A recent report by the Auditor-General of the Federation has exposed significant tax irregularities totaling N14.33 billion across over 30 Ministries, Departments, and Agencies (MDAs). The findings were highlighted in the annual report on Non-Compliance and Internal Control Weaknesses for the years 2020 and 2021. The report indicates substantial lapses in tax deductions, remittances, and adherence to financial regulations, emphasizing that six MDAs contributed N129.34 million to a pattern of tax under-deductions, with the Federal Road Safety Corps (FRSC) being the highest offender. Notably, there have been widespread breaches of the established financial regulations that mandate all applicable taxes, such as Value Added Tax (VAT) and Withholding Tax, to be accurately deducted and timely remitted to the Federal Inland Revenue Service (FIRS).
The Federal Road Safety Corps stands out as the most significant offender with an alarming shortfall of N90.57 million in tax deductions. In contrast, the Federal Ministry of Labour and Employment recorded the least under-deduction, amounting to N623,162.80. Additionally, the report cited other agencies, including Federal Polytechnic Bida and the Nigerian Security Printing and Minting Company, among those responsible for failing to adhere to tax compliance regulations. More troubling was the revelation that a total of N2.64 billion in taxes went undeducted across 21 MDAs. Failure to deduct taxes primarily pertained to payments made to contractors and other beneficiaries and illustrated a blatant disregard for established financial norms.
Among the agencies noted for this severe non-compliance, the Nigerian Security Printing and Minting Company again emerged prominently, reporting an irregularity of N1.01 billion, whereas the Federal Medical Centre in Ebute Meta had the least non-deduction at N617,427.66. The audit findings revealed a disturbing pattern of negligence among numerous government entities, suggesting systemic issues with their financial oversight practices. Furthermore, the issues escalated with the non-remittance of taxes amounting to N11.56 billion, where 11 MDAs failed to forward deducted taxes to the FIRS, constituting a grave violation of the law.
The Nigerian Security Printing and Minting Company again led in this category, accumulating N10.39 billion in unremitted taxes. The report pointed to the Federal Medical Centre, Katsina, as having the smallest unremitted amount, which amounted to N1.37 million. Other implicated entities included various hospitals and agencies, demonstrating a widespread problem of non-compliance that compromises the integrity of financial governance in these institutions. The implications of these findings call into question the effectiveness of internal controls and financial regulations intended to uphold fiscal responsibility within government bodies.
Moreover, the Auditor-General also discovered N69.93 billion in unrecovered tax liabilities across 26 outstations of the Federal Inland Revenue Service (FIRS) nationwide. This staggering sum highlights significant weaknesses in the FIRS’s tax enforcement capabilities, as these liabilities have reportedly lingered despite existing policies aimed at timely recovery. States like Akwa Ibom, Cross Rivers, and Bayelsa reported the highest combined delinquent amounts, totaling N26.32 billion, which underscores geographic disparities in tax collection efficacy.
Amidst these alarming revelations, the report raises profound concerns about the underlying internal controls and the pervasive culture of non-compliance amongst government agencies. Such failings not only jeopardize government revenue streams but also erode public trust in accountability measures. Consequently, the report advocates for urgent corrective measures, including enhanced training for accounting officers, more rigorous enforcement of tax laws, and intensified oversight in MDAs’ financial operations. Specifically, it urges the Federal Inland Revenue Service to prioritize the recovery of outstanding tax debts and ensure adherence to financial regulations to mitigate future revenue losses and foster financial integrity within the public sector.
