Join Taxaide’s Exclusive Knowledge Sharing Session on February 19, 2025
Tax compliance is a crucial aspect of running a successful business in Nigeria. As the Federal Inland Revenue Service (FIRS) intensifies its tax audit efforts, understanding what is expected of businesses has never been more important.
Taxaide is excited to invite you to an insightful Knowledge Sharing Session themed:
đź“Ś “Tax Audit and Expectations of the FIRS”
This session is designed to equip business owners, finance professionals, and tax consultants with essential knowledge about tax audits, ensuring compliance, and avoiding common pitfalls.
We are honored to have Mr. Oluwemimo, the Head of Tax Audit at the Lagos Island Medium Taxpayers Office, as our guest speaker. With extensive experience in tax compliance, Mr. Oluwemimo will provide valuable insights on:
✔️ Understanding tax audits and how they impact businesses ✔️ Key areas the FIRS focuses on during an audit ✔️ Common mistakes businesses make and how to avoid them ✔️ Strategies for maintaining compliance and avoiding penalties
Why You Should Attend
🔹 Gain expert knowledge on tax audits and compliance 🔹 Learn how to effectively handle FIRS audits 🔹 Network with industry professionals and tax experts 🔹 Get answers to your pressing tax-related questions
How to Register
Participation is free, but registration is required to secure your spot.
Join us for an exclusive webinar on “Understanding Tax Compliance in Nigeria” and discover the keys to avoiding undue penalties, fines, and reputational damage.
Learn from our expert panel:
Overview of tax filing seasons: PIT, PAYE, CIT, and Transactional Filings
Consequences of non-compliance: financial, legal, and reputational impact
Best practices for tax compliance and planning
Don’t miss this opportunity to:
Stay up-to-date on Nigeria’s tax laws and regulations
Network with fellow professionals and industry experts
Get answers to your burning tax compliance questions
Join us this Friday, January 31st, 2025
Key Speakers
Riwan Usman (Tax Auditor)
Abdul Wahab Yinusa (Corporate & Personal Tax Auditor)
Moderator:
Gbemisola (Tax Auditor)
Who Is To Attend: Business Owners, Finance professionals, SMEs, and anyone interested in understanding the current tax season in Nigeria.
Today, Taxaide Professional Services Limited stands in solidarity with Nigerians nationwide to commemorate the sacrifices of our brave Armed Forces. We pay tribute to the courageous men and women who have selflessly dedicated themselves to protecting our nation’s sovereignty, security, and democratic values.
Their unwavering commitment ensures our institutions, businesses, and communities thrive in peace and safety. We honor the memories of those who have made the ultimate sacrifice, and we acknowledge the enduring hardships faced by their families.
As a firm dedicated to fostering National economic growth and development via taxation and its compliance, we’re particularly grateful to the Armed Forces for creating a secure environment that enables businesses to flourish. Their efforts pave the way for shared prosperity and a thriving economy.
At Taxaide, we’re committed to supporting our troops and their families as an Armed Forces Friendly Institution (AFFI). We urge all Nigerians, businesses, and institutions to join us in this effort, ensuring the welfare of our heroes and their loved ones becomes a collective responsibility.
Let’s strive to build a nation where unity prevails, peace reigns, and the sacrifices of our heroes inspire us to serve one another selflessly. We salute the gallant men and women of the Armed Forces of the Federal Republic of Nigeria. May their bravery continue to inspire a united and prosperous Nigeria.
As we usher in the new year, employers across Nigeria are once again faced with the annual obligation of filing the Form H1, the annual tax return for emoluments paid to employees. With the deadline looming, here’s a comprehensive guide to ensure your organization stays compliant and avoids penalties, along with some practical filing tips.
Legal Basis
Under Section 81(2) of the Personal Income Tax (Amendment) Act 2011, every employer must file an annual return detailing all emoluments paid to employees in the previous year. The deadline for this submission is 31 January 2025 for the year 2024. This legal requirement ensures that all income is accounted for and taxed appropriately.
Deadlines and Penalties
Deadline: All employers must submit their Form H1 by 31st January 2025. Missing this deadline could lead to significant repercussions.
Penalties: According to Section 81(3) of the Act, failure to comply results in penalties of N50,000 for individuals and N500,000 for corporate bodies. These fines underscore the importance of timely filing to avoid legal complications and financial losses.
Filing Process
The process for filing the annual tax return varies slightly across Nigerian states:
Electronic Filing: Some State Internal Revenue Services (SIRS), like the Lagos State Internal Revenue Service (LIRS), offer electronic filing options, making the process more accessible and less time-consuming.
Manual Filing: In other states, manual filing might be required, where physical submission of documents is necessary.
Regardless of the method, here are the key documents and information required:
Schedule of total emoluments paid to employees in the previous year (2024).
Schedule of PAYE deductions and remittances made to the SIRS.
Schedule of withholding taxes remitted in the previous year.
Schedule of projected emoluments for the current year (2025).
Filing Tips
Start Early: Begin gathering all necessary data well before the deadline to avoid last-minute rushes.
Organize Your Data: Ensure all employee records, payroll data, and previous tax filings are well-organized. This reduces errors and speeds up the filing process.
Use Technology: If electronic filing is an option, leverage software or the SIRS online portal for accuracy and ease. Keep backups of all submissions for your records.
Review Before Submission: Double-check all entries for accuracy. Mistakes can lead to audits or penalties. If possible, have a second set of eyes review your work.
Understand Local Variations: Each SIRS might have specific requirements or forms. Visit their official websites or contact them directly to confirm processes specific to your state.
Keep Documentation: Retain copies of all filed forms and communications with the tax authority. This can be crucial if there are queries or audits in the future.
Seek Professional Help: If the process seems overwhelming, consider hiring a tax professional. Firms like Taxaide Professional Services Limited can provide guidance tailored to your company’s needs.
Stay Informed: Tax laws and procedures can change. Subscribe to newsletters, attend webinars, or join forums where updates are shared by tax professionals.
Key Takeaways
Timely Filing: Ensure you file your returns before the deadline to avoid penalties and start the year on a positive note.
Accuracy: Double-check all entries and calculations to prevent errors that could lead to audits or further penalties.
Stay Updated: Different SIRS might update their requirements or procedures; keep abreast with the latest from your local SIRS.
Conclusion
As the deadline approaches, don’t wait until the last minute. File your company’s annual tax returns now to beat the rush, ensure compliance, and avoid potential penalties. Remember, being proactive in your tax obligations not only keeps you legally secure but also sets a good precedent for financial stewardship in your organization.
Beat the 31st of January deadline! Let’s start the year right by fulfilling our tax responsibilities with diligence.
For further information on the foregoing (which is only but a professional advice) or related matters, please contact us at info@taxaide.com.ng, or specifically contact the key person below;
The significant Nigerian government changes to the country’s tax system with the implementation of the 2024 Withholding Tax Regulations seeks to improve tax compliance, reduce the burden on businesses, and align Nigeria’s tax policies with global best practices.
Key Features of the New Regulations:
Exemption for Small Businesses: Small companies with an annual turnover below a specified threshold are no longer required to deduct tax at source, provided they meet compliance conditions such as having a valid Tax Identification Number (TIN).
Reduced Rates for Low-Margin Sectors: The regulations introduce reduced withholding tax rates for sectors operating on low margins, such as agriculture and manufacturing.
Exemptions for Key Sectors: Farmers, manufacturers, and other producers are now exempt from withholding tax, provided their activities fall under specified qualifying criteria.
Measures to Curb Tax Evasion: Stricter compliance requirements for businesses without a valid TIN, with companies engaging in transactions without a TIN facing double the standard withholding tax rate.
Simplification and Clarity: The regulations aim to address ambiguities in the application of withholding tax, providing clarity on critical aspects such as timing of deductions and scope of eligible transactions.
For expert guidance and support, please do not hesitate to reach out to our team (info@taxaide.com.ng)
The International Financial Reporting Standards (IFRS) 18 governs the preparation and disclosure in the financial statements of an entity. The standard which was issued on 9th April 2024 is effective for accounting periods beginning on or after 1st of January 2027, although it permits early adoption.
The International Financial Reporting Standards (IFRS 15) governs the recognition of revenue from contracts with customers, providing principles that guide entities in reporting revenue to reflect the transfer of goods or services to customers. While this standard primarily focuses on revenue recognition, it also sparks discussions on how revenue impacts comprehensive income and cash flow statements. However, the distinction between the presentation of comprehensive income and the cash flow statement under IFRS 18 may appear as a nuanced detail, yet it holds significant implications for financial reporting.
Comprehensive Income Comprehensive income encompasses all changes in equity during a period, except those resulting from transactions with owners in their capacity as owners. Under IFRS 18, revenue recognition affects comprehensive income indirectly. Revenue recognized from contracts with customers contributes to the overall performance of the entity, thereby impacting comprehensive income. However, comprehensive income includes not only revenue but also other elements such as gains and losses from investments, foreign currency translation adjustments, and unrealized gains and losses on available-for-sale financial assets. Therefore, while revenue recognition is a vital component of comprehensive income, it is just one piece of the broader financial picture.
Cash Flow Statement On the other hand, the cash flow statement provides insight into the cash generated and used by an entity during a specific period. Revenue recognized under IFRS 18 directly impacts the cash flow statement, as it represents cash inflows from operating activities. However, the cash flow statement includes other elements such as cash flows from investing activities, and financing activities. These components offer a comprehensive view of an entity’s liquidity and cash flow management, beyond just revenue generation. IFRS 18 addresses the gaps created by the existing standard (IAS1) such as ambiguity as to the classification of income and expense items in the statement of comprehensive income.
Presentation of Statement of Comprehensive Income under IFRS 18.
Distinction without a Difference?
The new standard (IFRS 18) ensures transparency of performance measures disclosed in the financial statements, comparability of information in the statement of comprehensive income, and ability of the users of the financial statement to make reasonable and more informed decision. The first requirement in the new standard is the presentation of new subtotals in the statement of comprehensive income as operating profit/loss, profit/loss before financing and tax, profit/loss for the year after tax, and the five (5) categorizations of income and expense items as (operating, investing, financing, income taxes and discontinued operations). The second requirement is the identification of management-defined performance measures (MPM) and the related disclosures in the financial statements. The third requirement of the new standard is the establishment of consistent principles for labelling and grouping of items in the comprehensive income. The principles of IFRS 18 are illustrated in the table below for a general corporate entity.
While revenue recognition affects both comprehensive income and the cash flow statement, the distinction lies in the focus and purpose of each financial statement. Comprehensive income provides a holistic view of an entity’s financial performance, incorporating not only revenue but also other income and expenses. In contrast, the cash flow statement focuses specifically on cash movements, highlighting the sources and uses of cash within the organization.
Despite this difference in focus, both comprehensive income and the cash flow statement play complementary roles in financial reporting, offering stakeholders a comprehensive understanding of an entity’s financial health. While revenue recognition under IFRS 18 may impact both statements, each serves a distinct purpose in conveying different aspects of an entity’s financial performance and liquidity.
In conclusion, while the presentation of comprehensive income and the cash flow statement under IFRS 18 may seem similar due to their shared reliance on revenue recognition, they serve different purposes and provide unique insights into an entity’s financial position. Understanding these distinctions is essential for stakeholders to interpret financial statements accurately and make informed decisions.
The Nigerian tax environment is constantly evolving, to stay up with the constantly evolving business environment, companies need to regularly evaluate their tax structures, tax positions, and tax compliances. This will help to guarantee that overall tax positions are supported by sufficient evidence, compliances are tracked, and any potential litigation-related issues are handled properly. The Finance Acts in Nigeria had been adopted as a fiscal policy model which introduced over 150 amendments to existing tax and regulatory legislations in Nigeria and is aimed at promoting fiscal sustainability, enhancing revenue generation, and supporting small businesses. As at date, the Nigerian Government has introduced four Finance Acts which are Finance Acts of 2019, 2020, 2021, and 2023. These pieces of legislation have changed the tax compliance regime for businesses in general which necessitates the need for consistent Tax Health Checks. The impact of the Finance Act on tax compliance in Nigeria has been significant. It has led to increased revenue generation for the government, increased tax compliance for taxpayers, and reduced the incidence of tax evasion and avoidance. The Finance Act has also introduced several measures to simplify the tax system, making it easier for taxpayers to comply with tax laws and regulations.
The Tax Health Check is a comprehensive review of a taxpayer’s tax affairs to ensure compliance with tax laws and regulations. It is aimed at identifying areas of non-compliance and addressing them before they become a problem for the taxpayer. It also helps taxpayers to avoid penalties, interest, and other charges that may arise from non-compliance.It involves a comprehensive review of a taxpayer’s tax affairs, including tax returns, financial statements, and other relevant documents. The review is conducted by a qualified tax professional who assesses the taxpayer’s compliance with tax laws and regulations.Best practices for conducting a Tax Health Check in line with the Nigerian Finance Act include engaging qualified tax professionals, conducting the review in a timely manner, and ensuring that all relevant documents are reviewed. Taxpayers should also ensure that they have a good understanding of tax laws and regulations and seek professional advice where necessary.
STEPS IN CONDUCTING TAX HEALTH CHECK 1. Understanding the Company’s nature of business; the industry it operates. 2. Determining the scope of work to enable you to work effectively and efficiently. 3. Establish a timeline; Every task should have its own timeline. 4. Collect sufficient data; Verify that the information obtained is sufficient, accurate, and error-free. 5. Identify risks and concerns: Determine the hazards that might arise from a failure to provide necessary documentation or from a failure to comply with applicable tax legislation. 6. Recognize opportunities; Conduct a thorough examination of the tax reconciliation process to make sure that all potential avenues for lowering tax obligations or recouping unpaid taxes are found. 7. Prepare your tax report; recommending solutions for danger areas and strategies to guarantee tax compliance.
Despite the benefits of Tax Health Checks, there are several challenges faced by taxpayers and tax authorities in implementing the procedure. These challenges include a lack of awareness among taxpayers, a shortage of qualified tax professionals, and a lack of cooperation from taxpayers. To improve the implementation of Tax Health Check procedures in Nigeria, it is recommended that tax authorities provide more education and awareness campaigns to taxpayers. This will help to increase awareness of the benefits of the Tax Health Check and encourage more taxpayers to conduct the review. This note should not be taken as tax advice, please contact your tax manager if you require any clarification.
Daniel Fowobaje Senior Associate, Tax Audit. d.fowobaje@taxaide.com.ng info@taxaide.com.ng
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Integrated with TaxiTPay® to enable seamless disbursement of VAT to the RTA or other VAT collection agent.
Cloud-based Technology: Work from anywhere and anytime.
Notifications & Reminders: Built-in real-time notifications and alert system to help you stay compliant and keep up with your obligations.
Mobile Compatibility: Work from your mobile device.
Instant Data Import: The built-in data import tools make data migration into TaxiTVAT® painless thereby giving you a smooth onboarding experience.
Fraud Control: Checks against fraud and illicit financial transactions with the user-role console to set-up administrators, approvers, and disbursers functions.
Data Security: Highly private, confidential, secure and encrypted data including soft token generation.
User Intelligence Experience: Analytical and interactive dashboard interface displaying a general awareness and overview of when and how vendor payments and tax obligations are met.
With no upfront software costs, you wouldn’t need to break the bank to afford TaxiTVAT®
There’s no software installation hassle and TaxiTVAT® updates automatically.
You can automatically export your TaxiTVAT® information into spreadsheets as the relevant general ledger.
TaxiTVAT® is scalable; it expands as your business grows, allowing you to undertake complex VAT computation, including Input and Output Tax computations.
Taxit Withhold
Direct Disbursement: Sorts out payment to vendors and RTAs and disburses payments directly to their individual bank accounts instantly.
Integrated with TaxiTPay® to enable seamless disbursement of payments to vendors and RTAs.
Automatic Payment Processing: Retains and sorts out all obligations to vendors, computes withholding tax (WHT) and ensures scheduled payments to vendors and RTAs.
Cloud-based Technology: Work from anywhere and anytime.
Notifications & Reminders: Built-in real-time notifications and alert system to help you stay compliant and keep up with your obligations.
Mobile Compatibility: Work from your mobile device.
Instant Data Import: The built-in data import tools make data migration into TaxiTWithhold® painless thereby giving you a smooth onboarding experience.
Fraud Control: Checks against fraud and illicit financial transactions with the user-role console to set-up administrators, approvers, and disbursers functions.
Data Security: Highly private, confidential, secure and encrypted data including soft token generation.
User Intelligence Experience: Analytical and interactive dashboard interface displaying a general awareness and overview of when and how vendor payments and tax obligations are met.
With no upfront software costs, you wouldn’t need to break the bank to afford TaxiTWithhold®
There’s no software installation hassle and TaxiTWithhold® updates automatically.
You can automatically export your TaxiTWithhold® information into spreadsheets as the relevant general ledger.
Information available in formats sufficient for filing monthly WHT Schedules
TaxiTWithhold® is scalable; it expands as your business grows, allowing you to add as many vendors or pay cycles as you like.
Tbook
TBook® allows taxpayers to manage their tax affairs and have access to online real time information about their taxes and other statutory obligations.
Notifications: Built-in real-time notifications and alert system to help you always stay informed of payments made to or on your behalf including receiving your TaxiTPaySlip®.
Ideal for all employees of organizations that use TaxiTPayroll® or persons who receive payments via TaxiTPay®.
Data Security: Highly private, confidential, secure and encrypted data including password access
User Intelligence Experience: Analytical and interactive functions to enable you to generate choice information.
At no cost, TBook® is freely available as long as your smartphone has sufficient data. TBook®’s data usage is very minimal.
There’s no software installation hassle and TBook® updates automatically.
You can automatically export your TBook® information into spreadsheets as your personal ledger.
Information is available in formats sufficient for filing your personal income tax returns.
Taxit Pay
One Stop hub for all payments, tax computations and deductions E-banking is the now the norm. To keep tabs on all tax deductions, organisations need a platform that can help track all transactions and keep track of all tax liabilities reducing the stress of computing a huge block of transaction annually.
Time Sensitive: Tax and related payments made in timely and stress-free fashion
Multi-application: Optimized for making diverse forms of payments and remittances which include net salaries, vendor payments, pensions, and major tax obligations.
Receipting: Integrated instant receipt-generating function that gets you your tax and related receipts straight from the RTAs
Generate employee pay slips (TaxiTPaySlips®) from TaxiTPay®
Integrated with TaxiTPayroll®, TaxiTWithhold®, TaxiTVAT® to allow their users smooth and seamless disbursement of relevant payments.
Cloud-based Technology: Work from anywhere and anytime.
Mobile Compatibility: Work from your mobile device.
Fraud Control: Checks against payment frauds and illicit financial transactions with the user-role console to set-up administrators, approvers, and disbursers functions.
Data Security: Highly private, confidential, secure and encrypted data including soft token generation.
User Intelligence Experience: Analytical and interactive dashboard interface displaying a general awareness and overview of when and how payments are made.
With no upfront software costs, you wouldn’t need to break the bank to afford TaxiTPay®
There’s no software installation hassle and TaxiTPay® updates automatically.
TaxiTPay® is scalable; it expands as your business grows, allowing you to undertake as many payments as you like.
Taxit Payroll
TaxiTPayroll® provides the most robust solution for payroll taxes and tax obligations in Nigeria. TaxiTPayroll® offers an easy to use online application that supports entrepreneurs and small businesses. Accessible 24/7 online, it allows you to grow your business and offers a simple way to get things done.
With no upfront software costs, TaxiTPayroll® won’t break the bank.
There are no software installation hassle and your payroll software updates automatically.
With our smart online payroll solution, your payroll expands and shrinks as your business grows, allowing you to add as many employees or pay cycles as you like.
You can automatically update your payroll general ledger.
Direct Disbursement: Sorts out the remuneration of employees and disburses payments directly to their individual bank accounts instantly.
Automatic Tax Processing: Retains and sorts out all statutory payroll obligations, computes payroll taxes and remits all at once and instant payment to the relevant agencies and agents (RTAs, PFAs, NHF, NSITF, ITF etc.) as payments fall due.
Cloud based Technology: Work from anywhere and anytime.
Notifications & Reminders: Built in real-time notifications and alert system to help you stay compliant and keep up with your payroll obligations.
Mobile Compatibility: Work from your mobile device.
Instant Data Import: The built-in data import tools make data migration into TaxiTPayroll® Painless thereby giving you a smooth onboarding experience.
