The Federal Inland Revenue Service (FIRS) has written ministries, departments and agencies (MDAs) to refund over N1 trillion in taxes they have failed to remit according to The Nation.

A source at the FIRS told press that MDAs are expected to collect certain taxes on behalf of the FIRS.

“These include VAT  (Value Added Tax) and Withholding Tax (WHT) that emanate from contracts awarded at the states and businesses they engage with and then act as collection agents of these taxes for the FIRS and afterwards remit same to the Service,” the source said.

Many MDAs, the source added, failed to remit these taxes which had accumulated to over N1 trillion over the years.

In 2017, MDAs were reported to have collected N20.676 billion in taxes but failed to remit the money to the Federal Government.

Between 2017 till date, the unremitted taxes grew to over N1 trillion and the need to ramp up revenue has forced the Federal Government to go after the unremitted funds.

“Recall we have announced that we are going to embark on a VAT, WHT monitoring exercise in this regard. That is why we did the nationwide compliance exercise. We wrote to them; engagements are ongoing,” the FIRS source said.

This fact was recently corroborated by Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PwC, who asserted that MDAs had not been remitting withholding tax to the government.

Speaking at the Nairametrics Economic Outlook webinar, Oyedele said: “You will be surprised to know that the National Assembly, Presidency and EFCC do not remit taxes, according to the audit report of the Auditor-General.”

Oyedele urged MDAs to remit taxes of staff and appealed to the Federal Government to “harmonise taxes by reducing the taxing agencies which should work in tandem with blocking leakages.”

Also to be affected by the FIRS’ unremitted tax harvesting, are states and local governments.

Executive Chairman of the FIRS, Muhammad Nami recently vowed to clamp down on erring states and local governments holding on to taxes meant for the Service.

He said most states and local governments had failed to remit to the Service WHT and VAT deductions from payments made by contractors and service providers as required by law.

Following the failure by states and local governments to remit the deducted taxes, the FIRS warned that it would “consequently advise the Federal Government and the Minister of Finance, to henceforth decline approval of any request for the issuance of state bonds or other securities in the capital market.”

To underline the seriousness of the issue, Nami said the FIRS would demand that requests for external borrowings and approvals for domestic loans from commercial banks or other financial institutions by any of the states and local governments with outstanding unremitted tax deductions be denied.