Tax Irregularities: 30 MDAs Embroiled in N14.33bn Scandal

AuGF Exposes Massive N14bn Tax Scam in MDAs

The recent report has uncovered some alarming lapses in tax enforcement and recovery efforts...

The AuGF has uncovered widespread tax irregularities in Nigerian MDAs, totaling N14.33 billion. Get the details here.

A recent report by the Office of the Auditor-General of the Federation (AuGF) has exposed widespread tax irregularities across over 30 Ministries, Departments, and Agencies (MDAs) in Nigeria. The report reveals a staggering N14.33 billion in tax irregularities, highlighting significant lapses in tax deductions, remittances, and compliance with financial regulations between 2020 and 2021.

The report outlines several categories of tax violations, including under-deduction of taxes by six MDAs, totaling N129.34 million. This is just the tip of the iceberg, as the report also reveals other infractions, such as failure to deduct withholding tax and value-added tax, amounting to N129.341 million.

These findings are part of the Auditor-General's Annual Report on Non-Compliance and Internal Control Weaknesses, which aims to promote transparency and accountability in government agencies. The report's revelations are a cause for concern, highlighting the need for stricter oversight and enforcement of tax regulations in Nigeria.

The tax irregularities uncovered by the AuGF report are in clear contravention of Paragraphs 234 and 235 of the Financial Regulations (2009). These regulations explicitly require accounting officers to ensure the proper deduction and prompt remittance of taxes, including Value Added Tax (VAT) and Withholding Tax, to the Federal Inland Revenue Service (FIRS).

The Federal Road Safety Corps (FRSC), Abuja, emerged as the worst offender, with a staggering under-deduction of N90.57 million. Other agencies implicated in the tax irregularities include the Federal Ministry of Labour and Employment, Federal Polytechnic Bida, Nigerian Security Printing and Minting Company (NSPM), National Water Resources Institute, and the Council for the Regulation of Freight Forwarding in Nigeria.

A more severe irregularity was uncovered, involving 21 Ministries, Departments, and Agencies (MDAs) that failed to deduct taxes totaling N2.64 billion. The Nigerian Sovereign Investment Authority (NSPM) had the largest discrepancy, amounting to N1.01 billion, while the Federal Medical Centre, Ebute Meta, had the smallest violation at N617,427.

Notable offenders included the Nigerian Railway Corporation, Ajaokuta Steel Company, Ministry of Petroleum Resources, Nigeria Police Force, and Corporate Affairs Commission. These entities failed to deduct taxes, leading to significant revenue losses for the government.

The most substantial violation, however, was the non-remittance of deducted taxes, which totaled N11.56 billion. This is a clear indication of a lack of transparency and accountability in the financial management of these MDAs.

Eleven Ministries, Departments, and Agencies (MDAs) have been flagged for failing to remit taxes to the Federal Inland Revenue Service (FIRS), despite collecting them. The Nigerian Security Printing and Minting Company (NSPM) was the largest defaulter, with a staggering N10.39 billion in unremitted taxes.

On the other end of the spectrum, the Federal Medical Centre, Katsina, had the smallest unremitted amount of N1.37 million. Other agencies cited for non-compliance included Galaxy Backbone Limited, Irrua Specialist Hospital, Aminu Kano Teaching Hospital, and the Medical Rehabilitation Therapists Registration Board.

In addition to these findings, the Auditor-General's report also identified a significant amount of unrecovered tax liabilities. Across 26 FIRS outstations nationwide, the report found N69.93 billion in unrecovered tax liabilities.

The recent report has uncovered some alarming lapses in tax enforcement and recovery efforts. It appears that some states are struggling to collect taxes, with offices in Akwa Ibom, Cross River, and Bayelsa states having the highest combined unrecovered taxes at a staggering N26.32 billion. On the other hand, the FIRS office in Gwagwalada, Abuja, reported the least unrecovered taxes at N4.18 million.

Other defaulting outstations included those in Makurdi, Ibadan, Lagos, Osogbo, Aba, Lafia, and Abuja. This widespread inefficiency in tax collection has severe implications for the government's revenue collection and public accountability. Effective tax administration is crucial for any economy, and it's essential to address these lapses to ensure transparency and accountability.

The report highlights the need for improved tax enforcement and recovery efforts. This can be achieved by implementing more effective deterrents against non-compliance, such as stricter penalties and enforcement activities. Additionally, the government can explore ways to enhance taxpayer services and improve the overall efficiency of tax administration.

To tackle the widespread tax irregularities and inefficiencies, the Auditor-General of the Federation (AuGF) has recommended a comprehensive set of measures. These include enhanced capacity building for accounting officers to equip them with the necessary skills and knowledge to manage public finances effectively. Additionally, the AuGF advocated for stricter enforcement of tax laws to deter non-compliance and ensure accountability.

The report also emphasized the need for improved oversight of Ministries, Departments, and Agencies' (MDAs) financial practices. This includes regular audits and monitoring to prevent financial mismanagement and ensure transparency. Furthermore, the AuGF urged the Federal Inland Revenue Service (FIRS) to take immediate action to recover outstanding tax liabilities and ensure adherence to financial regulations. This is crucial to prevent further revenue losses and promote a culture of compliance.