FCT-IRS warns contractors in Abuja not to remit withholding tax to wrong tax jurisdiction

The FCT-IRS, the internal revenue generating agency for Nigeria’s Federal Capital Territory (FCT), has urged Ministries Departments and Agencies (MDAs), and contractors in the territory to remit Withholding Tax (WHT) appropriately.

FCT-IRS clarified that WHT for limited liability companies is remitted to the Federal Inland Revenue Service (FIRS) while WHT for Enterprises and Individual contractors goes to the Internal Revenue Services of states or to FCT-IRS.

They noted that it was important for taxpayers to understand tax jurisdiction rules, and have observed instances where the wrong tax jurisdiction is entered on the Government Integrated Financial Management Information System (GIFMIS) platform by MDAs’ desk officers.

They say this can lead to contractors suffering the loss of WHT credit and relevant tax authorities experiencing revenue loss, disclosed in a statement by its spokesman, Mr. Mustapha Sumaila, on Sunday.

Proper Tax Jurisdiction

They revealed that Ministries Departments and Agencies (MDAs), and contractors should remit Withholding Taxes (WHT) appropriately; citing that many organisations erroneously remitted withholding taxes meant for the FCT-IRS to other tax authorities.

Withholding Tax

FCT-IRS noted that WHT for limited liability companies is remitted to the Federal Inland Revenue Service (FIRS) while WHT for Enterprises and Individual contractors go to Internal Revenue Services of states or to FCT-IRS, adding:

“We have observed instances where the wrong tax jurisdiction is entered on the Government Integrated Financial Management Information System (GIFMIS) platform by MDAs’ desk officers.

“This error can lead to contractors suffering the loss of WHT credit and relevant tax authority experiencing revenue loss.

“The beneficiary of the WHT may also be 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.”

Tax Clearance Certificates

They warned they would not issue Tax Clearance Certificates on WHT credits wrongly sent to other tax jurisdictions 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 principles of transparency and accountability.’’