TUE, FEBRUARY 12 2019-theG&BJournal-The Lagos Chamber of Commerce and Industry (LCCI) has called on regulators to exercise utmost restraint in the adoption of their latest tax revenue recovery strategy because of the grave implications for investors, financial inclusion and the economy as a whole.
‘’The damage to the economy may be much more than the contemplated revenue,’’ LCCI said Monday following the renewed onslaught by the Federal Inland Revenue Services (FIRS) on companies, mostly midsize company that are deemed as tax dodgers.
The Chamber released their position warning on the disruptions to businesses resulting from a sudden freezing of 85, 000 bank accounts of businesses under the radar.
The FIRS placed a lien on their accounts for certain estimated amounts of unpaid tax. Businesses affected currently are those with an annual banking turnover of between N100 million and N999 million and have not paid tax between 2015 to date.
To unfreeze these accounts, the businesses affected will have to produce their audited financial statements and tax returns from at least 2015 to 2017. Where they are not available, the FIRS will require part or full payment of the liability estimated by FIRS for which a lien is placed on the bank account afterwards, submission of tax returns.
Close source at the FIRS told theG&BJournal that the chase is not over yet. ‘’There are many more that we are watching, particularly the big multinationals that have over the years diverted profits,’’ he said. ‘’The FIRS is treating both the companies and their executives as guilty until they prove they are tax compliant.’’
The FIRS announced last week it had realised about N23 billion last week for its closer look at the financials of over 45, 000 tax dodgers with as much as N100 million turnover in their accounts.
Analysts see this initiative as having potential to raise significant additional amounts of tax for the federal government.
But worried LCCI say the disruptions to businesses resulting from a sudden freezing of bank accounts for reasons of alleged default in tax payment has caused irreparable reputational damage to many businesses.
‘’Taxpayers should be given ample opportunity to defend their positions on tax matters before a lien is placed on their bank accounts. There are instances where company accounts were frozen in error because there was no proper engagement, documentation or communication with the tax payers,’’ the Chamber said in the note signed by its director general, Muda Yusuf.
Yusuf said; ‘’In the light of the foregoing, LCCI urges the FIRS and the banks to exercise utmost restraint in the adoption of this tax revenue recovery strategy because of the grave implications for investors, financial inclusion and the economy as a whole. The damage to the economy may be much more than the contemplated revenue.’’