9 in 10 Big Businesses Evaded Tax in Katsina — KT-IRS Chairman

By Katsina Times

The Chairman of the Katsina State Internal Revenue Service (KT-IRS), Muhammad Isyaku, has said about nine out of 10 major businesses operating in the state had historically failed to pay taxes to the government.

Isyaku made the disclosure during a special interview with Katsina Times on Friday at the headquarters of the KT-IRS along Kano Road, Katsina.

He said the agency had introduced reforms, including data-driven tax assessment, digital filing and improved tax audits, to increase revenue collection and ensure compliance with tax laws.

According to him, the state’s tax system covers employees of the state and federal governments residing in Katsina, workers in private companies, contractors, business owners and other taxable individuals and organisations.

How PAYE works

Explaining the Pay-As-You-Earn (PAYE) system, Isyaku said employees were taxed according to their income, with the applicable amount deducted from their salaries before payment.

“You pay tax on what you earn; you do not pay tax on what you do not earn,” he said.

He explained that KT-IRS collects personal income tax from employees of the Katsina State Government, federal government workers resident in the state and employees of private companies operating in Katsina.

He added that although some companies, particularly limited liability companies, have tax obligations to the Federal Government, their employees remain liable to personal income tax in the states where they reside, in line with the law.

Companies required to register, file returns

Isyaku said companies operating in Katsina were required by law to register with the state tax authority.

He said businesses were also expected to notify the agency when leaving the state and file annual returns declaring their income, expenditure, profits and tax liabilities.

According to him, the agency uses the information provided by taxpayers alongside its own assessment mechanisms to determine whether the correct amount of tax has been declared.

Contractors, withholding tax

The KT-IRS chairman also explained the operation of withholding tax, particularly for contractors and businesses.

He said withholding tax deducted from payments to contractors could be credited against their actual tax liabilities after proper assessment.

He warned that some contractors risk losing tax credits because they fail to maintain proper financial records and file accurate returns.

He gave an example of a contractor from whom N600,000 had been deducted as withholding tax during a year but whose actual tax liability, after allowable expenses and assessment, amounted to N200,000.

In such a case, he said, the remaining N400,000 could become a tax credit.

He therefore advised contractors and businesses to maintain proper accounts to enable them to benefit from legitimate tax credits.

‘We inherited a negotiation-based system’

Isyaku said the current management inherited a tax assessment system in 2023 in which assessments were sometimes determined through negotiations between officials and taxpayers.

He said Governor Dikko Umar Radda directed the new management to reform the system.

“When we came in, what we met was a system where an individual could be assessed based on how he was perceived, and negotiations would then take place until an amount was agreed,” he said.

According to him, the agency was gradually replacing the system with a data-driven approach.

He cited the introduction of the Data Management System (DMAS), which he said enables the agency to cross-check information supplied by taxpayers against available transaction records.

He said the system was designed to establish whether taxpayers were declaring their actual income and transactions.

‘Many major businesses only sought tax clearance’

The chairman alleged that prior to the reforms, many major businesses and individuals only approached the tax authority when they needed tax clearance certificates for official transactions.

He praised Ibrahim Ida, the Wazirin Katsina, and Samaila Mamman Kurfi for voluntarily paying their taxes annually.

“Between 2023 and 2024, whenever you saw a major businessman coming to pay tax, in most cases he was looking for a tax clearance certificate,” he said.

Isyaku maintained that about nine out of 10 major businesses had previously failed to meet their tax obligations.

However, he said the situation was changing following the reforms introduced by the agency.

Katsina generates N2.8bn in July

Isyaku disclosed that Katsina State generated about N2.8 billion in tax revenue in July 2026.

He attributed the increase in monthly collections to improved tax administration and the agency’s efforts to bring more businesses and individuals into the tax net.

He said the agency was particularly targeting businesses whose economic activities were linked to Katsina but whose tax contributions did not reflect the scale of their operations.

He added that major businesses were not limited to Katsina metropolis and Daura, but were also found in Funtua and other commercial centres.

KT-IRS scrutinises hotels, companies

The chairman said the agency was also examining the tax records of major hotels and companies operating in the state.

He said some hotels were registered as limited liability companies and were therefore subject to relevant tax obligations.

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He added that the agency was reviewing payrolls and other financial records to determine whether appropriate taxes were being paid.

Isyaku also acknowledged allegations of collusion and misconduct involving some officials of the agency.

He said some officers were currently under investigation over alleged irregularities.

Agency conducts tax audits

The chairman said KT-IRS conducts tax audits whether or not taxpayers voluntarily approach the agency.

He said organisations were required to provide records of contracts awarded, names of contractors and withholding tax deductions.

“If withholding tax was deducted, where is the money? If it was not deducted, we will identify the error and require the appropriate payment,” he said.

He explained that withholding tax obligations could arise at both federal and state levels, depending on the nature of the business and transaction.

Informal sector brought into tax net

Isyaku said the state had introduced a system for collecting taxes from businesses operating in the informal sector.

He explained that the informal sector included businesses with limited financial records or without formal banking and accounting systems.

According to him, the state engaged consultants and agents to collect taxes in markets, while KT-IRS monitors and controls the process.

He acknowledged that the reform had faced challenges, including complaints from traders and problems involving some agents.

However, he said collections had increased significantly in some markets.

He cited Kagadama Market in Kaita Local Government Area and Dandume Market as examples of locations where revenue collection had improved under the new system.

‘Individual taxpayers can generate over N40bn’

The KT-IRS chairman said Katsina State could generate more than N40 billion annually if residents complied fully with their individual tax obligations.

He urged residents and businesses to file their annual returns, even where they believed they had no tax liability.

He said filing returns would enable the authority to determine whether an individual was liable to pay tax and the amount involved.

He added that operators of commercial motorcycles and tricycles were also covered by the state’s tax system.

Isyaku urges wealthy Katsina indigenes to pay taxes

The chairman appealed to wealthy Katsina indigenes, politicians and business owners whose economic activities extend beyond the state to ensure that they meet their tax obligations to Katsina.

He mentioned Senator Yakubu Lado Danmarke, Mustapha Inuwa and Babba Kaita, among others, while urging wealthy residents to contribute to the development of the state through their tax obligations.

He also praised businessman Dahiru Mangal for what he described as his contribution through dividends and related tax obligations.

“We want to see the names of our major people and what they are contributing to the state,” he said.

KT-IRS targets banks, telecom firms

Isyaku further disclosed that the agency was pursuing tax obligations involving banks, telecommunications companies and other major service providers operating in Katsina.

He said the agency was prepared to pursue legal avenues where necessary to recover revenue owed to the state.

He mentioned MTN, Glo, Airtel, IHS and other service providers as companies whose tax obligations were being examined.

According to him, some disputes had already resulted in legal proceedings, but the agency was seeking ways of resolving them without disrupting essential services.

Tax services move online

The chairman said KT-IRS had moved significant parts of its operations online to enable taxpayers to access services remotely.

He said tax clearance certificates were now issued electronically, reducing the need for taxpayers to visit the agency’s offices physically.

He said the digital system was aimed at making tax compliance easier while reducing delays and opportunities for corrupt practices.

‘We have received threats’

Isyaku said the tax reform programme had come with personal risks, alleging that he and some officials had received threats, including threats of violence.

He said the threats had not discouraged him from pursuing the reforms, adding that his commitment was driven by his belief in public service and the support of his family.

‘Our goal is to make tax payment easier’

Isyaku said the ultimate objective of the reforms was to make tax compliance easier for residents and businesses while reducing the difficulties associated with tax administration.

He said the agency wanted to establish a system where taxpayers could fulfil their obligations from their homes or offices without unnecessary delays.

“Our hope is that by the end of our tenure, we will have made tax payment easier for every taxpayer and reduced the difficulties faced by taxpayers and our staff,” he said.

He added that improved tax compliance would provide the state government with more resources for development and reduce pressure on its capital expenditure.