FIRS Enforcement Move Threatens Investors Confidence

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Only recently, business owners were awakened to cruel bank transaction notifications running into millions of naira undertaken without their consent.

On further enquiries from their respective banks, they were shocked to learn that the Federal Inland Revenue Service (FIRS) had issued fiat to financial institutions to put lid on accounts of suspected tax defaulters.

“We just woke up, saw notifications from our banks that the FIRS told them to put a lien of an outrageous amount in taxes we are owing; that was about a N100 million,” one of the affected business owners told THISDAY on conditions of anonymity.

The Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler, recently disclosed that the sum of N23 billion had been recovered from 45,000 tax defaulters, who had over N100 million as turnover in their respective bank accounts.

He further hinted that a new batch of 40,000 millionaires would be targeted in this year.

However, the latest mode of clampdown on businesses, which had failed to comply with their tax obligations have been severely criticised in some quarters, including FIRS staff and renowned tax and audit authorities.

A source further told THISDAY that some staff of the revenue agency had even urged affected individuals to seek legal redress as the move by Fowler was unprecedented, with grave implications for the growth of small enterprises which are critical for economic development.

Famous audit firm KPMG, had promptly questioned the FIRS move, describing it as “draconian”.

It stated: “We note and salute the FIRS’ objectives to bring delinquent taxpayers into the tax net and consequently increase the federal government’s tax revenue.

“However, the current practice whereby the FIRS issues fiat to freeze taxpayers’ bank accounts generally and to demand that SBs pay alleged outstanding tax liabilities from customers’ bank balances without recourse to affected persons, is draconian.

“This will cast doubt on the federal government’s drive to improve the ease of doing business in Nigeria, diminish the credibility of the Nigerian tax system, and erode investors’ confidence in the Nigerian economy.”

The company also called on taxpayers to “ensure that they fulfill their civic obligations by paying the right amount of taxes and filing relevant tax returns with the tax authorities, as and when due”.

Apparently, under pressure from critics over its unpopular actions to compel compliance through seizure of accounts, Fowler had within the week halted the freezing of bank ac- counts of tax defaulters for 30 days.

According to him, the directive became necessary in view of the large number of taxpayers, who had besieged its offices in their bid to regularise their tax positions, coupled with the inconveniences they encountered during the process. But in spite of the criticisms bedevilling the FIRS measures, particularly the seeming lack of due process in freezing bank accounts, the service appears unperturbed and has maintained that it possessed powers under its Establishment Act to take the steps.

Justifying its actions, FIRS spokesman, Mr. Wahab Gbadamosi, responding to THISDAY enquiries maintained that “tax is anchored on law, the basis of tax is law in the first place” stressing that the FIRS Establishment Act (FIRSEA), Company Income Tax Act (CITA) among others already provided the basis for its actions.

Quoting relevant sections of the Act, Gbadamosi said, “The Service may require any person to give information as to any money, fund or other assets, which may be held by him for, or of any money due from him to, any person.

“Also note that Section 49 of CITA further empowers FIRS to take all the steps we have taken with respect to recovery of tax debts from billionaire and millionaire tax defaulters.”