How To Avoid Future Tax Audit Liabilities

Welcome to another Tax Thursday!

If you have been following our publications, today’s topic is something you are already familiar with. However, if you are a new reader, you can check up on our previous posts, link will be attached at the end of this write-up.  On today’s edition, we won’t only be talking about tax, audit, and it processes, we would also be talking about its liabilities and how to avoid them.

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THE TAXAIDER NEWSLETTER VOL 3, ISSUE 7 (JULY 2021)

First Thoughts: Between Self Determination and Freedom of Choice

As much as I do not particularly like to get political or join issues with the current realities on the nation’s administrative and political landscape, I have to admit I have been quite fascinated by the occurrences of the last few weeks. Two public figures have been at the center of the storm and interestingly, they come from two major parts of the country.

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Tax Compliance: What You Need To Know

The meaning of tax compliance in its most basic form is generally defined as the degree to which taxpayers comply with the tax laws.

There is the question whether ‘compliance’ refers to deliberate or obligatory conduct. In the event that taxpayers ‘agree’ simply because of critical dangers or provocation or both, this would not give off an impression of being a proper compliance regardless of whether 100% of the tax were raised in accordance with the ‘tax gap’ idea of noncompliance. All things being equal, it very well may be contended that effective tax administration expects taxpayers to comply willingly, without the requirement for enquiries, investigations, or the danger of utilization of legal or administrative sanctions. A more suitable definition of tax compliance might therefore be the taxpayers’ ability and willingness to comply with tax laws which are determined by ethics, legal environment and other situational factors at a particular time and place.  

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FIRS TAX AUDIT: WHAT YOU NEED TO KNOW

THE FIRS

The Federal Inland Revenue Service (FIRS) is an establishment of the Federal Government of Nigeria, saddled with the responsibility to administer taxes and collect the taxes due from all registered companies (either domiciled in Nigeria or offshore) that generate revenue from Nigeria. That said, all registered companies are obliged to file all relevant tax returns and remit all taxes (Corporate Income Taxes and Transactional Taxes) to the Federal Government of Nigeria through the FIRS.

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IMPACT OF TAXPROMAX ON TAXPAYERS WITH RESPECT TO TAX FILINGS

The initiative by the FIRS to ensure Taxpayers file their annual returns on FIRS’ TaxPro-Max barely a month to the deadline for CIT filing, which was due on June 30, 2021, leaves a bittersweet taste on the lips of taxpayers despite having the intention to provide taxpayers with a seamless return filing and tax remittance process. The TaxPro-Max website was designed with the sole purpose of tax filings (value added tax, withholding tax, withholding vat and companies’ income tax), remittances, and a database for evidencing Taxpayers’ Withholding Tax (WHT) credit position

.

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KEY THINGS TO KNOW ABOUT STATE INTERNAL REVENUE SERVICE(SIRS)TAX AUDIT

The State Internal Revenue Service (SIRS) is an establishment of the relevant State Government across Nigeria (including FCT) which is saddled with the responsibility of collecting income and employment taxes as well as enforcing tax laws at the state levels. All employers of labour are obliged to deduct, remit and file Personal Income Taxes (PAYE) in the case of employment taxes and also file transactional and consumption taxes such as Withholding tax (WHT) and Hotel Occupancy and Restaurant Consumption (HORC) to the Government through the SIRS. The due date for remittances of PAYE is the 10th of every month following the month of deduction. While the due date for filing of Annual Tax Returns(PAYE) is January 31st of every year.

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THE TAXAIDER NEWSLETTER VOL 3, ISSUE 6 (June 2021)

First Thoughts: Midway point Reflections

How do you feel when you get to the midway point of a journey? Do you look back and smile when you consider how far in the journey you have come? Do you look back and wish you had not started the journey at all? Do you look forward and visualize the end of the journey and how far you still have to go before arriving at your destination? Do you look forward and smile, knowing that you are no longer where you used to be and if you could have come far enough to the midpoint, you would definitely find strength to get to the finish point?

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Company Income Tax: What you Need Know

One of the components of the various tax structures in Nigeria is Company Income Tax (CIT). In this tax structure, taxes are payable on the earnings of a company accumulated from, brought into, or got in Nigeria or any exchange or business for whatever timeframe the exchange or business may have been completed. The current rate of company’s income tax is 30% of assessable income.

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Tax Auditing: Understand its Benefits

“For every operation audited, know the mission … the purpose… the reason for being.”Larry Sawyer

Tax audit is an autonomous assessment of records, tax returns, tax installments and different records of a taxpayer to affirm compliance with tax laws, rules and regulations and precision of tax paid and adhering to relevant accounting standards and norms.

Generally, an audit will inspect the issues seen as generally important to accomplishing an exact appraisal of a taxpayer’s tax responsibility. Commonly, these issues will incorporate any signs of critical unreported pay or possibly over-asserted allowance; things that might be evident from an assessment of a taxpayer’s return. On account of business audits, public law regularly requires a business to comply with certain accounting and bookkeeping guidelines. The audit may likewise include actual enquiries, like assessment of merchandise in stock, premises and so on. Tax auditing has several benefits, and they include:

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Taxation of Non-Resident Companies in Nigeria (Part 2)

In our previous post, we shared our view on the taxation of Non-Resident Companies (NRCs) in Nigeria, it is worthy of note that further to the introduction of Significant Economic Presence (SEP) vide the CITA (as amended by the Finance Act 2019), the scope of NRCs has been amended to include digital activities.

SEP put in simple terms means foreign entities which derive revenue especially through digital activities in Nigeria in an accounting year without having a fixed base in Nigeria. The SEP concept was first documented in the final report of Base Erosion Profit Shifting (BEPS) of the Organization for Economic Co-operation and Development (OECD) in October 2015. What SEP seeks to address are the cases where Companies or persons outside the shores of Nigeria transact businesses with Organizations domiciled in Nigeria and as a result of them not having a fixed base in Nigeria end up not being subject to tax. Prior to the amendment of Section 13 of CITA, an NRC was subjected to tax in Nigeria if such NRC had a fixed base in Nigeria and/or the taxable profit is attributable to profits from the fixed base.

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