KPMG Nigeria Tax Alert
The Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, was the Keynote Speaker at the KPMG Quarterly Tax Breakfast Meeting held on Friday, 18 November 2016.
We have summarized below the key issues discussed by the FIRS Chairman at the meeting:
Waiver of penalty and interest
- The 45-day penalty and interest waiver programme expiring on Thursday, 24 November 2016 covers all forms of penalties and interest on Federal taxes, including penalty for late filing of returns. While the waiver primarily relates to the 2013 to 2015 financial years, the FIRS is open to waiving penalties and interest charges relating to pre-2013 FY tax liabilities.
- To qualify for the waiver, evidence of payment of at least 25% of the principal tax liability must be submitted with the application, in addition to a payment plan for the balance. However, the FIRS reserves the right to audit the years for which the waiver has been given, and it will not refund interest and penalty previously paid by any company in the years covered by the waiver programme.
- Application for the waiver programme should be addressed to the Office of the Executive Chairman of the FIRS, but can be submitted at any FIRS office in the country.
- A copy of the FIRS’ FAQs on the waiver programme is attached to this Alert for further information.
Withholding Tax (WHT) and Value Added Tax (VAT)
- The FIRS has confirmed that WHT credits can be carried forward, subject to an audit of the company’s records for the period covered by the credits. However, WHT credits relating to periods already audited by the FIRS will not be re-audited.
- With effect from 1 December 2016, the FIRS will start transmitting WHT credit notes to taxpayers via email. Taxpayers are, therefore, advised to update their email addresses with their respective tax offices.
- Taxpayers can request electronic copies of WHT credit notes relating to the last two (2) years. Special requests can also be made for WHT credit notes beyond this two-year cut-off period.
- Where a taxpayer has suffered WHT deduction from a Ministry, Department or Agency (MDA) of the Federal Government without receiving the related WHT credit notes, the taxpayer can present the evidence of WHT deduction by the MDA for the purpose of claiming its WHT credit.
Currency of remittance of VAT and WHT
- The FIRS reconfirmed that WHT and VAT should generally be remitted in the currency of the underlying transaction. However, where a taxpayer has problems sourcing foreign currency for the purpose of WHT or VAT remittance, the taxpayer should escalate the issue to the Office of the Executive Chairman of the FIRS. Such a taxpayer must provide evidence that it has applied to the Central Bank of Nigeria for foreign exchange and deposited the Naira equivalent of the foreign exchange tax liability with its bank.
The tax refund process is currently being reviewed by the FIRS. Therefore, all taxpayers who have pending applications for tax refund should contact the Office of the Executive Chairman of the FIRS for prompt resolution.
Henceforth, new applications for tax refund should be sent directly to the Office of the Executive Chairman.
Other Tax Issues
- The FIRS plans to issue regulations on the taxation of non-interest financial institutions by the end of January 2017. The FIRS is also working on draft guidelines on the taxation of Real Estate Investment Trusts.
- Two separate FIRS teams are not allowed to carry out audits (whether desk or field audits) on a taxpayer for the same period. Where this occurs, it should be referred to a higher ranking tax office for resolution or escalated to the Office of the Executive Chairman.
- The FIRS is committed to the speedy implementation of the Integrated Tax Administration System to enable electronic filing of returns.
For further enquiries on the above, please contact:
Partner and Head, Tax Regulatory and People Services