Nigeria: FIRS Resumes "Freezing" Of Taxpayers' Bank Accounts

Summary

Following the suspension of lien placed on the bank accounts of alleged non-compliant taxpayers in February 2019, the Federal Inland Revenue Service (FIRS) has directed banks in Nigeria to resume restriction of bank accounts of a number of taxpayers for alleged non-payment of taxes effective 15 March 2019.

Details

Earlier in the year, the FIRS had directed a number of commercial banks to place a lien on the bank accounts of a number of taxpayers for alleged non-payment of taxes. However, on 15 February 2019, the FIRS, in a letter, directed banks in Nigeria to suspend the lien placed on the bank accounts for a period of 30 days. (Read our tax alert on the suspension of lien here).

Following these events, the FIRS has issued a Public Notice (PN) stating that the restriction on the bank accounts of alleged non-compliant taxpayers would continue effective 15 March 2019. In addition, the PN specifically requires companies that have a minimum annual banking turnover of ₦100 million and have failed to remit Withholding Tax and Value Added Tax to the government to register for tax before the 15^th of March to avoid restriction of their bank accounts.

Implication

The powers of the FIRS to direct the freezing of taxpayers accounts still generates a number of controversies as there are concerns that this FIRS' approach to recover unpaid taxes may not be consistent with the relevant provisions of the legislative framework in Nigeria. (Read our article on the powers of FIRS to freeze taxpayer's accounts here).

Notwithstanding the above, taxpayers whose accounts have been frozen are advised to liaise with their tax consultants to resolve any issues with the FIRS amicably.

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