The Federal Capital Territory Internal Revenue Service (FCT-IRS) has urged Ministries, Departments, and Agencies of the government (MDAs), as well as contractors in the FCT, to ensure that the Withholding Tax (WHT) due to the Service is remitted accordingly.
In a circular released by the Service, it was indicated that Withholding Taxes meant for the Service were wrongly paid to tax authorities other than the FCT-IRS. Therefore, there is a need to educate the general public, especially concerned organizations and contractors in the FCT, about this issue.
The circular explained that taxpayers must understand the tax jurisdiction rules. WHT for limited liability companies should be remitted to the Federal Inland Revenue Service (FIRS), while WHT for enterprises and individual contractors should go to the State IRS, such as the FCT-IRS, if the transaction is conducted 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 losing 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 about the potential consequences.
“Henceforth, the FCT-IRS will not grant a Tax Clearance Certificate for 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 closely liaise 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 should be noted 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 companies, enterprises, and individuals are done using the GIFMIS platform.
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