Nigeria: New tax regime eyes freezing defaulters’ bank accounts
If the ongoing parley between the Federal Inland Revenue Service (FIRS) and stakeholders like collecting banks (banks accredited to collect taxes on behalf of the Federal Government) ends smoothly, Nigerian revenue authority will be freezing bank accounts of tax defaulters.
Over 6, 772 defaulting taxpayers, mostly billionaires, according to banks’ data, will be affected by this exercise.
Although the power to work with institutions like banks to track and punish tax offenders is enshrined in the FIRS Act of 2007, the tax institution is just beginning to explore such powers.
FIRS said it has come to its notice that taxpayers who are raking in billions in Nigeria are not paying taxes, its Executive Chairman, Tunde Fowler, has said.
The tax authority also said it would, through all banks in the country, do substitution on accounts for such identified taxpayers.
Fowler, who disclosed this at a stakeholders’ meeting Thursday in Lagos, noted that most of such taxpayers who have between N1 billion and N5 billion in their accounts have no Taxpayer Identification Number (TIN) and have not filed any tax returns as taxpayers.
His words: “What we have done is what we call substitution, which also is in our laws, which empowers us to appoint the banks as collection agents for tax. So, all these ones of TIN and no pay and no TIN and no pay, totaling 6,772, will have their accounts frozen or put under substitution pending when they come forward. First, they equally declined to come forward in 2016, they refused to come forward under VAT and are still operating here. So, we are putting them under notice that it is their civic responsibility to pay tax and to file returns on these accounts.”
Fowler explained further: “We looked at all businesses, partnerships, corporate accounts that have a minimum turnover of N1 billion per annum for the past three years. First of all, the law states clearly that before you open a corporate account, part of the opening documentation is the tax ID. From the 23 banks that we have analysed so far, we have 31,395 records. Out of which, effectively minus duplications, we had 18,602.
“We broke those into three categories: Those that have TIN tax ID, those that don’t have no TIN and, of course, no TIN no pay and those that have TIN and have not even paid anything.
“So, on a minimum, every company or business included here over the last three years has had a banking turnover of N3 billion and above. Some of them have had banking turnover of over N5 billion and have not paid one kobo in taxes. Now, the total number of TIN and no pay is 6,772.
“So, if someone is good in mathematics, you take the minimum level of N3 billion multiplied by 409; and they are operating within our society and economy and do not remit or make any tax payment.”
Paraphrasing the Nobel Laureate, Prof. Wole Soyinka’s famous quotation of wasted generation, Fowler said this generation should not repeat Soyinka’s description by their conduct. “I plead with the banks to support us. In supporting us, you are supporting Nigeria. In supporting Nigeria, you are supporting all Nigerians and those who have chosen Nigeria as home. And most of all, you are supporting a future that we can leave behind for the upcoming youths of Nigeria.”