TAX NEWS - June 2010

Nigeria Tax: Federal Inland Revenue Service Uncovers Alleged N1 Billion Tax Fraud By Aba Firm

The Federal Inland Revenue Service, FIRS, Abuja, has uncovered an alleged tax evasion crime to the tune of over N1 billion in an Aba, Abia State-based manufacturing company, International Equitable Association, IEA.

In a letter, dated 22 April 2010 to the company by FIRS and signed by Mr. Hussaini Umar, entitled, International Equitable Association (Industrial & Commercial) Ltd, Tax Investigation Exercise (2005-2008 year of Accounts), FIRS claimed that the company failed to file its tax returns between 2007 and 2009 despite repeated requests to do so.

FIRS said that the non-payment of the tax amounted to an offence under the provision of the tax law, noting that the matter had been referred to its legal and prosecution department for necessary action.

Consequently, FIRS directed the company to respond to the issues raised, and produce any additional document or written submission to its office.

Giving details of the sales proceeds recorded by the company between 2005 and 2008, which it said was to the tune of over N1 billion not reported and tax evaded, FIRS demanded evidence from the company to prove that the sales were reported in its financial statement, alleging that it was an act of tax evasion.


Firms' MD reacts

When contacted, the Managing Director of the company, Chief John Onwukwe, said the evasion did not take place during his tenure.

He said "the incident happened during the tenure of the former manager and his team who allegedly grounded the company and fled the country, refusing to come and answer to allegations of fraud levelled against them.

"The IEA, which I manage, is a transparent one which has even invited government to come and investigate us. We have no skeleton in our cupboard.


Lists achievement

"Meanwhile, we have reinstated the 268 workers who were sacked during IEA's crises, took back the 120 we met in the company and employed 155 more, most of who are graduates. How else can we help in solving unemployment problem in the country and solve youth restiveness if not through this gesture?

"The FIRS came following our invitation because we did not want anything that will dent the image of the new management, when we discovered tax evasions. They came and made the same discovery that tallow sales amounting to over one billion naira were not recorded in the company's audited account.

"The period coincided with the time Access Bank financed the importation of tallow which loan was not refunded. Also, sales of the products of the company made to Brian Munro were not recorded as well.

"This confirms the diversion of fund allegation levelled against the former management.

"Deducting tax and VAT revenue accruable to the amount will assist greatly in the working capital need of the company because the Access Bank saga would have been settled."