Inspite the vigorous campaign by Governor Rauf Aregbesola of the state of Osun for tax payment by all eligible tax payers and groups, there is an area where the state government is losing billions of naira without much attention paid to it, recent investigation has revealed.
Findings by OSUN DEFENDER showed that while the government has no stress in the remittance of taxes from workers in the state civil service, it has not explore the potentials of withholding tax for the increment of the Internally Generated Revenue (IGR).
Withholding Tax is an Income Tax withheld from employees’ wages and paid directly to the government by their employers. It is a tax levied on income in form of dividends, rents, interests, director’s fees, gambling winnings, commissions etc. from securities owned by a non-residents.
Investigations revealed that the withholding tax of Osun indigenes who are working in other states are not being remitted to the Osun government by their various employers.
OSUN DEFENDER gathered that the state might be losing about N10bn due to the non-remittance of the withholding tax on taxable Osun indigenes working in other states.
The medium gathered that many of the Osun indigenous workers working in other states have not been filing their state of origin address in their employees’ withholding tax form, thereby denying the state the opportunity of getting the withholding tax.
According to Information released recently from the state Internal Revenue Service, “Osun government is losing revenue to the tune of N10bn yearly as a result of non-remittance of withholding taxes of Osun indigenes transacting businesses in other states.
“This is because the various Osun indigenes in diaspora (taxpayers on withholding tax) did not use Osun address in their ‘Employee’s database.”
“Withholding tax is the amount withheld as a credit against the income taxes the employee must pay during the year. And how this tax (withholding tax) is paid to the state depends on the address that the tax payer used in his or her ‘Employee’s Withholding Allowance Certificate’.
“This is the area of concern. Based on the recently conducted research on Withholding Tax, tax on withholding that is due to the coffers of the state of Osun is being presently used to develop some other states of the federation.”
The medium gathered that some of the affected indigenes include those working with Federal Government parastatal and other agencies, as well as those working within private establishment across the country.
Checks showed that many of the state indigenes working outside the state had registered with their employees with addresses different from their original state of origins, either as a result of wanting to gain employment or non affiliation with their place of birth, a situation that is now depriving the state of its financial right.
It would be recalled that Lagos and Ogun States have had issues as to which state should enjoy the rights of withholding tax on indigenes who reside in either state and works in another.
In the face of the state’s drive for revenue generation, the OIRS had disclosed that it can no longer afford to lose such monies to other states when it has a lot of responsibilities begging for attention.
The state government might have to intensify its efforts through public enlightenment, sensitisation and more publicity on tax payment, particularly on withholding tax among its indigenes, who lived and work outside the state.
Also, the state would have to begin an enlightenment campaign to sensitise its indigenes on the need to use their state of origin when seeking employment outside the state so that it would not lose it rights in the future.