The Lagos Chamber of Commerce and Industry (LCCI) has picked holes in the recent decision by Federal Inland Revenue Service [FIRS) to appoint banks as collecting agents.
Reacting to the provision on Thursday, LCCI Director General, Muda Yusuf argued that the decision and subsequent freezing of the accounts of taxpayers considered to be in default of tax payment might damage businesses.
He said the provision was draconian and could be used as a tool of intimidation, coercion and harassment of taxpayers. “It should be invoked with utmost discretion and caution. Such an account will be debited to the tune of the alleged tax debtors. This should be invoked with utmost discretion and caution.”
According to Yusuf, tax administration should be consistent with the basic principles of equity, fairness, legality and accountability.
He said LCCI is inquisitive to know whether the claim of tax liability by the FIRS of the affected investors applies to a final and conclusive assessment which should be an outcome of an exhaustive engagement between the tax authorities and the taxpayer.
The LCCI DG expressed worry over disruptions to businesses of account holders of a sudden freezing of accounts for reasons of alleged default in tax payment, saying this could cause an irreparable reputational damage to businesses.
Mr. Yusuf opined that the decision of FIRS would bring about risk to financial inclusion as SMEs may avoid the use of banks for their transactions and also to liquidity in the banking system.
“In the light of the foregoing, we urge the FIRS and the banks to exercise utmost restraint in the adoption of this tax revenue recovery strategy because of the grave implications for investors and the economy. The damage to the economy may be much more than the contemplated revenue.
This move is premised on the on the powers conferred on the FIRS by section 31 of the FIRS Act which gives FIRS the powers to appoint collection agents for the recovery of tax payable by the taxpayer. Such an agent will be mandated to pay any tax payable by the tax payer from any money held by the agent on behalf of the tax payer.