Key Takeaways from the FIRS’ Stakeholders’ Meeting
September 14, 2018
The Federal Inland Revenue Service (FIRS) recently organised a meeting with various stakeholders on tax matters to discuss some issues regarding tax administration and national revenue. While a number of stakeholders expressed their concerns on perceived aggressiveness on the part of the FIRS on tax collection and audit, the discussion was also targeted at the plans for achieving a more effective tax system in Nigeria as well as the recent issuance of substitution letters by the FIRS which has resulted in the restriction of bank accounts of over 2,000 alleged tax defaulters.
We have outlined some of the key points from the FIRS’ address as follows:
- The FIRS will continue to issue substitution letters to banks for the recovery of unpaid taxes by defaulting taxpayers. However, the FIRS will exercise due care and follow due process in achieving its legal mandate.
- Although, the 15-day window that was granted for the Withholding Tax (WHT) review and reconciliation exercise expired on 30 August 2018, more time will be allowed for taxpayers to reconcile their WHT tax positions with the FIRS. Thus, taxpayers can take advantage of the exercise to reconcile their WHT positions. Also, the FIRS Chairman confirmed that there is no time limitation to the carry-forward of WHT credits.
- The FIRS and all States Internal Revenue Service have signed a Memorandum of Understanding for joint tax audits. As such, taxpayers can apply for joint tax audits to avoid multiple audits in different states where they have multiple accounts.
- Taxpayers will be required to display Value Added Tax (VAT) Certificates at their business premises. It is expected that a formal notification will be issued to taxpayers to this effect. The FIRS intends to use this medium to discourage people from patronising business owners who collect VAT on behalf of the government but fail to remit such.
- The FIRS will begin to assess certain companies on turnover basis. Companies that fall within this category are those that have had a yearly minimum inflow of N1billion or more in their bank accounts within the past three years and have failed to file returns with the FIRS. Such inflows of N1billion or more, recorded in the bank account of such companies, will be used as turnover in estimating their tax liabilities.
- For companies that own landed properties but fail to file returns, the FIRS has decided to treat the market value of such properties as the deemed income of the companies and assess a portion of the income to tax on a turnover basis.
Given all these action plans articulated by the FIRS, it is imperative for companies to begin to regularize their affairs by filing their tax returns, carrying out tax health checks and reviewing their tax planning strategies to ensure that they are in line with the law.