FG Be­gins Probe of Con­trac­tors’ Tax Records

THISDAY - - BUSINESS/ MONEYGUIDE - Obinna Chima

As part of ef­forts to im­prove tax com­pli­ance, the fed­eral gov­ern­ment has com­menced re­view­ing the tax com­pli­ance records of all con­trac­tors who re­ceived pay­ments from the fed­eral gov­ern­ment and its var­i­ous agen­cies in the last seven years. This fol­lowed the re­sults of a sam­pling ex­er­cise con­ducted by the Min­istry of Fi­nance which found that less than 20 per cent of con­trac­tors re­viewed ac­cu­rately stated the in­come re­ceived from the fed­eral gov­ern­ment in their tax re­turns, whilst many made no dec­la­ra­tion at all. Ac­cord­ing to a state­ment, the re­sult of a sam­pling ex­er­cise showed that some Tax Clear­ance cer­tifi­cates which were pre­sented at the point of con­tract award were found to have little bear­ing to the true value of busi­ness con­ducted by the con­trac­tors.

How­ever the state­ment said the Min­is­ter of Fi­nance has as­sured that with the new multi-agency, data driven ap­proach, it would be far eas­ier for tax au­thor­i­ties to cross check in­for­ma­tion pro­vided in tax dec­la­ra­tions and thereby en­sure that the cor­rect taxes were paid.

“Fed­eral In­land Rev­enue Ser­vice (FIRS) as part of its au­to­ma­tion ef­forts has al­ready elim­i­nated is­suance of hand­writ­ten tax clear­ance cer­tifi­cates and other re­forms are on-go­ing.

“The Min­istry of Fi­nance and Of­fice of the Ac­coun­tant Gen­eral of the Fed­er­a­tion are now com­pil­ing de­tailed records of all pay­ments ex­ceed­ing N100 mil­lion made in the last seven years in­clud­ing de­tails of the ben­e­fi­ciary bank ac­counts and other de­tails.

“All agen­cies have 30 days to re­turn the in­for­ma­tion on pay­ments made, and ac­count­ing of­fi­cers are re­quired to cer­tify the ac­cu­racy of the data sup­plied.

“De­lib­er­ate omis­sion or ma­nip­u­la­tion of data by ac­count­ing of­fi­cers will at­tract sanc­tion. The ini­tia­tive is part of the con­struc­tion of a cen­tral data base of fi­nan­cial in­for­ma­tion be­ing de­vel­oped for use in tax com­pli­ance,” it added.

It fur­ther ex­plained that the data­base project dubbed ‘Project Light House’ is aimed at build­ing com­pre­hen­sive pro­file of tax pay­ers us­ing a wide range of avail­able data sources, in­clud­ing BVN, for­eign exchange al­lo­ca­tions, land reg­istry records, and in­for­ma­tion ob­tained from for­eign gov­ern­ments.

The data would be used to cross check in­for­ma­tion pro­vided to the tax au­thor­i­ties.

While ex­plain­ing the Pres­i­dent Muham­madu Buhari - led gov­ern­ment’s com­mit­ment to im­prov­ing tax com­pli­ance, the Min­is­ter of Fi­nance, Kemi Adeo­sun stated that Nige­ria’s low level of tax com­pli­ance was at vari­ance with the col­lec­tive de­sire to re­duce de­pen­dence on oil and to be­come a pros­per­ous na­tion that pro­vides for all its cit­i­zens.

Ac­cord­ing to the min­is­ter, “It was a mat­ter of con­cern that those who earned money di­rectly from Gov­ern­ment, which is both trace­able and ver­i­fi­able, still failed to pay the cor­rect taxes thereon.”

She urged such com­pa­nies to promptly take ad­van­tage of the con­ces­sions of­fered un­der VAIDS, adding that once an au­dit or in­ves­ti­ga­tion had com­menced, a com­pany or in­di­vid­ual would not be able stop that process by par­tic­i­pat­ing in VAIDS.

“VAIDS has now been open since July 1st and some ap­pli­ca­tions have al­ready been re­ceived. If the tax au­thor­i­ties reach a com­pany be­fore such com­pany has ap­plied for VAIDS, then the full au­dit process will be con­ducted.

“This could re­sult in penal­ties, in­ter­est and pros­e­cu­tion. So com­pa­nies and in­di­vid­u­als who know they will be af­fected are urged to quickly take ad­van­tage of VAIDS,” she added.

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