$2.9bn tax infractions: Reps committee gives UBA, FSDH two weeks ultimatum

Two Banks, United Bank for Africa (UBA) and FSDH Merchant Bank are currently swimming in troubled waters over an alleged $2.9bn billion tax infractions levelled against them by the House Joint committee on Finance and Banking.

National Daily gathered that the committee has directed both banks to provide more details on the alleged allegations which include withholding tax, Foreign Exchange inflows and outflows of infractions running into billions of Naira when officials of the bank appeared before the committee recently.

The committee, it was gathered, invited the banks following investigation on alleged $30 billion revenue leakage between 2010 and 2019, and has therefore issued a 2-week ultimatum for the banks to comply.

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The first phase of the investigation conducted by the joint committee of the House on Finance and Banking & Currency, United Bank for Africa (UBA) allegedly underpaid WHT and VAT worth $2,838,296,330.74; foreign exchange leakages worth $25,199,851,112.97 for the period under review.

FSDH Merchant bank management appeared based on an alleged underpayment of $2.698 million in Withholding Tax and Value Added Tax and foreign exchange leakages amounting to $7.264m.

The committee had in a letter to FSDH in March 2021 said it has completed the first phase of its investigations and made some findings. FSDH Executive Director, Taiwo Otiti explained to the committee that the bank has records of all the transactions and have presented them to the committee in hard and soft copies.

At the hearing, UBA Head of Trade, Chidi Okpara said some of the withholding taxes allegedly underpaid by the bank did not qualify as withholding tax as adduced by the committee.

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Chairman, House Committee on Banking and Currency, Victor Nwokolo who presided over the second session said, the bank must produce hard copies of all the documents presented in soft copies to the committee.

The lawmakers at the hearing expressed grave concern over the flagrant breach of extant financial regulations and relevant provisions of the 1999 Constitution (as amended).

“Foreign exchange leakages arising from the mismanagement of inflows from capital importation, and capital outflows on account of any validly issued certificate of capital importation. Verification and confirmation from your customers’ bank statements, of the utilization of the Naira proceeds of capital importation of any taxable transactions.

“Confirmation and verification in your banks’ sales blotters of the utilization of Foreign Exchange purchased by your bank from each of the sources such as Capital Importation, CBN, Interbank, Export proceeds (Oil and Non-Oil Domiciliary accounts, Over the counter etc.

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“Identification and recognition of capital repatriation transaction costs and its related taxes (VAT, Stamp Duty) on stock sales transactions cost paid to Fund Manager/ Stockbrokers’ fees, NSE, CSCS etc.

“The reasonableness and legitimacy of every foreign transfer for the reason of observed cases of capital flight and other illegitimate repatriations on account of invalidly issued Certificates of Capital Importation.

“Comparison of Form ‘A’ and Form ‘M’ filed with the Committees, and other extractions obtained from customer’s dollar and naira account statements, and your bank’s record of foreign exchange utilization returns with the Central Bank of Nigeria”, the joint panel told the banks.