- Auditor-General's annual report revealed N14.33 billion in Tax irregularities across over 30 Ministries, Departments, and Agencies (MDAs)
- Federal Road Safety Corps and Nigerian Security Printing and Minting Company identified for massive under-deductions and unremitted taxes
- The Auditor-General urged stricter enforcement to prevent future revenue losses
The Auditor-General's Annual Report on Non-Compliance and Internal Control Weaknesses revealed that tax irregularities totalling N14.33 billion were identified across more than 30 Ministries, Departments, and Agencies.
The report from Shaakaa Chira’s office, highlighted significant issues with tax deductions, remittances, and adherence to financial regulations between 2020 and 2021. It noted that six Ministries, Departments, and Agencies (MDAs) accounted for N129.34 million in under-deducted taxes.
Federal Ministry of Labour and Employment has smallest tax under-deduction
According to Paragraphs 234 and 235 of the Financial Regulations (2009), accounting officers are obligated to deduct and remit all applicable taxes, such as VAT and Withholding Tax, promptly to the Federal Inland Revenue Service. Despite this, the audit revealed significant violations of these requirements.
Among the agencies audited, the Federal Road Safety Corps in Abuja was the highest offender, with a N90.57 million under-deduction, while the Federal Ministry of Labour and Employment in Abuja recorded the smallest shortfall of N623,162.80.
The report read in part, “The sum of N129,341,764.04 was the amount of under deduction of taxes by six ministries, departments and agencies.
“The Federal Road Safety Corps, Abuja, has the highest amount of N90,579,554.92 while the Federal Ministry of Labour and Employment, Abuja, has the least amount of N623,162.80.”
The report also named other implicated agencies such as Federal Polytechnic Bida, located in Niger State; Nigerian Security Printing and Minting Company Plc in Abuja; National Water Resources Institute in Kaduna; and the Council for the Regulation of Freight Forwarding in Nigeria.
Audit exposes N2.64bn tax gaps from payments to contractors
Another significant concern was the non-deduction of taxes, which resulted in a cumulative shortfall of N2.64 billion across 21 Ministries, Departments, and Agencies.
The report pointed out that these agencies did not deduct taxes from payments to contractors and other beneficiaries, in contravention of established financial guidelines.
The Nigerian Security Printing and Minting Company (NSPM) in Abuja was the highest defaulter in this category, with a discrepancy of N1.01 billion, while the Federal Medical Centre in Ebute Meta had the smallest discrepancy, amounting to N617,427.66.
The report further read, “The sum of N2,636,147,740.99 was the amount of taxes not deducted from payments to several beneficiaries by 21 Ministries, Departments and Agencies.
“The Nigerian Security Printing and Minting Company Plc, Abuja, has the highest amount of N1,009,286,718.93 while the Federal Medical Centre, Ebute Meta, has the least amount of N617,427.66.”
Defaulting MDAs also include the Nigerian Railway Corporation, Ajaokuta Steel Company, Ministry of Petroleum Resources, Nigeria Police Force, and Corporate Affairs Commission.
N11.56 billion in unremitted taxes, with Nigerian Security Printing leading
The report highlighted the most substantial breach as the non-remittance of taxes, amounting to N11.56 billion. It found that 11 MDAs had deducted taxes but did not remit them to the Federal Inland Revenue Service, in contravention of legal requirements.
NSPM, Abuja led as the largest defaulter again, with unremitted taxes totalling N10.39 billion, while the Federal Medical Centre, Katsina, had the smallest unremitted amount of N1.37 million.
The report read, “The sum of N11,561,131,193.52 was the amount of taxes not remitted to relevant tax authorities by eleven Ministries, Departments and, Agencies, and
“The Nigerian Security Printing and Minting Company Plc, Abuja, has the highest amount of N10,393,793,419.34 while the Federal Medical Centre, Katsina, has the least amount of N1,371,984.59.”
Agencies also highlighted in this category include Galaxy Backbone Limited, Irrua Specialist Hospital (Edo State), Aminu Kano Teaching Hospital (Kano), and the Medical Rehabilitation Therapists (Registration) Board of Nigeria in Abuja. The Auditor-General of the Federation further revealed N69.93 billion in unrecovered tax liabilities across 26 Federal Inland Revenue Service outstations across the country.
N69.93 billion in unrecovered tax liabilities across FIRS outstations
The report, which highlighted deficiencies in tax enforcement, has raised doubts about the effectiveness of the FIRS in recovering overdue tax assessments, despite the mandates outlined in the Federal Inland Revenue Service (Establishment) Act, 2007.
The highest combined unrecovered tax liabilities of N26.32 billion were attributed to the FIRS outstations in Akwa Ibom, Cross River, and Bayelsa States, while the FIRS (MSTO) in Gwagwalada, Abuja, reported the smallest amount, N4.18 million.
“The sum of N69,926,317,274.64 was the amount of unrecovered tax liabilities by 26 Outstations of the Federal Inland Revenue Service across the country.
“The FIRS, Akwa Ibom, Cross Rivers and Bayelsa States offices have the combined highest amount of N26,324,196,289.63 while the FIRS (MSTO), Gwagwalada, Abuja, has the least amount of N4,180,362.94,” the report read.
The following FIRS branches were flagged in the audit for having notable unrecovered liabilities: FIRS Makurdi, FIRS (MSTO) Ibadan, Osogbo, Lagos, Aba, Akwa Ibom, Lafia, Abuja, Garki, and New Bussa.
Auditor-General demands strengthened tax enforcement to prevent further losses
The Auditor-General’s report pointed out significant weaknesses in internal controls and widespread non-compliance with financial regulations across government agencies, warning that these lapses jeopardise both revenue collection and public accountability.
The report proposed urgent corrective actions, such as enhancing the capacity of accounting officers, enforcing tax laws more rigorously, and increasing oversight of financial management in MDAs.
The Auditor-General urged the Federal Inland Revenue Service to recover outstanding taxes and ensure strict compliance with financial regulations to prevent further revenue losses.
FG plans 25% tax on Nigerians earning above N100m
Meanwhile, TheRadar earlier reported that Nigerians earning N100m or more monthly may face a 25% personal income tax if the National Assembly passes a new tax bill.
The reform, expected to take effect by January 2025 pending legislative approval aimed to reduce the tax burden on 90% of current taxpayers, particularly lower- and middle-income earners.