Chairman, Federal Inland Revenue Service (FIRS) Mr. Babatunde Fowler, has advised accountants against colluding with tax evaders, warning that they have no power to substitute accounts.
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Fowler gave the advice on Wednesday at the ongoing 49th Annual Conference of the Institute of Chartered Accountants of Nigeria (ICAN), where he was the keynote speaker at a panel discussion on FIRS Power of Substitution. Critical Review and Matters Arising. The discussion was chaired by former FIRS Chairman, Mrs Ifueko Omoigui-Okauru.
While explaining the dynamics involved in the substitution of accounts, Fowler urged accountants at the conference to partner with FIRS in order to improve the revenue collection efforts of all tax authorities.
Before the FIRS decided to place lien on bank accounts of defaulting taxpayers, noted Fowler, it granted a waiver of penalty and interest for three years (2013-2015), followed by the Voluntary Assets Income Declaration Scheme (VAIDS). According to him, it was when millionaire and billionaire taxpayers, with turnover of between N11 million and N1 billion, passed up the opportunity to pay their taxes that the FIRS decided to place lien on defaulting taxpayers’ accounts.
“All defaulting taxpayers were considered, provided that such taxpayers came forward to declare their indebtedness; pay at least 25% of the outstanding amount and present a payment plan on the outstanding tax liability that was acceptable to the Service. This window was opened from 5th October to 24th November, 2016. A total of 2,400 companies took advantage of the window, from which FIRS realized about N98.8 billion,” he said.
He noted that without chartered accountants, it will be very difficult to ensure that adequate taxes are being paid and called on accountants to be diligent and forthright when reviewing clients’ financial status.
“Do your own internal assessment on what your clients should pay; drop accounts that are not willing to do the right thing,” he said.
He explained that the revenue collected by the FIRS is distributed among the three tiers of government, adding that over 30 states rely on that monthly collection without which the service delivery in those states would have been considerably poorer.
“We are all here for this conference, certain that chartered accountants came from various states across the nation. If in your state, we were not able to support your revenue drive, what level of security would you have in your state?
The FIRS boss explained that the Service has been empowered Section 8 (1) (a) of the act establishing it to assess persons chargeable with tax under the extant tax laws and enforce payment of taxes as may be due to government. Section 8 (1) (c) of the FIRS Establishment Act, he said, empowers the Service to collect, recover and pay to the designated account any tax under any provisions of the Act, while Section 8 (1)(g) of empowers the Service to adopt measures, to identify, trace, freeze, confiscate or seize proceeds derived from tax fraud or evasion. He added that Section 31 of the FIRSEA provides for the power of substitution, which is one of the enforcement powers of the Service.
However, his position was rejected by accountants and lawyers at the conference. Wole Obayomi, Head of Tax, KPMG in Africa, maintained that Sections 33 of the FIRSEA and Section 49 of Companies and Income Tax Act (CITA) do not grant the FIRS such powers.
Omoigui-Okauru, who chaired the session, insisted that the FIRS is acting within the law and suggested that FIRS and disaffected taxpayers should seek a middle ground, possibly through an Ombudsman to address the complaints.