Nigeria’s Federal Inland Revenue Service (FIRS) has updated the Value Added Tax (VAT) compliance processes on its ICT-based tax compliance platform, the TaxPro MAX (the Platform). The updated processes are on Sales, Purchases, Sales Adjustments, and the VAT Returns Form. We provide below, 15 key notes on the changes on the Platform and their implications for your VAT compliance process, going forward:

A. Sales:

  1. You are now required to upload your duly filled Sales Schedule as part of your VAT Returns filing process. The Sales Schedule is essentially a record of all your sales transactions (whether VAT-able or not) during the period for which the filing relates.
  2. The template Sales Schedule which is downloadable in MS Excel on TaxPro MAX requires you to provide such details as the name of your customer/client, the client/customer’s tax identification number (TIN), the item/service sold, the cost/price, the item/service’s description, and VAT Status. The ‘VAT Status’ relates to whether the transaction is VAT-able (in which case “0” will be inputted); zero-rated (in which case “1” will be inputted); or VAT-exempt (in which case “2” will be inputted).
  3. Upon the filling of the Sales Schedule, same is to be uploaded unto TaxPro MAX which automatically populates all on the Sales page. You are required to select the “Returning Currency” prior to proceeding from the Sales page. The “Returning Currency” option currently does not allow for multiple “Returning Currency” selections; a scenario that will pose some challenges where VAT payments are to be made in multiple currencies.
  4. A maximum 1,000 sales transaction can be upload in each Sales Schedule upload. This means sales transactions that exceed 1,000 will be uploaded in multiple Sales Schedules, that is, one after the other.
  5. An “Item ID” is automatically generated by Tax Pro MAX for each line of sales transaction recorded on and uploaded on the Sales page.
  6. As you will note, the Sales Schedule forms the fulcrum of the upgraded system as the records of your Purchases, especially for the Input-Output Tax set-off system, is wholly dependent on the ability of your Counterparties to have filed their VAT Returns and made the relevant VAT payment on the Platform. This also applies to all your customers/clients who will be unable to see or utilise their Input Tax, where applicable, save and unless you have duly uploaded your Sales Schedule and made your applicable VAT remittance on TaxPro MAX.
  7. In a case where you are unable to supply the TIN or the correct TIN of your customer/client, TaxPro MAX will automatically reflect the customer/client’s name as “Not Found” until you are able to subsequently provide the customer/client’s TIN. The ability to get the TIN column correctly is an all-important dependency of the Platform, especially in the ultimate reflection of Input Tax in the Purchases page.

    B. Purchases:
  8. Following the upload of the Sales Schedule and completion of the Sales page, TaxPro MAX will take you to the Purchases page, where, as explained in (5), you currently have minimal input as TaxPro MAX has been re-designed to obtain relevant data only from the Sales Schedule that your sellers/suppliers may have duly uploaded with your correct TIN and for which they had made relevant VAT payments.
  9. You can claim Input Tax, in line with Section 17 of the VAT Act, on the Purchases page by simply clicking on “Claim Input” on relevant VAT-able transactions. As you may know, the Input Tax is to be set-off from your Output Tax, as established on the Sales page. While TaxPro MAX cannot currently correct you if Input Tax is being incorrectly claimed, FIRS will resort to its desk review or field tax audit process to correct any such errors by swiftly assessing you to additional assessments.

    C. Sales Adjustment:
  10. Following your competition of the Purchase page and proceeding therefrom, TaxPro MAX will take you to the Sales Adjustment page where you will have the opportunity to make adjustments for returned sales of a prior period for which you had uploaded the Sales Schedule, filed the VAT Returns Form and made VAT payment. The essence of the Sales Adjustment page is to enable you claim back the VAT that was paid on the returned sales of a prior period. Again, the returned sales is/are for a prior period and not the period for which the current VAT Returns and payment is to be made.
  11. The Sales Adjustment process works with the “Item ID” that is generated from the uploading of the Sales Schedule. It is this “Item ID” that is inputted in respect of each of the previous sales that is intended to be reversed through the Sales Adjustment process.

    D. VAT Form:
  12. From the Sales Adjustment page, you proceed to the VAT Form page where the summary of the VAT Returns for the period is displayed for you to make needed adjustments, only on your Closing Inventory, Purchased Imports, and VAT on Imports. TaxPro MAX has pre-filled all other fields.
  13. The Closing Inventory adjustments is to ensure that your Input Tax does not exceed your Output Tax at any point in time.  TaxPro MAX will currently not allow Input Tax to exceed the Output Tax for a relevant period.

    E. Our Concluding Commentary:
  14. The challenges of the Purchases page being wholly dependent on data fed it by the uploaded Sales Schedules of counter-parties remains TaxPro MAX’s major notable issue. Although informally denounced by some of FIRS’ officials, a system which will put my compliance at the mercy of another’s action or inaction needs be critically rethought. The consensus for now appears to be that you are at liberty to pay what you consider to be the correct net VAT payable following your set-off of your calculated Input Tax from your Output Tax; however, the fact that TaxPro MAX will still continue to record and reflect a challengeable deficit would and should not be appealing to tax payers.
  15. FIRS’ bid to gradually and ultimately fully automate the VAT filing process is laudable and meets the global expectation for progressive tax systems. However, and in the circumstance that TaxPro MAX is deployed as a service to aid the tax system, it must be employed in the fashion of all world class software as a service (SAAS) platforms. It must live up to the requirements of good stakeholder engagement, quick resolution of issues, effective communication, and progressive updates as would be expected of any world class platform. Instances where queries and questions are asked of the Platform by users and the Platform is without a handler that can timeously deal with such queries must immediately be repaired. The delivery of a great product is not an end in itself as the product must be employed for efficient and effective service delivery. Good utilisation of stakeholder feedback will often result in well-paced and impactful updates. TaxPro MAX must be rightly treated by the FIRS and the taxpaying public as a service for which the best of standards must be demanded and strictly so.

For more information or inquiries, please be free to contact our VAT Desk at or call us at +234 700 TAXAIDE; +234 1 631 0971-2; +234 810 701 7274.

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