Business Hilights
Tracking Nigeria's Headline Business News Online

Advert space

FIRS causing service providers to pay double VAT by hoarding receipts

Whereas the federal government through the Federal Inland Revenue Service (FIRS) is working to raise tax compliance in the country, indication has emerged showing high incidence of double payment of Value Added Tax (VAT) by companies.

A number of tax consultants who spoke to our correspondents said FIRS officials are reluctant in releasing VAT withholding receipts booklets to companies so that when VAT is deducted, the receipt showing the deduction is issued to the payer without delays.

According to them, the situation is causing service seekers to end up paying for VAT twice or more as the cases may be.

For example, if Company A delivers service to a government agency, during payment, the agency will deduct VAT without a covering receipt which the agency is supposed to get from FIRS, the service provider will end up paying another VAT on same payment during tax reconciliation and assessment by FIRS who always insist to see evidence of having paid VAT on the transaction, knowing full well it did not give the agency any VAT receipt to issue to service providers in the first instance.

Only recently, the Chairman of FIRS, Mr. Tunde Fowler, said the agency has collaborated with the Office of the Accountant General of the Federation to ensure that Ministries, Departments and Agencies remit tax revenues promptly.

He noted that this was achieved through the implementation of the Government Integrated Financial Management Information System, which ensures that Value Added Tax and Withholding Tax were deducted from source on all Federal Government contracts.

He however failed to explain how service providers will escape the risk of double payment hence there is no documentary evidence given to service providers after deducting VAT at source.

Fowler spoke in a keynote remark at the 44th Annual General Meeting of the Association of Advertising Agencies of Nigeria in Lagos on Friday.

He said “We have also improved collaboration with the Office of the Accountant General of the Federation to ensure that the MDAs remit taxes promptly through the implementation of the Government Integrated Financial Management Information System, which facilitates deduction and remittance of Withholding Tax and Value Added Tax on all contract payments at source”.