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Section 42

Power to collect tax from person owing money to a taxpayer

(1) This section applies when a taxpayer is, or will become liable to pay a tax and—
  • (a) the tax is unpaid tax; or 
  • (b) the Commissioner has reasonable grounds to believe that the taxpayer will not pay the tax by the due date for the payment of the tax. 
(2*) The Commissioner may, in respect of the taxpayer and by notice in writing, require a person (referred to as the “payer” “an agent”)––
  • (a) who owes or may subsequently owe money to the taxpayer; 
  • (b) who holds or may subsequently hold money, for or on account of, the taxpayer; 
  • (c) who holds or may subsequently hold money on account of some other person for payment to the taxpayer; or 
  • (d) who has authority from some other person to pay money to the taxpayer, to pay the amount specified in the notice to the Commissioner, being an amount that shall not exceed the amount of the unpaid tax or the amount of tax that the Commissioner believes will not be paid by the taxpayer by the due date. Finance Act, 2018 Effective 1st July 2018*
(3) When a notice served under subsection (2) requires a payer “an agent” to deduct a specified amount from a payment of a salary, wages or other similar remuneration payable at fixed intervals to the taxpayer, the amount required to be deducted by the payer “an agent” from each payment shall not exceed twenty per cent of the amount of each payment of salary, wages, or other remuneration (after the payment of income tax). Finance Act, 2018 Effective 1st July 2018

(4) This section shall apply to a joint account when––
  • (a) all the holders of the joint account have unpaid tax liabilities; or 
  • (b) the taxpayer can withdraw funds from the account (other than a partnership account) without the signature or authorization of the other account holders. 
(5) A payer “an agent” shall pay the amount specified in a notice under subsection (2) by the date specified in the notice, being a date that that does not occur before the date that the amount owed by the payer to the taxpayer becomes due to the taxpayer or held on the taxpayer’s behalf. Finance Act, 2018 Effective 1st July 2018

(6) When a taxpayer “an agent” who has been served with a notice under subsection (2) fails to comply with the notice by reason of a lack of monies held by the payer “an agent” on behalf of, or due by the payer “an agent” to the taxpayer, the payer “an agent” shall notify the Commissioner in writing within seven** fourteen** days of receiving the notice, setting out the reasons for the payer’s “an agent” inability to comply. Finance Act, 2018 Effective 1st July 2018 (Finance Act 2022-wef-01-July-2022**)

(7*) When the Commissioner is notified by a payer “an agent” under subsection (6) that the payer “an agent” is unable to pay the amount due, the Commissioner shall, in writing to the payer “an agent” —
  • (a) accept the notification and cancel or amend the notice issued under subsection (2); or 
  • (b) reject the notification.  Finance Act, 2018 Effective 1st July 2018*
(8) The Commissioner shall notify the payer “an agent” in writing of a revocation or amendment of a notice given under subsection (2) where the taxpayer pays the whole or part of the tax due or has made an arrangement satisfactory to the Commissioner for the payment of the tax Finance Act, 2018 Effective 1st July 2018

(9) The Commissioner shall serve the taxpayer with a copy of a notice served on a payer “an agent” under this section.  Finance Act, 2018 Effective 1st July 2018* (Finance Act 2022-wef-01-July-2022)
(9) The Commissioner shall serve the taxpayer with a copy of a notice under this subsection (2), when serving the agent. (Finance Act 2022-wef-01-July-2022)

(10) A payment made by a payer “an agent” to the Commissioner in accordance with a notice issued under this section is treated as having been made on behalf of the taxpayer and shall discharge the payer “an agent” of any liability to the taxpayer or any other person. Finance Act, 2018 Effective 1st July 2018

(11) The Commissioner shall credit any amount paid by a payer “an agent” under this section against the tax owed by the taxpayer. Finance Act, 2018 Effective 1st July 2018

(12) The Commissioner may require, in writing, any person, within a period of at least thirty days, to provide a return to the Commissioner showing any monies which may be held by that person for a taxpayer referred to in subsection (1) or monies held by that person which are due to a taxpayer referred to in subsection (1).

(13) A taxpayer who without reasonable cause fails to comply with a notice or a requirement by the Commissioner under this section shall be personally liable for the amount specified in the notice or requirement.

(14) No notice shall be issued under this section unless the Commissioner has either confirmed its assessment through an Objection Decision and the taxpayer has defaulted to appeal to the Tax Appeals Tribunal within the prescribed timelines.  (Finance Act 2022-wef-01-July-2022)  Deleted by (Finance Act 2023 wef 1st-July-2023 s57) 

(14*) The Commissioner shall not issue a notice under this section unless— 
(a) the taxpayer has defaulted in paying an instalment under section 33(2); 
(b) the Commissioner has raised an assessment and the taxpayer has not objected to or challenged the validity of the assessment within the prescribed period; 
(c) the taxpayer has not appealed against an assessment specified in an objection decision within the prescribed timelines; 
(d) the taxpayer has made a self-assessment and submitted a return but has not paid the taxes due before the due date lapsed; or 
(e) the taxpayer has not appealed against an assessment specified in a decision of the Tribunal or court.  (Finance Act 2023 wef 1st-July-2023 s57*) 

42A Appointment of Value Added Tax withholding agent 

Finance Act, 2016 Effective 19th January 2016 Finance Act, 2019 Effective 7th November 2019
(1) The Commissioner may appoint a person to withhold six percent two percent of the taxable value on purchasing taxable supplies at the time of paying for the supplies and remit the same directly to the Commissioner.

(2) The Commissioner may, at any time, revoke the appointment of a tax withholding agent made under subsection (1), if the Commissioner deems it appropriate to do so. Finance Act, 2016 Effective 19th January 2016

(3) Subsection (1) shall not apply to taxable supplies for official aid funded projects. Finance Act, 2016 Effective 19th January 2016

(4) For the avoidance of doubt, the withholding of tax under subsection (1) shall not relieve the supplier of taxable supplies of the obligation to account for tax in accordance with this Act and the regulations.
(4A) The Commissioner may at any time exempt any supplier from the provisions of this section if such supplier has sufficiently demonstrated that due to the nature of his business, and due to the application of this section, he is going to be in a continuous credit position for a period of not less than twenty-four months. Finance Act, 2016 Effective 19th January 2016 Finance Act, 2017 Effective 3rd April 2017 (Finance Act 2021- wef-01July2021)

(4B) The tax withheld under this section shall be remitted to the Commissioner on or before the twentieth say of the month following the month in which the deduction is made. Finance Act, 2017 Effective 3rd April 2017    (Finance Act 2023 wef 1st-July-2023 s58) 
(4B) The tax withheld under this section shall be remitted to the Commissioner within five working days after the deduction was made.  (Finance Act 2023 wef 1st-July-2023 s58) 

(4C) A person who is required under this section to withhold tax commits an offence if the person –
(a) fails to withhold the whole amount of the tax which should have been withheld, or 
(b) fails to remit the amount of the withheld tax to the Commissioner by the twentieth day of the month following that in which  fifth working day after* the deduction was made. Finance Act, 2017 Effective 3rd April  2017 (Finance Act 2023 wef 1st-July-2023 s58*)  Deleted by  (TPAA 2024 wef 27th December, 2024 S6)
(4C) A person who is required under this section to withhold tax and, without reasonable cause— 
(a) fails to withhold the whole amount of the tax which should have been withheld; or 
(b) fails to remit the amount of the withheld tax to the Commissioner by the fifth day of the following month, shall be liable to a penalty of ten per cent of the amount not withheld or remitted. (TPAA 2024 wef 27th December, 2024 S6)


(4D) A person who commits an offence under subsection (4C) is liable on conviction to a penalty of ten percent of the amount involved. Finance Act, 2017 Effective 3rd April 2017

(5*) A person who, prior to the commencement of this section, was appointed to withhold tax under section 25A of the Value Added Tax Act, 2013 shall, notwithstanding the repeal of that section, be deemed to be a person appointed under subsection (1),
  • Provided that this provision shall not be construed to impose any penalty whatsoever on any such person who ceased to withhold tax for any period following the repeal of that section up to the 8th June 2016.  Finance Act, 2016 Effective 19th January 2016*

42B. Appointment of digital service tax agent. (FA2020)


(1) The Commissioner may appoint an agent for the purpose of collection and remittance of digital service tax to the Commissioner.
(2) An appointment under subsection (1) may be revoked at any time by the Commissioner.

42C. Appointment of rental income tax agents. (Finance Act 2023 wef 1st-July-2023 )

(1) The Commissioner may appoint an agent for the purpose of the collection and remittance of rental income tax to the Commissioner. 
(2) An appointment under subsection (1) may be revoked at any time by the Commissioner.


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