Billionaire Tax Defaulters In Trouble As FIRS Moves To Freeze Their Accounts

The Federal Inland Revenue Service (FIRS) will soon go after the bank accounts of defaulting taxpayers who are raking in billions of Naira in Nigeria and are not paying taxes, FIRS Chairman, Tunde Fowler has said.

In doing that, FIRS, through all banks in the country, will do substitution on accounts for such identified taxpayers. There are Over 6772 of such defaulting billionaire taxpayers being identified by the FIRS, leveraging on banks data.

Fowler who disclosed this at a stakeholders’ meeting in Lagos, noted that most of such taxpayers, who have between N1 and N5 billion in their accounts have no Taxpayer Identification Number, TIN, or have TIN and have not filed any tax returns as taxpayers.

Said the FIRS Chairman: “What we have done is what we call ‘’substitution‘’ which also is in our laws which empowers us to appoint the banks as collection agents for tax. So, all these ones of TIN and no pay and no TIN and no pay, to the total of 6772 will have their accounts frozen or put under substitution pending when they come forward. First, they refused to come forward in 2016, they refused to come forward under VAT and are still operating here. So, we are putting them under notice that it is their civic responsibility to pay tax and to file returns on these accounts.

Fowler explained further: “We looked at all businesses, partnerships, corporate accounts that have a minimum turnover of N1 billion per annum for the past three years. First of all, the law states clearly that before you open a corporate account, part of the opening documentation is the tax I.D. From the 23 banks we have analysed so far, we have 31,395 records, out of which effectively minus duplications we had 18,602.

“We broke those into three categories: Those that have TIN tax I.D, those that don’t have no TIN and of course no TIN no pay and those that have TIN and have not even paid anything.

“So, on a minimum, every company or business included here over the last three years have had a banking turnover of N3 billion and above. Some of them have had banking turnover of over N5 billion and have not paid one kobo in taxes. Now the total number of TIN and no pay is 6772.

“So, if someone is good in mathematics and you take the minimum level of N3 billion multiply by 409 and they are operating within our society and economy and do not remit or make any tax payment.”

Paraphrasing the Nobel Laureate, Professor Wole Soyinka’s famous pithy quotation of wasted generation, Fowler said this generation should not repeat Soyinka’s statement by their conduct: “I plead with the banks to support us. In supporting us, you are supporting Nigeria. In supporting Nigeria, you are supporting all Nigerians and those who have chosen Nigeria as home. And most of all, you are supporting a future that we can leave behind for the upcoming youth of Nigeria..

“I remember this when we were growing up a statement made by Wole Soyinka that our generation is a wasted generation. That (statement) has remained in my mind for many years. Wole Soyinka is still alive. His generation is a generation of 80s and above. Let us not look back and say also our generation has not left any value behind. I think it is time for us to change.

He noted that FIRS is also paying closer attention to audit. ”We have started a comprehensive audit exercise that involves both national and regional audits… because we got to a position where we found out that majority of the major organizations that were allowed to do self-assessment, do not truthfully declare or pay the taxes that were due. To date, we have raised assessment of over N805 billion from 1324 National Audits out of which 499 (taxpayers) have N219 billion.

“N219 billion, it can do a lot of things. It can provide certainly a lot more infrastructure, healthcare and educational facilities. These monies that are supposed to go into the Federation Account are shared between Federal, Local and State governments. So, every state can get an additional 1 billion from such monies. Hopefully, if you vote right, that governor would deploy it to the right place.

At the stakeholders’ meeting held at Oriental Hotels in Lagos and attended by representatives of the Nigerian Bar Association (NBA), Manufacturers Association of Nigeria (MAN), Central Bank of Nigeria (CBN), Nigerian Employers Consultative Council (NECA), Labour Unions, professional accounting and audit firms, tax consultants, amongst others, Fowlers noted that it is not fair nor right for businesses to be making money in the Nigerian space and fail or refuse to contribute tax to the till.

“Gone are the times or days we ask what has government done for me. We should ask what we are doing for ourselves and the nation first. We should obey the law, pay our taxes, empower our governments at various levels, then sit back and see the end results. If we see the amount of the budget that has gone into capital under this present government, but not only gone into the government but being expensed, it is at least three times more when the revenues were even higher.

He did not spare the FIRS either, even though it had made over N1 trillion over its 2017 collection between January to August by N1 trillion. “If you look at 2018 revenue to date, between January and August, we have done N3.5 trillion, which is N1 trillion over 2017. But the main point I want to make is that majority of taxpayers that accounted for this revenue have not changed. The laws have not changed. And to a great extent, the consultants to these companies have not changed. If you look at 2017, there is an increase of close to N800 billion over the 2016 collection.

“The increase in 2018 so far showed N1 trillion. If the same consultants advised or reviewed the accounts of the majority of the taxpayers, one would wonder why such large increases occurred. It is either the taxpayers did not disclose fully their finances to the consultants or the consultants involved in tax planning.

Either way, it is not to the wellbeing of our nation, Nigeria

He noted the perfidy of businesses who collect VAT and not remitting to government coffers: “We have found out that a number of businesses collect VAT that do not remit to government, So we are going back old school way and I would just like to publicly display this. This is the new VAT certificate which would be given to all tax payers and we expect them to display it in their places of business because we also found out in actual figures that a number of businesses were not even registered tax payers and were collecting VAT. Without having a tax I.D as an agent for collection of VAT there is no way you can remit that VAT to government. So, in short, they were sort of collecting and adding it to their income and spending it.

The FIRS Chairman noted that taxpayers can now enjoy the flexibility of choosing their tax offices and paying online.

“Prior to now, at times your tax office can be an hour away from your office, taxpayers can now choose where their files reside. You can pay anywhere in the world: London, Dubai, New York, pay your taxes online and download your receipt immediately,” he said.

Citing the example of taxes FIRS is levying on corporates which have property, but are now being assessed on the value of their property’s turnover, Fowler clarified on why such property owners are being assessed for tax.

“First of all, banking turnover does not mean that is the turnover of your business it simply means the money that has gone in and out of your account, but what the tax law says is that’’ if you do not file your returns and you are in constant default we use turnover as a basis of estimating your tax liability’. For example, if your turnover is N100 million we assume that 20% of that is profit and we tax that at 30%.

“Some of them claim not to own the property. Those of them that claim not to own the property and of course were sent to government, Presidency to decide what would happen to those properties that have no owners. To those that have owners and have not paid, they would be prosecuted. We are also in the process of going to court to get the approval of the court to sell those properties. We are not only doing that in Abuja, we’ve concluded in Lagos. We are currently doing it in Osun, Oyo, Kaduna and eventually we would cover the whole federation.

“The idea here is simple. If you have had the opportunity to make your wealth in this economy, in this society, the least you can do is pay your tax.

“We have not included any group who by law are not meant to pay tax in this group. So far, we have sent out 2,980 letters and we believe that before the end of September we would get most of them out,” he said.