The House of Representatives on Tuesday threatened to ensure that erring commercial banks that failed to ensure prompt remittance of education tax (EDT) are sanctioned in line with existing financial regulations.
Chairman of the House Committee on Tertiary Education Trust Fund (TETFund), Hon. Miriam Onuoha, issued the notice while addressing the managing directors and CEOs of three commercial banks that appeared during the flag-off of the 2-day investigative hearing into ‘Monitoring of collection, utilisation, and other associated services relating to EDT from 2011–2022.
Hon. Onuoha, who expressed grave concern over the breach of the existing financial regulations, directed all the banks to appear alongside their tax consultants with a view to reconciling the EDT computation not remitted to TETFund for the period under review.
She alleged that there were disparities in the EDT remittances submitted by the banks to the FIRS over the years, adding that what was computed by the banks’ auditors did not tally with tax consultants.
“The bone of contention has always been that the banks seem to be relying on a purported exemption order that clearly mentions the company income tax exemption order of 2011.
“We have asked the banks to produce an EDT exemption order and they have failed to present it, We have equally presented it to them but you cannot like one exception with the other
He said this is because, in law, we don’t summarily assume because what is not mentioned is deemed excluded
“Because EDT was not mentioned in whatever you have shown and that has been the reason for the back and forth,” she said
In his intervention, Chairman of the House Committee on Judiciary, Hon. Oluwole Oke, who moved a motion, asked the banks to appear before the Committee with the Tax Consultants with details of tax computation on a yearly basis.
The chairman, however, said that out of the 15 banks invited, about seven were supposed to appear before the committee, but only three of them showed up, with three others writing to seek a new date to appear.
In his remarks, Deputy Chairman, House Committee on TETFund, Hon Bappa Misau, observed that First Bank under-remitted its EDT deductions to TETFund, an action which he said was punishable under the law.
Misau said, “Unfortunately, we do not have the year-by-year breakdown. However, the available records you submitted in 2011 were N603,801. Then, in 2012, you owed N301,263,135, and in 2013, you had a credit balance of N102,713,615.
“Again, in 2014, you had a credit of N2.933,659; if you go to 2015, you have N25 million outstanding; in 2017, N169,852,600 outstanding; and in 2018, you have N98 million outstanding.
“In 2012, you paid N7.877,451 in debit, then in 2020, N148 million in credit, and in 2021, N269,618,626.6 in debit. Therefore, in 2022, you had N3.748,984,654.64.
“Then you add it up, you sum the credit and the debit, and you end up with N3,749,353,260 outstanding. You know there is a penalty for non-remittance.”
While responding, First Bank’s Executive Director, Mr Bashir Yusuf, disclosed that between 2011 and 2022, the bank posted a profit before tax (PBT) of N795.123 billion.
When asked to take the figure year by year, Mr. Yusuf, who presented the summary of the financial report, said, “Unfortunately, what I have is the summary of the presentation. I crave the indulgence of the committee to take what we shared with the committee.
“I prepared the summary for the presentation so that if there are issues, we can take those issues, especially if there are matters that we need to settle outside the committee room with our consultants.
“So, I am very sorry; I don’t have the breakdown by year, but I have the summary over the period. We had net accessible profits of N28 billion, which is the difference between the allowable and the disallowable expenses on the PBT we posted over the period.
“In terms of tax liability over the period, we have a tax liability of N5.498 billion.
“Then, over the periods of the audit by the Committee, that is, 2011 to 2022, we had additional assessments. It was on the basis of those assessments conducted between 2014 and 2021 that we had an additional liability of N852 million.
“So, in terms of total TETFUND Tertiary Education Tax Fund liability and payment, we made a payment of N5.493 billion.
“And in terms of outstanding liability over the period, we have ‘nil’ liability over the period, and other subsequent items associated with outstanding liability are also ready.”
He explained that there were issues that could not be resolved at the committee hearing, adding that “what you have are items that are classified as taxable.
“We have some differences based on the provisions of the exemption order that was issued by the President in 2011. That’s why I said some of these issues we will not be able to resolve at this sitting.
“It is good we have time, and I believe this does not just apply to First Bank because it’s an issue that applies to other banks as well. Our consultants have been interacting overtime on the issue of the exemptions that are provided for in the Presidential Order of 2011 that exempt certain categories of income from tax.
“Based on that presidential order issued in 2011, there are certain categories of incomes that are exempted from tax.
“Some of them include short-term investment income from short-term government instruments and securities such as Treasury bills, promissory notes, bonds issued by federal, state, and local governments, and bonds issued by corporate bodies, including supranationals.
“The last item is interest earned by holders of the bonds on short-term securities.
“By the time you take into consideration the income earned from these instruments over the period of the audit of the Committee, the difference between the submissions we have made and the submissions you have in your records will be identified, and we will be able to reconcile. It will be zero; we are very sure,” Mr Yusuf noted.
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