The House of Representatives has directed Guaranty Trust Bank (GTBank) to remit the Value Added Tax (VAT) on the commissions it received from Remita transactions between 2015 and 2022.
This order was issued by the Public Accounts Committee (PAC) of the House of Representatives during an ongoing investigation into suspected revenue leakages involving the Remita platform.
The committee’s chairman, Rep. Bamidele Salam, stated that the bank must calculate the VAT from the commissions earned on Remita transactions and remit the amount to the Federal Government recovery account.
The order followed a unanimous decision by the committee after reviewing records and questioning GTBank’s management.
The committee raised concerns that GTBank failed to remit VAT during the early stages of its transactions through Remita, which is a serious oversight given the bank’s responsibilities.
This investigation by the House committee extends beyond just GTBank. It also focuses on potential breaches in standard operating procedures by several banks and financial institutions using Remita.
Rep. Bamidele Salam emphasized the need for compliance with tax remittances, noting that tax laws require transparency and full accountability in all financial transactions involving public funds.
The PAC is also probing other potential non-compliance issues tied to the Remita platform. However, the VAT on Remita commissions has emerged as a key issue in this ongoing investigation.
During the hearing, GTBank’s Executive Director, Mr. Ahmed Liman, explained why the bank had not remitted VAT for nearly eight years. According to Liman, the bank assumed that the VAT had already been deducted by Remita, the platform operator, before the commissions were shared with GTBank.
“We believe that Remita is saddled with the responsibility of sharing the commission fees between the payment-receiving parties,” Liman explained.
He reiterated that the bank thought the proper procedure was for Remita to handle VAT deductions before disbursing funds to the parties involved. “In our mind, we think Remita has done the needful before sharing the fees between the parties,” he added.
Liman also disclosed that GTBank charges a fee of 0.75% on all transactions conducted through the Remita platform. He pointed out that, in 2018 alone, the bank received a total of N254.4 million from the Accountant General of the Federation through the platform.
GTBank is not the only bank caught up in this investigation. Representatives from several other banks were also called to testify before the committee. These banks include Keystone Bank, Zenith Bank, Sterling Bank, Polaris Bank, First City Monument Bank (FCMB), Ecobank, and Wema Bank.
The committee referred the cases of these banks to its reconciliation sub-committee. This sub-committee will work with the banks to resolve discrepancies found in their submissions regarding VAT remittances and other financial transactions involving the Remita platform.
Remita, developed by the technology company SystemSpecs, is a gateway platform that enables the collection and disbursement of government revenues. It is an integral part of Nigeria’s Treasury Single Account (TSA) system, which centralizes the government’s finances.
Through the Remita platform, payments such as taxes, pensions, and other levies are made to the appropriate authorities. Remita processes payments for Ministries, Departments, and Agencies (MDAs) of the government, including VAT, Pay as You Earn (PAYE), and Withholding Tax.
In addition to government payments, Remita is also used by individuals and businesses to handle various forms of financial transactions. It is a versatile platform that plays a crucial role in ensuring that funds are properly channeled to the government treasury and other beneficiaries.
VAT is a consumption tax levied on goods and services in Nigeria. The standard rate is 7.5%, and it is payable to the Federal Inland Revenue Service (FIRS).
