FISCAL Policy Partner and Africa Tax Leader at Pricewaterhouse Coopers (PwC),Taiwo Oyedele, said most ministries, departments and agencies (MDAs) of the Federal government have not been remitting their withholding taxes to the government.
Withholding tax is basically an advance payment of income to be applied as tax credit to settle the income tax liability of the years of assessments to which the income that suffered the deduction relates.
Oyedele, who spoke on Arise Television Business Morning show programme today, regretted that such non-remittance was dealing a blow on the nation’s scarce resources, as its economic managers resorted to borrowing and overburdening those already in the tax net.
He called on the National Assembly to sanction heads of government agencies that were not effecting such remittances, which come mostly from government contracts and related businesses.
Oyedele, who spoke against the backdrop of the recently released Federal government’s 2023 Tax and Fiscal Policy, said the development could hurt businesses on the back of current economic hardship and high cost of ease of doing business.
He said, “It seems government is comfortable with the easier solution as regards hike in tax. However, a report from the Auditor-General of the Federation showed most MDAs are not complying with tax payments. They are not remitting withholding taxes that they collect to the government.”
The tax expert pointed out that the increases in tax in the fiscal framework were done without sufficient consultation with the industry professionals.
To him, without sufficient consultation with relevant business stakeholders, the success of the new fiscal regime would be hampered.
He also stressed the importance of tax harmonisation, insisting that the Federal Inland Revenue Service (FIRS) should be saddled with effecting such process.
The Federal government had introduced new Fiscal Policy Measures (FPM) for 2023, in a circular dated April 20, 2023.
The circular, signed by the minister of Finance, Budget and National Planning, Zainab Ahmed, was titled, ‘Approval For The Implementation Of The 2023 Fiscal Policy Measures And Tariff Amendments.’
The introduced additional excise duty ranged from 20 per cent to 100 per cent on alcoholic beverages, tobacco, wines and spirits.
In the new policy, Nigeria will begin to tax single use plastic, while five per cent telecommunication tax had been approved.
The taxes will take effect on June 1, 2023, immediately after the end of the Muhammadu Buhari administration.
The document read in part, “This is to confirm that His Excellency, Mr. President, has approved the implementation of the 2023 Fiscal Policy Measures made up of Supplementary Protection Measures (SPM) for the implementation of the ECOWAS Common External Tariff (CET) 2022 – 2026 and revised excise duty rates on alcoholic beverages, cigarettes and tobacco products, as well as introduction of excise duty on single use plastics (SUPs).