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The Freetown City Council (FCC) is in tax default of over One Billion Leones (Le1,034,519,088.00) in respect of legal and regulatory requirements, according to the Auditor General’s 2019 report.
According to her report the Council is amongst 11 Local Councils who are in breach of such requirements that ranges from non-payment of Withholding Taxes, Pay-As-You-Earn (PAYE) Tax and NASSIT contributions.
The said Councils are to account for a cumulative amount of Le1.4 Billion (Le1,372,377,497). They are Bonthe District, Moyamba District, Western Area Rural District, Freetown City, Port Loko District, Port Loko City, Makeni City, Koinadugu District, Karene District, Kambia District, Falaba District Councils.
Freetown City Council carries 75% of the breach, and were faulted on not paying Le633mn (Le 633,198,042.00) Withholding Taxes and Le401mn (Le401,321,046) for PAYE. Western Area Rural District is in arrears for Le5mn (Le5,175,000.00) NASSIT contributions and Le93mn (Le92,985,192.00) Withholding Taxes. Karene District has to pay Le90mn (Le90,184,323.00) Withholding Taxes.
From the breakdown tabulated by the audit team, three Councils were in breach of NASSIT contributions, nine for Withholding Taxes and one for PAYE according to Section 130(1) of the Income Tax Act of 2000 which stipulates that: “Any tax that has been withheld or should have been withheld by a withholding agent shall be paid by such agent to the Commissioner within fifteen days of the end of the month in which it was or should have been withheld”.
Withholding taxes which totalled Le944 million (Le944,722,451.24) was deducted/not deducted from suppliers’ payments from own-source revenue and the devolved sector activities, were not paid to the National Revenue Authority (NRA).
Failure to pay withholding tax will attract penalties that may eventually affect the implementation of the activities of the Council, since the penalty was not budgeted for.
Also, Staff NASSIT contributions of Le26mn (Le26,334,000) were not paid. Under Section 25 of the NASSIT Act of 2001, the Council is obligated to pay NASSIT contributions that have been withheld within fifteen days of the end of the month, in which it was or should have been withheld. Failure to pay NASSIT contributions increases the risk of penalty of the Council.
Section 116 of the Consolidated Income Tax Act of 2008 mandates the withholding of tax by employers at source. The audit revealed that the Council failed to withhold PAYE tax on employment income totalling Le401mn (Le401,321,046).
