The Association of Bureau De Change Operators of Nigeria has kicked against ongoing banks’ suspension of bureau de change accounts, demanding for tax remittances on turnover volumes.
In a statement on Thursday, the President, ABCON, Alhaji Aminu Gwadabe, said banks were acting under the directive of the Federal Inland Revenue Service to demand that the BDCs pay taxes on funds used to bid for their dollar allocations sent to the Central Bank of Nigeria on a weekly basis through the commercial banks.
The ABCON boss said many banks had written to the BDC operators and were implementing a ‘Post No Debit’ order on the operators’ accounts even where there was no evidence of tax default.
“The BDCs are high turnover sector and their funding cash for dollar collections cannot be subjected to taxes. An average BDC does over N30m weekly turnover and paying taxes on such funds will affect their cash flow and ability to meet their statutory role of foreign exchange supply to the retail-end of the market,” he said.
He said many of the affected BDC operators were already facing major funding challenges that needed to be addressed immediately by concerned stakeholders.
“In fact, we will be writing to the Central Bank of Nigeria to complain about the illegal policy of the ‘Post No Debit’. Presently, most of our members funding with the Deposit Money Banks for their bidding obligations are being trapped in the banks. This scenario, if not checked, will affect our members funding capacity, derail the sustainability of their businesses with the resultant liquidity spikes,” he said.
In the statement, a letter from one of the commercial banks said, “The bank has pursuant to section 49 of the Companies Income Tax Act LFN 2004 and Section 28, 29 and 31 of the Federal Inland Revenue Service (Establishment) Act No. 13 of 2007 been appointed by the executive chairman of the FIRS as collection agent over your accounts.”
“Please be informed that consequent on this directive, we are compelled by law to place ‘Post No Debit’ on your account pending the receipt of further instructions from the executive chairman of the FIRS. This is for your information and necessary action as you are best advised to contact the FIRS officials”.
According to Gwadabe, the new trend in collecting taxes from the BDCs is unacceptable and must be stopped.
He said that ABCON would be writing to the CBN to call the banks and other parties implementing the directive to order.