Nami: Some government agencies using old salary system to under-remit taxes

The Federal Inland Revenue Service (FIRS) says some government ministries, departments and agencies (MDAs) are taking advantage of the old salary system to under-remit taxes.

Muhammad Nami, the FIRS executive chairman, said civil servants who have not migrated to the IPPIS platform are guilty of this.

A statement signed by Abdullahi Ismaila Ahmad, director of FIRS’ communications and liaison department, quoted Nami as saying the tax agency is working on blocking those loopholes.

The FIRS boss was responding to a question from Mohammed Adamu, the inspector general of police, during a courtesy visit to the force headquarters at Louis Edet House in Abuja.

Police authorities had said their personnel who earn comparable salaries with their sister security agencies were paying higher taxes than obtainable in some MDAs.

“Nigeria operates the progressive tax system under which the more you earn, the higher you pay. However, the progressive tax system also provides a better tax relief package on your dependent relatives compared to the former system through the provision of consolidated tax relief,” Nami was quoted to have said.

“If you earn below N300,000 per annum, for instance, you virtually don’t pay any tax. And even if you earn well above that threshold, the consolidated tax relief system gives you N200,000 per person in the first instance.

“If your earning after this first tax threshold is still above N300,000, the consolidated tax relief system still gives you 20% as tax rebate on the total taxable sum of your earnings. This was not the case under the old system where you only got N2,500 tax relief per child.”

Nami commended the police for making their correct remittance on the pay as you earn (PAYE) tax deducted from their personnel’s salaries.

However, he urged the police to apply the same approach to deduct withholding tax, value-added tax (VAT) and 1% stamp duty on contractual transactions as well as procurement-related activities as stated in the 2019 finance act.

In his response, Adamu commended the FIRS for its diligence in collecting tax, which he said is applied to pay “our salaries and build public infrastructure”.