The Chairman of the Federal Inland Revenue Service (FIRS) Muhammad Nami, has said that henceforth Stamp Duty, Withholding Tax and Company Income Tax (CIT) should be deducted from source.
Nami made the disclosure on Tuesday when he paid a visit to Lagos State Governor, Babajide Sanwo-Olu at the Lagos State House at Alausa, Ikeja.
He also said that tax-evading firms would be tracked down and put in the tax net.
“Revenue collecting agencies are to deduct stamp duty, withholding tax and CIT from their contractors at the point of payment and promptly send these to the Federal Inland Revenue Service (FIRS) in lump sum, rather than staggered payments as is the current practice.
“This is better for everybody as we would all have to do less reconciliation and enforcement activities, and we can therefore use the saved time to expand the tax net,” he posited.
According to the FIRS Chairman, some multinational companies operating in Lagos have not been paying CIT since 2011.
He therefore called for collaboration between the Lagos State government and FIRS to come up with strategies to bring such tax-evading companies into the tax net.
His words: “A number of multinational companies operating in Lagos State have not paid CIT since 2011 as they appeared to have perfected the illicit act of profit shifting to escape paying tax.
“The FIRS and the Lagos State government need to collaborate to map out strategies to tax these tax-evading companies, whose goods and services we all consume or patronise and who also use public infrastructure to do their business but yet repatriate their profits home.
“We need to tax them so that we can have the fund to combat insecurity, build and maintain public infrastructure and provide social amenities for Nigerians.”
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The FIRS boss also charged all tax-collecting agents in the public and private sectors to make correct collection and prompt remittance of all collectable taxes priority.
Nami also clarified that the outstanding Value Added Tax (VAT) on contracts invoiced before the February 1, 2020 kick-off date for Finance Act 2019, should be paid on the old VAT rate, stressing that all collecting agencies in default in this regard should clear this up immediately.
Nami used the opportunity to further explain some of the palliatives to taxpayers in the Finance Act.
He enumerates them to include a reduction in CIT for Small and Micro Enterprises (SMEs) from 30 per cent to 20 per cent; VAT exemption for SMEs who make a turnover of less than N25 million and a further cut by two per cent for corporate and individual taxpayers who file their CIT or Personal Income Tax (PIT) returns three months before due date.
He canvassed more collaboration between the FIRS and the Lagos State government, particularly in the area of information sharing, tax audit, correct collection and prompt remittance of CIT, PIT, Withholding Tax and Stamp Duty.
In his response, Sanwo-Olu pledged the support of his government to the FIRS.
He said: “When we look at our economic indices, and we need this money, it is only when the FIRS do well that we can get this money through the FAAC. We in Lagos pledge to work even closer with you in the FIRS to meet your target.
“We also pledge to use the money judiciously in the service of the public when it comes back to us as allocation.”
Sanwo-Olu noted that the local economy has capacity to generate more than the N8.5 trillion the FIRS has been mandated to collect.
