tax from the monthly Federation Account Allocation Committee (FAAC), as well as name and shame the states and local governments owing tax to FIRS.

The statement reads in part:

“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.

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“All entreaties by the Service to ensure the remittance of the established unremitted tax deductions by the defaulting States and Local Governments have been unsuccessful as a result of lack of cooperation in adopting the e-payment platforms provided by the FIRS for a seamless deduction and remittance of these taxes.”

NNPC, NLPGA, MTN top list as FIRS reveals top-performing taxpayers in Nigeria, Dangote missing from top 10

Recall that has reported that the Federal Inland Revenue Service, FIRS has published its Top tax-compliant companies in 2021.

The list revealed on Twitter showed that of the top ten companies listed, 8 are in Nigeria’s Oil and gas space and 2 in Nigeria’s telecoms space.

The disclosure was made in a report FIRS titled Accolades For Our Tax-Complaint Companies In 2021.


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