The Association of Bureau De Change Operators of Nigeria, ABCON, has flawed the ongoing suspension of bureau de change accounts by banks on the grounds of tax remittances on turnover volumes.
The banks’ action was sequel to the directive of the Federal Inland Revenue Service, FIRS, to the banks to demand that the BDCs pay taxes on funds used to bid for their dollar allocations from the Central Bank of Nigeria (CBN) on a weekly basis through the commercial banks.
Apparently uncomfortable with the directive, the association through a statement signed by its President, Mallam Aminu Gwadabe, confirmed that some deposit money 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.
He stated: “The BDCs are high turnover sector and their funding cash for dollar collections cannot be subjected to taxes. An average BDC does over N30m million 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.
The ABCON boss pointed out that many of the affected BDC operators were already facing major funding challenges requiring urgent attention by the regulatory authorities.
Gwadabe hinted that the association would be writing to the Central Bank of Nigeria to complain about the illegal policy of the ‘Post No Debit’.
According to him, most of the association members funding with the deposit money banks for their bidding obligations are being trapped in the banks.
He described the development as undesirable which, if not checked, would affect BDC operators’ funding capacity, derail the sustainability of their businesses with the resultant liquidity spikes.
In the statement, the association disclosed the content of a letter from one of the commercial banks which stated, inter alia: “The bank has pursuant to section 49 of the Companies Income Tax Act LFN 2004 and Sections 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”, the letter added.
Gwadabe described the new approach of collecting taxes from the BDCs as unacceptable and must be stopped.