FIRS Urges AGF to Address Withholding Tax Remittance Lapses by MDAs

The Federal Inland Revenue Service (FIRS) has formally called on the Accountant-General of the Federation (AGF) to urgently tackle ongoing lapses in the remittance of withholding tax by Nigeria’s Ministries, Departments, and Agencies (MDAs). This move comes as part of the FIRS’s broader efforts to improve tax compliance and enhance domestic revenue mobilization amid growing fiscal challenges.

A New Call for Transparency and Accountability

Withholding tax serves as a critical source of non-oil revenue for the Nigerian government. It is meant to be deducted at the point of payment for services such as contracts, rent, consultancy, and commissions, and remitted to the FIRS within a prescribed timeframe. However, several MDAs have been reported to consistently deduct these taxes without remitting them as required by law.

The FIRS, in its recent communication, expressed concern that this negligence is causing serious revenue leakages, weakening public confidence, and threatening national development goals.

FIRS Recommendations to the AGF

To address these challenges, the FIRS has requested the AGF to implement firm actions that include:

• Setting up a more rigorous monitoring and evaluation system for MDAs’ tax deductions.
• Mandating periodic audits of remittances and financial records.
• Enforcing existing penalties and sanctions for MDAs found to be defaulting.

The FIRS emphasized that unless these actions are taken swiftly, Nigeria’s revenue sustainability efforts will remain at risk.

Why It Matters: The Bigger Fiscal Picture

In recent years, Nigeria has faced fluctuating oil prices, high inflation, and mounting debt. As a result, the government has placed increasing emphasis on improving non-oil revenue, with withholding tax playing a key role.

However, according to financial analysts, poor compliance by public institutions sends the wrong signal to the private sector and erodes the integrity of the tax system. If government agencies can violate tax laws with impunity, enforcing those same laws on businesses and individuals becomes extremely difficult.

Moreover, the non-remittance of taxes undermines the government’s budgetary projections and affects the timely execution of projects in critical sectors such as health, education, and infrastructure.

Ongoing Challenges in the System

The FIRS highlighted that some MDAs have developed the practice of issuing tax clearance documents to contractors without verifying that the corresponding withholding tax has been remitted. This creates inconsistencies in tax records and complicates audit processes.

In addition, the lack of digital accountability mechanisms makes it easier for some agencies to delay or divert remitted funds. In many cases, there is also a lack of internal controls or awareness among personnel handling financial operations in these MDAs.

The Path Forward: Embracing Reform and Technology

Stakeholders have welcomed the FIRS’s intervention, describing it as timely and necessary. Experts argue that a more transparent and automated tax remittance system will help close the loopholes. Such systems could include:

• Real-time tax deduction and remittance tracking tools.
• Mandatory integration of MDAs’ accounting systems with FIRS’s database.
• Public-facing dashboards that display remittance status for transparency.

Digital transformation, combined with firm political will, could help rebuild trust in the tax system and improve compliance across all levels of government.

The Role of the Accountant-General of the Federation

The AGF’s office is central to this effort. It manages government accounts and coordinates the disbursement and oversight of public funds. The FIRS is now counting on the AGF to issue circulars mandating strict compliance by all MDAs and to institute disciplinary actions for violators.

Analysts believe this collaboration between the FIRS and the AGF can significantly enhance accountability, especially if backed by presidential and legislative support.

Conclusion

The FIRS’s call to address lapses in withholding tax remittance is a clear signal that Nigeria is prioritizing fiscal discipline. Strengthening compliance among MDAs is not only a legal obligation but a necessary step toward building a reliable and sustainable revenue base.

As Nigeria continues to push for economic reform and diversification, ensuring that all public institutions lead by example in tax compliance is essential. The coming months will determine whether the AGF and other key stakeholders can rise to the occasion and deliver the systemic reforms required to restore confidence and integrity in Nigeria’s public finance management.

Source: Vanguard Nigeria – Tackle lapses in MDAs’ withholding tax remittance, FIRS charges AGF