FIRS approves N5.61bn capital allowance for 13 firms, loses N1.68bn

Adelani Adepegba, Abuja

The Federal Inland Revenue Service reportedly approved a capital allowance of N5.61 billion for 13 companies and also failed to collect the statutory 30 per cent Company Income Tax of the total capital allowance given to the firm, resulting in N1.68bn revenue loss.

This was contained in the 2019 Auditor-General report which also indicated that the companies did not present a certificate of acceptance and were not to be granted capital allowance.

The report noted that the CIT for the audit period was short by N1.683bn (30% of N5.61bn), uncollected by FIRS.

A civil society group, Dataphyte, in its analysis of the Auditor-General report on Wednesday, explained that capital allowance allows a company to make claims against taxable profit, noting that this was provided for assets purchased by the company and used to carry out its businesses.

These assets include equipment, research costs, and expenses for building renovations, which are classified into full or partial value to ascertain if the value claimed is deductible wholly or in bits.

Thus, the companies can claim such assets’ allowance in a year or spread over a period based on this classification.

The tax law recognizes investments made by companies and makes provisions for capital allowances to be deducted, adding, however, that deductions are made on presenting relevant documents to the FIRS as stated in section 5 of the Industrial Inspectorate Act, 1970.

Dataphyte said one of such relevant documents is the Certificate of Acceptance issued by the Industrial Inspectorate Department under the Federal Ministry of Industry, Trade and Investment.

It noted, “In reviewing the Taxpayers’ Files at Lagos Large Tax Office, the auditor noted that of the companies that filed for CIT returns, 13 of them didn’t have Certificates of Acceptance. Yet these companies received an accrued amount of N5.614 billion in tax deductions.

“Of this figure, 30 per cent was expected to be deducted as CIT for the 2018 Assessment Year but again, FIRS failed to deduct this amount. This action means that the country had a gross under-assessment of tax revenue and by extension, loss of revenue to the government for the year.”

In his report, Auditor-General demanded explanations from the FIRS for these failures but received none.

The media aide to the FIRS chairman, Mr Tobi Wojuola, could not be reached for comment on the reported infraction on Wednesday, as calls to his phone rang out. He had yet to reply to a text message sent to his phone as of the time of filing this report.

Posted by: PunchNews

Naijamerit
Author: Naijamerit

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