INTRODUCTION

The Federal Inland Revenue Service (or ‘The Service’) in its Public Notice (PN) of August 14, 2019 directed all companies, particularly those in the Fast-Moving Consumer Goods (FMCGs) Sector to deduct at source, Withholding Tax (WHT) and Value Added Tax (VAT) from compensations due to their distributors and customers.

These compensations referred to by the Service are marketing schemes and business promotion strategies deployed by companies to penetrate the market, promote their brands, build customer loyalty and ultimately grow revenue. As rightly noted by the Service in the Public Notice, these compensations are awarded to agents, dealers, distributors, retailers and can be in the form of cash payment, credit notes or even goods-in-trade. The critical points of this issue include:

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