The Federal Inland Revenue is expectedly going to be under pressure to increase tax revenues this year as revenue from oil is expected to drop. The Acting FIRS Chairman is talking tough dishing out several initiatives that he hopes will help increase tax revenue. A few weeks ago he talked about increasing VAT to 10% and this week he has touched an even more daring initiative. He wants banks to deduct taxes due to government directly from your account. This is according to an article from the Guardian. See excerpts;
THE Acting Chairman of the Federal Inland Revenue Service (FIRS), Samuel Sunday Ogungbesan, has hinted that his agency would collaborate with financial institutions, particularly banks, to collect tax directly from corporate organisations and individuals in the attempt to shore up government revenue from tax sources.
The new drive is expected to elicit the cooperation of the banks to deduct taxes due to government from contracts and other taxable transactions directly from the account of companies and individuals with Tax Identification Number (TIN) Ogungbesan, who spoke with The Guardian in Abuja, identified inadequate information on taxpayers in the country as reason for the low level of tax contribution to the country’s Gross Domestic Product (GDP) He said the tax agency, under his leadership, will strive to enhance collaboration with banks for direct deduction of accruable tax from accounts of individuals, private and government agencies carrying out transactions like award of contracts or selling of property About 1, 487, 249.
Corporate enterprises and individuals were issued Tax Identification Number (TIN) by the tax agency as at the end of December 2013, an indication that a great number of Nigerians are outside the country’s tax net.
The new FIRS boss, who unveiled his vision for tax administration in the country, said his goal was to enthrone a system that enable Nigerians to willingly and happily perform their tax obligations, saying the use of force was primitive and could be detrimental to the nation’s productivity.
In case you don’t get it, we believe Ogungbesan basically wants to give banks power to deduct taxes like Withholding Tax on transaction done with the Government once you have a TIN. For example, if you supply items to a government agency, then the VAT you collected from that agency or WHT deducted will have to be deducted by the bank on behalf of the government rather than wait for you to remit at your own discretion.