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Federal Government probes tax records of contractors



In efforts to improve tax compliance levels, the Federal Government has commenced the review of tax compliance records of all contractors, who received payments from its various agencies in the last seven years.

The development follows the outcome of a sampling exercise conducted by the Ministry of Finance, which found that less than 20 per cent of the contractors accurately indicated the income received from Government in their tax returns, whilst many made no declaration at all.

A statement from the Finance Ministry, said the result of the sampling exercise showed that some Tax Clearance certificates, which were presented at the point of contract award were found to have little bearing to the true value of business conducted by the contractors.


However, the Ministry assured that with the new multi-agency, data driven approach, it would be easier for tax authorities to crosscheck information provided in the tax declarations to ensure that the correct taxes were paid.

The initiative is part of the construction of a central data base of financial information being developed for use in tax compliance. The data will be used to crosscheck information provided to the tax authorities.

The database project dubbed, ‘Project Light House’, is aimed at building comprehensive profiles of tax payers using a wide range of available data sources, including BVN, foreign exchange allocations, land registry records, and information obtained  from foreign governments.

Besides, the Federal Inland Revenue Services (FIRS), as part of its automation efforts has already eliminated the issuance of handwritten tax clearance certificates, while other reforms are ongoing.

Furthermore, the Finance Ministry and Office of the Accountant General of the Federation, are now compiling detailed records of all payments exceeding N100 million made in the last seven years, including details of the beneficiary bank accounts and other details.

All agencies have 30 days to return the information on payments made, and accounting officers are required to certify the accuracy of the data supplied, while deliberate omission or manipulation of data by accounting officers will attract sanction.

Reiterating the President Muhammadu Buhari administration’s commitment to improving tax compliance, the Finance Minister, Kemi Adeosun, was quoted as saying that Nigeria’s low level of tax compliance was at variance with the collective desire to reduce dependence on oil and to become a prosperous nation that provides for all its citizens.


According to the Minister, It was a matter of concern that those who earned money directly from Government, which is both traceable and verifiable, still failed to pay the correct taxes thereon.”

She urged such companies to promptly take advantage of the concessions offered under the Voluntary Asset and Income Declaration Scheme (VAIDS), adding that once an audit or investigation had commenced, a company or individual would not be able stop that process by participating in VAIDS.

“VAIDS has now been open since July 1st and some applications have already been received. If the tax authorities reach a company before such company has applied for VAIDS, then the full audit process will be conducted. This could result in penalties, interest and prosecution. So companies and individuals who know they will be affected are urged to quickly take advantage of VAIDS,” she was quoted.

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