In recent times, the Nigerian government, in a quest to diversify the economy and increase tax revenue has introduced numerous measures to widen the tax base at the domestic level and internationally. The Federal Inland Revenue Service (FIRS) in particular has been developing strategies and approaches to improve the non –oil tax revenue collection and even recovery processes, in order to improve the revenue yield.

Some of the measures include Auto-VAT Collect initiative, Waiver of Penalty and Interest and Automation of tax collection through Information Technology. One of Nigeria’s latest strategy was the just concluded Voluntary Assets and Income Declaration Scheme (VAIDS) which generated significant revenue in billions of naira and enlarged taxpayers’ base.

The VAIDS was jointly handled by the FIRS and the States Internal Revenue Service. Continuing with this stance, the FIRS is determined to go after the bank accounts of defaulting taxpayers who are raking in billions of Naira in Nigeria and are not paying taxes. Through data-mining, FIRS has identified over six thousand seven hundred and seventy two (6,772) defaulting billionaire taxpayers through records obtained from the banks of such taxpayers. This is in FIRS bid to correctly ascertain their complaint status and widen the tax net.

Consequently, FIRS notified the banks of affected taxpayers of this development and in some instances, had ordered the banks, who are deposit takers to freeze the bank accounts of alleged defaulters to demonstrate the level of her seriousness. The affected taxpayers had been given defined timelines to comply with the Demand Notices for their accounts to be unfrozen.

Is Confidentiality in Banking Transactions Over?
Generally, banks have a legal duty to protect the confidentiality of existing and former customers, but four broad situations have been identified in which a bank can lawfully disclose confidential information: When the law compels it, where it has a public duty to, when a bank must disclose information to protect its interests and when a customer agrees.

In a number of countries, banks can also be required to give information to the Tax Authority as it is not only in Nigeria also in other countries e.g. In New Zealand the Inland Revenue Department is authorized under the Tax Administration Act 1994 to do so.

Furthermore, it seems globally Bank secrecy is over. In August 2017, FIRS signed two major multilateral instruments one of which is the Common Reporting Standard Multilateral Competent Authority Agreement‎ (CRS MCAA). According to Pascal Saint-Amans, Director of the OECD’s Centre for Tax Policy and Administration (CTPA), the signing of the agreements makes Nigeria the 71st jurisdiction to sign the MLI and the 94th jurisdiction to join the CRS MCAA.

In effect, the agreements empower Nigeria to automatically exchange tax and financial information among other 102 tax jurisdictions and enhance Nigeria’s ability and those of the other countries to contain tax avoidance and evasion as well as share financial data. As at August 7, 2018, 103 countries have signed to the CRS/MCAA.

The Banking and Other Financial Institutions Act, Laws of Federation, 2004 guarantees the confidentiality of the transaction flows in various entities’ account between the bank and the account holder. Despite the position above, the FIRS under its domestic Establishment Act and the CITA is empowered to access any banking information voluntarily given or on request as provided in section 28(i) of the FIRS (Establishment) Act.

Powers to Appoint Agents for Collection of Taxes
The FIRS cited the provisions of Section 31(Powers of Substitution) of the Federal Inland Revenue Service (Establishment) Act, Cap. F 36 Laws of Federation of Nigeria (LFN), as well as Section 49 of the Companies Income Tax Act (CITA), Cap. C 21 LFN 2004 (as amended) in first appointing the relevant commercial Banks as agents of collection and directing such banks to help recover the amount deemed as tax liabilities from the tax defaulters.Section 50 of Personal Income Tax Act Cap P 8 LFN 2004 (as amended), under “Power to Appoint Agent” has a similar provision.

Disputes and Appeals
Section 50 of CITA gives cover to persons who pay taxes due from monies held on behalf of companies from whom taxes are due, by way of indemnification under the law. The provisions of that same section further proceed to state that disputes and appeals procedure would apply as though the Customer/Taxpayer had been issued an assessment, in the ordinary course of transacting with the tax authorities. Such provisions have implications for the tax administrator as well as the taxpayer.

Disputes and appeal procedures are clearly spelt out in Section 59 and the Fifth Schedule of The FIRS (Establishment) Act 2007. For instance, aggrieved taxpayers can object to the assessments within 30 days of receipt. The appeal process further affords either the FIRS or the aggrieved taxpayer to appeal to the Tax Appeal Tribunal and this can continue until the Supreme Court.

Implications
The bold step taken by the FIRS to freeze the relevant accounts suggests that our tax system is still weak and needs to be strengthened as:
• There are a number of Taxpayers without Taxpayer Identification Numbers,
• Some have TINs and have not filed any tax returns as taxpayers, and
• Such taxpayers failed to take advantage of the VAIDS.
Another implication is that while the FIRS is well within its remit to invoke this power of substitution and other powers under the Act, collection of the taxes would not be achieved by fiat but through compliance with all the appeal processes.

Meanwhile, it also follows that while the banks may have moved swiftly, in contemplation of the provisions of section 34 of FIRSEA, which considers any amount due, by way of tax, as constituting a debt due to the Service, recoverable by a civil action brought by the Service, it is still expected that accounts of the respondent entities are unfrozen, if for any reason they did so, as soon as it is established that the taxpayer has engaged the relevant dispute and appeal mechanism.

The FIRS should be commended for seeking out taxpayers that were hitherto non-compliant. In doing so, however, they must endeavour to stay within the ambits of the laws. This is very important since based on similar provisions in the Personal Income Tax Act, it is not impossible that 36 different tax authorities may start to run after taxpayers, using the same approach, and may therefore end up killing the goose that lays the golden egg.Taxpayers, on the other hand, are encouraged to embrace the available self-assessment process, file appropriate tax returns and meet their respective obligations as provided under the law.
Ede is the President/Chairman of Council, CITN