Witholding Taxes for Enterprises, Individual Contractors Meant for Us – FCT-IRS

By Lateef Taiwo

The Federal Capital Territory Internal Revenue Service (FCT-IRS) has come out in a strong term to condemn the practices where witholding taxes meant for the Service wrongly paid to tax authority other than it.

This is contained in a circular emanated from the Service on Sunday and made available to journalists through the Head, Corporate Communication, Mustapha Sumaila, it urged Ministries, Departments and Agencies of government (MDAs) as well as contractors in the territory to ensure that Witholding Tax (WHT) due to the Service is remitted accordingly.

It explained that it is necessary for a taxpayer to understand the tax jurisdiction rule; WHT for limited liability companies is remitted to the Federal Inland Revenue Service (FIRS) while WHT for Enterprises and Individual contractors goes to the State IRS such as the FCT-IRS, if the transaction is done in the FCT.

“Regrettably, we have observed instances where the wrong tax jurisdiction is entered on the Government Integrated Financial Management Information System (GIFMIS) platform by the MDA desk officers. This error can lead to contractors suffering the loss of WHT credit and the relevant tax authority experiencing revenue loss. The beneficiary of the WHT may also be denied the WHT credit.

“To prevent such losses, we urge all MDA desk officers to ensure accurate data entry at the point of initiation. We also wish to draw the attention of enterprises and individual contractors in the FCT to this issue and caution them of the potential consequences.

“Henceforth, the FCT-IRS will not grant Tax Clearance Certificate on WHT credit that was wrongly sent to another tax jurisdiction by the Government Integrated Financial Management Information System (GIFMIS) platform.

“We advise all taxpayers to liaise closely with their respective MDA desk officers to ensure the correct tax jurisdiction is selected during WHT remittance.

“Our aim is to ensure a seamless tax administration system that supports compliance, promotes ease of doing business, and upholds the principles of transparency and accountability”.

It will be recalled that the FCT-IRS took over the administration, collection, and accounting of taxes in the FCT in 2018. Prior to this, FIRS was responsible for these functions. With the advent of GIFMIS, payment for contracts and the deduction and remittance of the WHT for both companies, enterprises, and individuals is done using the GIFMIS platform.