Tax Defaulters: FIRS Contravening Tax Laws – KPMG

KPMG, one of the big four auditors in the world, says the Federal Inland Revenue Service has contravened the Companies Income Tax Act by freezing the accounts of suspected tax defaulters.

KPMG said the FIRS had gone draconian by giving fiats to banks to freeze the accounts, TheCable reported.

It said, “Nothing in the CITA or FIRSEA authorizes the FIRS to impose a freeze order on a taxpayer’s bank account beyond the amount of tax proven to be due and payable by that taxpayer.

“The requirement directed to banks not to honour mandates from taxpayers over and above the tax amount supposedly proven by FIRS to be due and payable is without foundation and goes too far.”

“The letters to the SBs leave them with seven days within which to comply with the directives of the FIRS. This is contrary to the provisions of Sections 69 and 77(3) of CITA, which permits a taxpayer a 30-day period of review and objection.”

In reality, FIRS has not only frozen the accounts in question, but have also stopped some companies from paying staff salaries or carrying out routine transactions.

In addition to this, FIRS has also ordered the banks to deduct the alleged tax debt from these bank accounts “in full or partial payment”.

In its KPMG in Nigeria issue 2.5 released in February 2019, the professional service firm said FIRS had gone too far in its bid to get more people into the tax net.

KPMG argued that Section 69 of Companies Income Tax Act (CITA) 2004 “allows a taxpayer to object to a disputed assessment within thirty (30) days from the date of service of the notice of assessment”.

The firm added that “Section 77 (3) of CITA further provides that the collection of tax, in any case where notice of an objection or appeal has been given by a taxpayer, shall remain in abeyance until such objection or appeal is determined”.