By; MATTHEW UKACHUNWA, Lagos
The consequences of the appointment of banks as tax collecting agents for Federal Inland Revenue Service (FIRS) have been highlighted by a lawyer.
Ifeatu Medidem, Senior Associate/Practice Manager of Olisa Agbakoba Legal (OAL), said the assignment will impair banks’ confidentiality obligation to their customers and expose the banks to litigations for breach of privacy.
“FIRS’ appointment of banks as collecting agents in respect of the banks’ customers’ outstanding tax liability, places the banks in the precarious position of potentially impairing the confidentiality obligation owed to customers.
“Banks are also exposed to legal action, particularly where the tax liability is disputed,” Medidem elaborated.
She counselled banks to consider all possible options in addressing the mandatory obligation imposed by FIRS’ appointment to act as collecting agents from its customer’s bank accounts.
The banks have the liberty to test their appointment by FIRS as collecting agents pursuant to the provisions of the Federal Inland Revenue (Establishment) Act 2007 and Section 49 of the Companies and Income Tax Act, 2007, the OAL practice manager advised.
“A determination by the courts would certainly bring welcome development to our jurisprudence,” she stressed, describing the appointment as “a conundrum.”
According to her, there is the danger of taking the now largely banked economy a few steps back.
“Individuals and business organisations may refuse to bank, for fear of having their funds subjected to seizure without recourse to them, or to avoid having their financial activities monitored, or to maintain their financial privacy,” Medidem pointed out.
Noting that tax evasion is a criminal offence, she suggested that FIRS should be prosecuting offenders, instead of applying tax substitution strategy.