The Federal Inland Revenue Service, in a bid to ensure that all tax revenues due to the government are collected and remitted into the Federation Account, has begun a tax audit of the Nigerian National Petroleum Corporation.
The Executive Chairman, FIRS, Mr. Babatunde Fowler, disclosed this on Thursday in Abuja when members of the Public Accounts Committee of the Senate led by its Chairman, Senator Andy Uba, visited the agency.
Fowler said the audit was being carried out as part of measures aimed at boosting tax revenue in the 2016 fiscal period.
He said apart from the NNPC, the FIRS had received approval from the Minister of Finance, Mrs. Kemi Adeosun, to commence a joint audit of all Ministries, Departments and Agencies of the government.
He said the need for the joint audit arose owing to the fact that the arrangement where government agencies were to deduct Withholding Tax and Value Added Tax from contractors and remit same to the Federation Account had not yielded the desired results.
The audit, the FIRS boss added, had also been extended to all banks operating in the country to ensure that all tax revenues of government were remitted to the Federation Account.
Fowler said, “We have an audit process that we are carrying out with the collecting banks to ensure that revenues received have been swept into our account at the close of 2015; we are about to start another audit process to ensure that remittance still held by other banks have been swept.
“We also wrote to them in September that if there was any amount unapplied, because sometimes taxpayers pay and quote the wrong account number and it goes into a suspense account; we have told them to remit any amount unapplied that belongs to the Federal Government directly to our account. And during the audit process, we will also verify that that has been done.”
On the audit of government agencies, he explained, “We did have a situation whereby we expected them to remit taxes to the government, including Withholding Tax and Value Added Tax, which was not done. We have now, as a solution in discussion with the Minister of Finance, decided to do a joint audit on all federal Ministries, Departments and Agencies.
“We’ve also written to all the states governors requesting for their cooperation, that they should help put in place a system whereby all Federal Government taxes that are due from the state governments are also remitted electronically.
“I am glad to report that as of last week, the Ogun State governor has responded and we are still waiting for responses from other state governments.
“We are also putting in place a system in the Office of the Accountant-General of the Federation to ensure that all payments done by the government and all taxes due are deducted immediately and remitted to the Federation Account for onward allocation at the Federation Accounts Allocation Committee.”
The FIRS boss expressed optimism that with the new measures put in place by the agency, the country would from March begin to see an increase in the level of compliance by the MDAs on Withholding Tax and VAT.
Uba commended the FIRS for rising up to the challenge of funding the budget through tax revenue as a result of the decline in oil revenue.
He, however, drew the attention of the FIRS to queries raised by the Office of the Accountant-General of the Federation about the non-disclosure of the four per cent cost of collection in the agency’s statement of accounts.
Uba said, “We are just coming from the AGF’s office and while we were there, there is a question I asked the accountant-general and he said it is on record that the four per cent cost of collection enjoyed by the FIRS has not been included in the financial statement of the FIRS since 2010 despite the auditor-general’s persistent queries.
“There are queries that the auditor-general has sent to you with regard to the four per cent. They said they have had a meeting with your organisation and you people are saying you will look into it and get back to them.”
Fowler, however, explained, “By law, the four per cent is part of the revenue we generated and that is given to us monthly at the same time that FAAC is held; and so, it is automatic.”