I want to strongly believe that you are very much aware that the PAYE returns filing season is upon us. Well, just in case you are not aware (I seriously doubt that though), PAYE returns filing is an annual ritual of informing relevant tax authorities (“RTAs”) of the total income you paid to your employees and also the total taxes you deducted from their income in a particular year, whether or not those employees are still in your employment. Where you fail to carry out this ritual, you have to cough out N500,000.00 as penalty, for a corporate entity and N50,000.00, for sole proprietors and enterprises. Quite frightening, right?
That being said, it is therefore not surprising that the entire tax space in Nigeria has been buzzing with PAYE returns-related conversations – reminder letters from the RTAs to file PAYE returns, public notices on how to file PAYE returns, tax alerts from the ‘who’s who’ in the tax sector, etc. However, what no one is talking about (either RTAs or Tax Consultants) is how PAYE returns gives you the opportunity to avoid over-remitting your personal income taxes (PAYE). I know you might want to ask me ‘how is this possible?’ and I am more than willing to explain to you.
In the course of your monthly payroll computations, it is very possible that due to certain factors including but not limited to scenarios such as early leavers, late joiners and fluctuations in employees’ income, you may end up over-deducting PAYE from your employees’ income. The Annual PAYE returns filing however gives you the opportunity to compute your payroll on an annual basis, thereby giving you the opportunity to balance out any over/under-deduction that may have occurred.
Therefore, the very first step in your PAYE returns filing process is NOT the filing itself, rather it is the re-computation of your payroll on an annual basis to get your true PAYE liability position for the relevant year. I implore you to NEVER rely on your monthly computations because the aforementioned factors more often than not cause changes when the payroll is computed on an annual basis. Can I share a little secret with you? Getting a refund of taxes over-remitted to any RTA can be likened to a cat passing through the eye of a needle. You get my gist, yeah? Great.
Therefore, the very first step in your PAYE returns filing process is NOT the filing itself, rather it is the re-computation of your payroll on an annual basis to get your true PAYE liability position for the relevant year. I implore you to NEVER rely on your monthly computations because the aforementioned factors more often than not cause changes when the payroll is computed on an annual basis. Can I share a little secret with you? Getting a refund of taxes over-remitted to any RTA can be likened to a cat passing through the eye of a needle. You get my gist, yeah? Great!
I hope you have been able to pick a thing or two from the few lines I scribbled in the foregoing paragraphs. In case you have any question as regards the above (or any PAYE returns-related issue), kindly reach out to us at Taxaide on 0700TAXAIDE or payrolldesk@localhost or business@localhost.
Remember, we are always here to serve you ????
