Senate investigates withholding tax revenues on bank deposits, dividends

By Ignatius Okorocha

Senate on Tuesday mandated its Committees on Banking, Insurance and other Financial Institutions, and Finance to jointly investigate non remittance of taxes on bank deposits and dividends payments for enhanced state governments’ internally generated revenue, IGR.

The also urged the committees to ensure that all withholding tax revenues on both bank deposits and dividends are recovered while they reported back to the plenary within four weeks.

The resolution of the upper chamber was sequel to a motion, titled: “Digitalisation/automation of collection and remittance of withholding tax on bank deposits and dividends payments for enhanced state government internally generated revenue, IGR” sponsored by Senator Uche Ekwunife (PDP Anambra Central), yesterday during plenary.

Leading debate on the motion, Ekwunife said “it has been discovered that the Central Security & Clearing System, CSCS and banks in Nigeria do not remit withholding tax on bank deposits and dividends to state government as and when due.”

The lawmaker, who also noted that “most state governments were unable to pay salaries and meet their financial obligations as a result of poor and dwindling revenue,” added that billions of naira are being held by banks either in form of under remittance or non remittance of withholding revenue.

Ekwunife said the need for states to increase their IGR has become imperative giving the dwindling revenue from the Federation account which has left various state governments with the task of formulating strategies to improve the revenue base of their states.

According to her, “one of the major sources of revenue for state governments is the withholding tax on bank deposits and dividends which has been difficult for the states to track.”

“The current practice is that both the banks and CSCS remit to state governments any amount they desire as it is difficult for the states to reconcile what amounts should be credited to them. Remittances without recourse to details is capable of and already eroding the revenue due to the state governments,” she stressed.

Ekwunife, however, said that the leakages with respect to remittance of withholding tax could be addressed using modern tax solutions and information technology.

She also stressed the need for proactive measures to ensure that all the withholding tax is remitted for enhanced revenue and in meeting the federal government’s drive and quest for increased IGR at all levels of government to meet the nation’s developmental needs.

All the senators in their contributions, affirmed that automation of revenue collection and remittance of withholding tax remains the best way to block the leakages.

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