To attract more revenue into the coffers of the federal government, the Senate has found it expedient to recover all monies that accrued from the collection of withholding tax on bank deposits and dividend payments.
The Senate has therefore, tasked its joint committees on Banking, Insurance and other Financial Institutions and Finance to probe the non- remittance of taxes on bank deposits and dividends payments.
It further charged the joint committee to ensure that all withholding tax revenues on both bank deposits and dividends are recovered.
The resolution was sequel to a motion titled: “Digitalisation/automation of collection and remittance of withholding tax on bank deposits and dividend payments for enhanced state government internally generated revenue,” sponsored by Senator Uche Ekwunife (PDP/Anambra Central) yesterday during plenary.
Leading debate on the motion, Sen. Ekwunife said that “it has been discovered that the Central Security and Clearing System (CSCS) and banks in Nigeria do not remit withholding tax on bank deposits and dividends to state government as and at when due.”
The senator also noted that most state governments are unable to pay salaries and meet their financial obligations as a result of poor and dwindling revenue, added that billions of naira are being held by banks either in form of under -remittances or non -remittances of withholding revenue.
Sen. Ekwunife said the need for states to increase their internal revenue has become imperative giving the dwindling revenue from the federation account which has left various state governments with the task of formulating strategies to improve the revenue base of their states.
According to her, one of the major sources of revenue for state governments is the withholding tax on bank deposits and dividends which has been difficult for the states to track.
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“The current practice is that both the banks and CSCS remit to state governments any amount they desire as it is difficult for the states to reconcile what amounts should be credited to them. Remittances without recourse to details is capable of and already eroding the revenue due to the state governments,” she stressed.
Sen. Ekwunife however, said that the leakages with respect to the remittance of withholding tax can be addressed using modern tax solutions and information technology.
She also stressed the need for proactive measures to ensure that withholding tax is remitted for enhanced revenue and in meeting the federal government’s drive and quest for increased revenue at all levels of government to meet the nation’s developmental needs.
Senators in their contributions to the motion affirmed that the automation of revenue collection and remittance of withholding tax remains the best way to block the leakages.
The joint committee is expected to be report back its findings within four weeks time.
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