FIRS To Go After 52,005 Tax Defaulters, Recovers N83.2bn Outstanding Liabilities

A total of 52,005 Companies with turnover of between N100m and N1bn are not paying taxes to the Federal Government, figures from the Federal Inland Revenue Services have revealed.

The Executive Chairman of FIRS, Muhammed Nami gave the figure on Wednesday at a meeting to review the report on Illicit Financial Flow in relation to tax.

He said that based on FIRS’ strategy to tackle IFF, the Service wrote to all commercial banks, requesting for a list of Companies, Partnerships, and Enterprises with banking turnover of between N100m and N1bn.

He said after analyzing responses provided by 23 banks, it was discovered that 52,005 of these companies were not paying taxes while N83.216bn had been recovered by the FIRS.

He said illicit financial flows through cross border laundering, proceeds of crime, financing of terrorism, the theft of state assets, private sector bribery, and most importantly the abuse of taxation has had so much damage on the economy of Nigeria.

Nami said as a Service, the FIRS has identified the nature of tax fraud, illicit financial flows activities and tax crimes in Nigeria.

These, he noted, are carried out through payments of expatriates staff emoluments and remuneration and failure to declare for personal income tax purposes such emoluments to the relevant tax authorities in Nigeria.

He also listed other avenues through which tax crimes are committed to include laundering of funds often sourced illegally through Real Estates transactions to acquire property in choice locations outside Nigeria, and illegal transfer of money out of Nigeria, through unapproved channels such as Virtual Currencies.

Others are mispricing of goods and services transferred between interrelated Nigeria based companies and individuals to offshore based entities and individuals, profit-shifting through excessive interest payments on foreign and locally sourced loans and mis-invoicing of imports and exports.

To address these challenges, he said the FIRS has carried out reforms which include sealing a pact with the Financial Intelligence Unit and designated Authorized Officers for the FIUs; set up the first of its kind in Africa, a beneficial ownership register for tax purpose with Independent Corrupt Practices Commission and Other Related Offences which has led to so many forfeiture of asset under a presidential directives.

He said, “To address tax revenue losses through transfer mispricing of goods and transfer, the FIRS has put in place Transfer Pricing regulations in 2012 and established a functional Transfer Pricing Unit focused on ensuring that taxable persons report sales and profits in Nigeria in adherence with globally acceptable standards of arm’s length principle for tax purposes.

“FIRS have developed an in-house capability for trend analysis on banking transactions of taxpayers to provide early warning on transactions that might be a potential for Money Laundering and Terrorism Financing /illicit outflow.”

The FIRS Boss said that unwholesome practices of Multinational Enterprises, Financial Institutions, and Oil and Gas companies remain the biggest component of IFF in Nigeria.

He added, “Corruption and abuse of office by both political appointees and civil servants thereby enabling illicit financial flows activities offices remain a factor of money laundering /terrorism financing /tax crimes in Nigeria, and FIRS has ensured collective effort to end this menace.

“We are striving to reduce the Money Laundering/ terrorism financing/ illicit flow of money from Nigeria and effects of beneficial ownership as it is causing economic downturn which has an unprecedented effect on the economy and lives of Nigerians.”

Nami said that stiffer laws and regulation would be enacted to deter future illicit financial flows actions by people determined to engage in such acts, most especially in the new trend of virtual currencies which is a new typology on illicit financial flows.