THE Nigerian senate has noted with concern that billions of naira were being held by banks in Nigeria either in form of under remittance or non-remittance of withholding tax due to the government.
Nigerian banks, Central Securities Clearing System Plc (CSCS) which is the settling institution for financial organisations have been suspected by the Senate not to be remitting tax to the government.
On Tuesday, the Nigerian Senate directed its Committee on Banking, Insurance and other Financial Institutions to investigate the allegations.
The Senate gave the panel four weeks to ensure the recovery of all withholding tax revenues on both bank deposits and dividends, and report back.
The directive followed a motion by the upper chamber on the digitisation/automation of collection and remittance of withholding tax on bank deposits and dividend payments for enhanced state governments’ Internally Generated Revenue.
Financial Institutions in the likes of the Banks, Nigerian Stock Exchange (NSE) and Central Securities Clearing System Plc deduct tax from its customers on a periodical basis so it is expected that appropriate remittance is done to the government accordingly.
As for the NSE, every transaction executed on behalf of investors is taxed on stamp duty at a rate of 0.75 per cent of the value of transaction depending on if the investor is buying or selling.
Senator representing Anambra Central, Uche Ekwunife said: “Most state governments have been unable to pay salaries or meet their financial obligations as a result of poor and dwindling revenue.
“It had become imperative giving the dwindling revenue from the federation account which had left various state governments in Nigeria with the task of formulating strategies to improve the revenue base of their states,” she added.
Ekwunife stressed the need for states to increase their internally generated revenues in order to have enough financial resources to meet the expectations of the people.