The Federal Inland Revenue Service (FIRS) recently issued a Public Notice informing the general public of its intention to prosecute taxpayers for non-compliance with tax laws, regulations and other related tax offences, especially those listed in Part IV of the FIRS Establishment Act No. 13, 2007 (as amended) (FIRSEA or "the Act"). These include tax evasion, tax fraud, failure to deduct or remit tax, obstruction, false declaration, counterfeiting of documents, failure to file tax returns, etc.
Further, the FIRS noted its intention to invoke the provisions of Section 49(2) of the FIRSEA and prosecute all relevant persons involved in the management of the affairs of the non-compliant company, firm or association. In light of this, the FIRS enjoins taxpayers, practitioners and company managements to comply with the provisions of Section 24(f) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) by registering for tax, declaring all their incomes honestly, correctly, and accurately, and paying the appropriate taxes.
Prosecution of defaulting taxpayers is within the statutory powers of the FIRS. Specifically, Section 47 of the FIRSEA provides that "the Service shall have powers to employ its own legal officers who shall have powers to prosecute any offences under this Act subject to the powers of the Attorney-General of the Federation".
It is expected that the enforcement of the sanctions provided in the Acts will stimulate voluntary compliance and responsible tax practices among taxpayers. Voluntary compliance is mutually beneficial to both the tax authorities and taxpayers. It reduces the cost of collection for tax authorities and avoids the higher cost of compliance for taxpayers in the form of penalties and interest for outright default or belated compliance. It is hoped that taxpayers will respond positively to the FIRS' threat to manage their cost of compliance and reputation accordingly.
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