Nigerian Agencies Failed To Remit N20 billion VAT, Other Taxes In 2017 – Audit Report

Nigerian Agencies Failed To Remit N20 billion VAT, Other Taxes In 2017 – Audit Report

A total sum of N20.7 billion (N20,675,801,479.59) in various taxes was not remitted to the Consolidated Revenue Fund of the Nigeria government by Ministries, Departments and Agencies (MDAs) in 2017.

The details are contained in the Auditor-General’s annual report of the accounts of the federation of Nigeria for 2017. The report was obtained by this newspaper on Friday.

The report, transmitted to the Clerk of the National Assembly in July, was signed by the nation’s Auditor-General, Anthony Ayine.

The over N20 billion unremitted funds cover Withholding Taxes, Value Added Taxes, Stamp Duty, Capital Gains Tax and other statutory taxes.

The report claimed that from the 2017 audit, revenue-generating agencies and other Ministries, Departments and Agencies (MDAs) who deduct the statutory Withholding Taxes, Value Added Taxes, Stamp Duty, Capital Gains Tax and other statutory taxes did not carry out their duties appropriately to the benefit of the Nigerian government, thereby leading to a significant reduction in revenue accruable to the government.

A perusal of the details showed that 16 revenue-generating agencies did not remit a total of N19 billion (N19,025,384,100.29) to the Consolidated Revenue Fund. Among the agencies, the Bureau of Public Enterprise (BPE) topped the list, with N7.6 billion (₦7,585,116,400.00).

The report also found that revenue generating agencies dissipate funds on excessive overhead expenditures and extra-budgetary expenditure on contracts thereby reducing their operating surplus.

Similarly, 26 of the MDAs that were audited did not deduct or remit a total of N1.7 billion (N1,650,417,379.30), the report showed.

“Overall, audit found that the sum of N20,675,801,479.59 (Twenty billion, six hundred and seventy-five million, eight hundred and one thousand, four hundred and seventy nine naira, fifty nine kobo) in various Taxes (PAYE, WHT, VAT, etc.) in the year under review, was not remitted to the Consolidated Revenue Fund of the Federal government by Ministries, Departments and Agencies (MDAs),” the report said.

The auditor-general added that non-remittance of revenue surpluses by revenue-generating agencies affects financial liquidity of the government and reduces government’s efforts to adequately fund its annual budget. He added that it may lead to an increase in the government’s internal and external borrowing, thereby increasing the government’s debt burden.

“I recommend that a proper strategy to improve the oversight of revenue generating agencies should be devised and implemented. A timely reconciliation of all revenues accruing to the CRF should be done immediately, to ensure that funds meant for the Government are remitted immediately. Adequate sanctions should be implemented against the heads of agencies failing to remit appropriately and in a timely manner,” Mr Ayine added.

Affected agencies

The audit report listed unremitted taxes by some of the affected agencies and institutions to include Federal University Dutsin-ma, Katsina State (N31,461,559.60); University of Abuja, Abuja (N603,446,911.37); Modibbo Adama University of Technology, Yola, Adamawa State (N8,884,010.00);

Federal University, Oye-Ekiti, Ekiti state (N24,812,174.73); Federal University of Technology, Owerri, Imo state (N748,178,771.25) and the Teachers Registration Council of Nigeria (N355,059,967.21).

Others are the National Examination Council (NECO) with an unremitted sum of N3,498,463,711.01, Bureau of Public Enterprise (BPE) with 7,585,116,400.00, News Agency of Nigeria with N32,324,585.60, Security and Exchange Commission with N2,297,199,080.00, and the Federal Medical Centre, Abeokuta, Ogun State with N155,169,590.25, among others.

More Infractions

The report said that the audit team reviewed the granting of cash advances to staff across MDAs in compliance with relevant rules and regulations and found out that N1.4 billion (₦1,410,254,803.68) remained unretired cash advances granted by 26 MDAs.

“Furthermore, the sum of one billion, one hundred and ninety-five million, six hundred and fifty-two thousand, six hundred and sixty-naira, six kobo (₦1,195,652,660.06) was granted, as cash advances by twenty-one (21) MDAs above the threshold of ₦200,000.00 which indicates circumvention of procurement processes and avoidance of tax deductions While in three (3) MDAs, the sum of one billion, five hundred and thirty-four million, six hundred and one thousand, nine hundred and eighty-nine naira, sixty-one kobo (₦1,534,601,989.61) was unrecovered loans,” the report said.

“Some occasions Chief Executive Officers appoint a project accountant from their offices to oversee contracts, projects or programmes that require due process in line with the Public Procurement Act, however they grant cash advances to such staff above the permitted threshold.”

Breach of Laws Governing Tax Refunds

On tax refunds, the report said that in the course of ascertaining the appropriateness and accuracy of outflows from tax refund account maintained by both FIRS and OAGF in 2017, it was observed that FIRS internal processes were not compliant with Section 23(3) of FIRS ACT 2007.

The act states explicitly that: “Any tax refund shall be made within 90 days of the decision of the service made to subsection (2) of this section, with the option of setting off against future tax by the tax payer.’’

Details of the report showed that applications for tax refund as of December 31, 2017, stood at N47.4 billion while the amount due for payments on that date stood at N23.1 billion. Similarly, the budgetary provision for tax refund in 2017 was N25 billion but there were delays in approval from management after tax audit. There were also delays in the refund to taxpayers after tax audit and approval stages had been carried out, the report added.

The auditor-general noted that the development created inconvenience to taxpayers and impacted on the finances of households and businesses in the country.

“The Chairman of FIRS is required to ensure that the yearly budgetary provision for tax refund is adequate and that the 90-day time frame for tax refund is met,” Mr Ayine said.