—Tax Talk:Who Collects Taxes?
YBTC NEWS—Just like the proverbial snail and its shell, taxes and its collection are inseparable. While tax collection is the lifeblood of taxation, not everyone that knocks on your door is the legitimate tax collector. Sadly, payment of tax to an impersonator does not totally exonerate you from your tax liabilities.
Such a ‘sorry case’ is avoidable; all you need to do is to follow this discourse on ‘WHO COLLECTS TAX?’
The Nigerian tax administration is modelled after our fiscal system. That is, the three major tiers of government: Federal Government, State Government and Local Government have been saddled with the responsibility of collecting tax in Nigeria. This is in conformity with the provisions of the first schedule to the Constitution of the Federal Republic of Nigeria, 1999 (as amended). The tax body at the federal level is the Federal Inland Revenue Service (FIRS), at the state level, we have the Board of Internal Revenue service of various states (SBIR) and the Local government also collects taxes through the committee set up within their powers.
The Federal Inland Revenue Service (FIRS) collects taxes that are paid by companies and Federal Capital Territory. It is their responsibility to ensure that all taxes collected are duly remitted to the Federal Government. Examples of such tax collected by FIRS are: Companies income tax, withholding taxes on companies, petroleum profit tax, value added tax, stamp duties on corporate entities in the FCT, among others.
The State Board of Internal Revenue (SBIR) performs the responsibility of administering Personal Income Tax. The SBIRs are responsible to the State government in terms of accounting and remitting these collected taxes to the coffers of the State government. Examples of such tax collected by SBIRs are: withholding taxes on individual, rent, consultancy/professional fees, technical services, stamp duties on individual and corporate entities in the state.
The Local government also collects taxes through the committee set up within their powers. They collect taxes, rates and fines posted under its jurisdiction and are responsible to the Local government chairman for all taxes collected. Examples of such tax collected by the local government are: Shops and Kiosks rates, Tenement rates, Marriage, birth and death registration fees. Naming of street registration fees, excluding any street in the State Capital, Motor park levies among others.
Meanwhile, it will interest you to know that apart from the above mentioned bodies of tax collectors, there is the Joint Tax Board at the center. The board primarily contributes to the advancement of the tax administration in Nigeria, especially in the area of harmonization of Personal Income Tax administration throughout Nigeria. The board came into existence by virtue of the provisions of section 86 (1) of the Personal Income Tax Act cap. P8 LFN 2004.
In a nutshell, tax collection has been shown to be a task anchored by tax bodies across the Nigerian federal system of government. It is however noteworthy to state that while bodies have their specific taxes that they collect, they can nevertheless collect other taxes on behalf of other bodies and remit same to the appropriate tax bodies.
Next week, we’ll look into why we must pay taxes under the topic; Importance of tax. Till then, we look forward to your comments, contributions and questions.
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