FCT-IRS Warns MDAs, Contractors on Remittance of Withholding Tax

Olawale Ajimotokan in Abuja 

The Federal Capital Territory Internal Revenue Service (FCT-IRS) has tasked Ministries Departments and Agencies (MDAs) as well as contractors in the FCT to ensure that Withholding Tax (WHT) due to the service is remitted accordingly.

In a circular released on Sunday, the Service fumed that withholding taxes due to it were wrongly paid to tax authority other than FCT-IRS hence the need to educate the general public especially concerned organisations and contractors in the FCT.

The circular was signed FCT-IRS Head, Corporate Communications, Mustapha Sumaila.

It explained that it is necessary for a taxpayer to understand the tax jurisdiction rule; WHT for limited liability companies is remitted to the Federal Inland Revenue Service (FIRS) while WHT for enterprises and Individual contractors goes to the State IRS such as the FCT-IRS, if the transaction is done in the FCT.

The service observed instances where the wrong tax jurisdiction was entered on the Government Integrated Financial Management Information System (GIFMIS) platform by the MDA desk officers. 

It said error could lead to contractors suffering the loss of WHT credit and the relevant tax authority experiencing revenue loss in addition to the beneficiary of the WHT being 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 of the potential consequences,” Sumaila said.

The FCT-IRS threatened that it would not grant Tax Clearance Certificate on WHT credit that was wrongly sent to another tax jurisdiction by the GIFMIS platform. 

“We advise all taxpayers to liaise closely 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 will be recalled 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 both companies, enterprises, and individuals is done using the GIFMIS platform.