By Mohamed Jaward Nyallay
Implementation of audit recommendations have been a major problem for several years. Every year the audit report catalogues a number of issues that were raised in previous years that are still unresolved.
One of the most frequent issues raised in the report is the issue of Withholding Tax. It is hard to take stock of exactly how much more the National Revenue Authority has not been able to collect as a result of this anomaly, but what is clear is that public institutions owe the tax man billions of Leones.
According to the Income Tax Act, individuals and institutions are mandated to pay Withholding Tax on several things, from payroll to transactions.
The 2021 audit report came at a time when the country alongside the globe was still reeling from the effects of the COVID-19 pandemic. This was also followed by the Ukraine-Russia war which exacerbated an already difficult revenue mobilization situation.
For a country that was aiming to collect local revenue up to 20% of its GDP ratio, public institutions backsliding on their tax duties is a major impediment on that aim.
A report launched last week by Budget Advocacy Network showed that Domestic Revenue collection rate to GDP was on course to hit the 20% target before the COVID-19 pandemic.
“However, the breakout of the COVID-19 pandemic in 2020 stymied the global economy and as a result the domestic economy. revenue was severely hit, with the revenue/GDP ratio falling to 13.8% in 2020,” the study stated.
Researchers are yet to estimate how much of that shortfall came from government institutions backsliding on tax obligations, because government is the largest employer in Sierra Leone, generating billions of leones on taxes every day from itself.
One of the institutions that were listed in the 2021 Audit report, for failure of paying withholding tax in 2020, is Right to Access Information Commission (RAIC). The RAIC as its name implies deal with information disclosure in government.
In page 269, the Auditor General noted that: “Withholding Tax taxes totaling Le16,444,175 was deducted from payments, but not paid to the NRA.”
Following redenomination of the currency, the money they owed is now equivalent to Sixteen thousand, four hundred and forty-four leones, one hundred and seventy-five cents.
The official response that was given by RAIC at the time is that they will pay.
“Surely the Commission will definitely adhere to your recommendations to pay all withholding taxes to the NRA within date stipulated,” the report stated.
In the final copy of the report, the AG noted further that the recommendation was not followed and so at the time the report was published the issues was unresolved.
RAIC’s defense?
Executive Director of RAIC, Musa Brima said much of the problem was not the commission’s fault. He said this happened in between transitions, where they have had two different Accountants working for them at separately whiles working for other government institutions
“We are very concerned about audit, because when we came there was none, but we had some transition. There was an accountant at the Ministry of Information which was overseeing us, that has even led to a problem with our NASSIT,” Brima said.
According to his timeline, he said this was around 2018,2019 when the commission just started operations under the then new government of President Julius Maada Bio.
Brima said this continued until it got to a point when it became a necessity to get their own Accountant, however even with a new accountant, he was not working for the commission exclusively.
“We got an Accountant, who was also overseeing the Local Government Commission. He was under instruction to pay out these monies, but when we got the report in 2021, we found out that there were some loopholes in payment,” he added.
He said they had since resolved the issue and made sure they paid all the money. Bank transaction records that Mano Reporters saw shows several transactions paid as Withholding Tax to NRA’s account at the Bank of Sierra Leone.
Mano Reporters have since tried to confirm those details with the NRA, but they have not responded to a request made. In September this year, the NRA released a statement reminding businesses and institutions to pay taxes like Withholding Tax. NRA has since not commented on how much of that pursuit was targeted at government institutions.
Mano Reporters also now understand that the Investigations Department at the Anti-Corruption Commission followed up on the audit recommendation, something which hastened the process of repayment.
RAIC Executive Secretary also confirmed the meeting with ACC, saying it was a routine follow up. A source within the ACC also confirmed that this issue has been resolved and they will release a statement soon on it, as part of their broader follow up on Audit issues.
The shortage of Accountant is a reminder of the human resource deficit within government. Brima said the commission has now hired a new accountant which exclusively works for them.
“All our files and receipts are now in order; the Auditors have been here and they have gone through it all. We are optimistic about the next audit report,” he said.
