FIRS puts a 30-day hold on freezing of companies’ bank accounts

Nigeria’s tax office, the Federal Inland Revenue Service (FIRS) has
announced a temporary suspension on plans to freeze bank accounts of tax
defaulters.

The service, in a letter sighted by business a.m. and signed by Abiodun
Aina, coordinating director, Domestic Taxes Group of the FIRS, said
“the suspension has become imperative because of the large number of
taxpayers visiting our office for reconciliation and as a result
creating inconveniences to the tax payers when they have to wait a long
while due to the high traffic of visiting tax payers to our office.
Kindly treat as urgent.”

It however said that the suspension is for 30 days.

According to the letter dated 15th February 2019 and addressed to
managing directors of all Nigerian banks titled, ‘Temporary suspension
of lien on customers’ account’ with attention to compliance officers
said, “The FIRS wishes to inform you that the lien placed on the
accounts of our tax payers with your bank has been suspended for 30 days
with immediate effect.”

The FIRS had earlier written to banks to appoint them as collection
agents of taxpayers considered to be in default of tax payments. In
order to achieve this, the FIRS directed the relevant banks to freeze
the accounts of the taxpayers to prevent them from drawing funds from
the accounts.

KPMG had said that the letters of substitution issued to the banks
breach the confidentiality agreement between banks and their clients.
“Generally, a bank has a fiduciary obligation to maintain the
confidentiality of its customers and their transactions and to prevent
third-party access to the customers’ account information”. The
exceptions to this duty are in cases where the bank is required by law
or a court of competent authority to make disclosure, and where the
customer consents to the disclosure.