The Federal Inland Revenue Service (FIRS) in Nigeria has announced its intention to launch a nationwide Value-Added Tax (VAT) and Withholding Tax (WHT) compliance monitoring exercise for all taxable individuals and entities, beginning on October 23, 2023.
According to a statement released on Monday by Zacch Adedeji, the FIRS chairman this initiative is aimed at enhancing tax compliance and revenue collection in the country.
Here are the key points from the announcement:
VAT and WHT: VAT is a consumption tax applied to a product as value is added at various stages of the supply chain, from production to the point of sale. WHT, on the other hand, is deducted at the source by organizations or entities when making payments to suppliers of goods and services. These deducted amounts are required to be remitted to the tax authority during payments to suppliers or vendors.
Legal Basis: The monitoring exercise is in accordance with the FIRS Act of 2007.
Scope: The monitoring exercise will apply to all taxable individuals, tax agents, including Non-Governmental Organizations (NGOs), Ministries, Departments, and Agencies (MDAs) at the Federal, State, and Local government levels.
Implementation Date: The exercise will be effective from Monday, October 23, 2023.
Review Period: The exercise will encompass the accounting years from 2019 to 2022 for taxable individuals whose records were audited by the Service up to the 2018 accounting year. For taxpayers whose records have not been audited by the agency up to 2018, the exercise will also cover the preceding unaudited years.
Compliance Requirement: Taxable individuals or tax agents who have made deductions of VAT or WHT on behalf of the Service are required to promptly remit all such deductions to the FIRS within two weeks of the announcement.
Notification: Entities subject to the VAT and WHT compliance monitoring initiative will be duly notified by the FIRS. The necessary documents and requirements for the exercise will be outlined in the communication sent to the selected entities.
It is essential for individuals and organizations subject to VAT and WHT to ensure compliance with these tax regulations to avoid potential penalties or legal actions.
