Investor Presentaiton
The Country and its
institutions
Business Organisation Labour and Social
and Regulation
Security Regulations
The Nigerian Financial Tax System
Services Industry
Foreign Exchange
Transactions
Investment in Nigeria
Accounting and
Auditing Requirements
Importation of Goods
Exportation of Goods
COVID-19 Economic
and Fiscal Measures
5.4.7
5.4.8
Tax Returns and Payment of Tax
A taxable person who has made or expects to make taxable supplies of
#25 million or more is required to render monthly VAT returns within 21
days of the month following the month of the VATable transaction.
The returns are to be filed using the VAT returns Form 002 which can be
obtained from the FIRS office nearest to the taxpayer or downloaded from
the FIRS website. Failure to file returns within the statutory deadline
attracts a penalty of #50,000 for the first month of default and #25,000 for
every month in which the failure continues.
Taxable persons with cumulative taxable supplies of less than #25 million
in a calendar year are not required to render a return or charge VAT on their
invoices. However, the person to whom the taxable supply has been made
is required to self-account for the VAT on the transaction and remit to the
FIRS, as and when due.
Non-remittance of VAT payable to the FIRS attracts a penalty of 10% of the
tax not remitted and interest charged at the prevailing CBN minimum re-
discount rate on the amount of tax in default.
VAT on Transactions with NRCs
Where an NRC makes taxable supply of goods 48 and services 49 in Nigeria,
the NRC is required to register for VAT in Nigeria, obtain a tax identification
number, and file monthly VAT returns with the FIRS, or appoint a
representative for the purpose of fulfilling their VAT obligation in Nigeria.
The VAT Act also requires Nigerian companies to self-account for the VAT
on transactions with NRCS on services that are provided outside of Nigeria.
VAT is remitted in the currency of the transaction.
VAL
48 Goods are deemed to be supplied in Nigeria if they are physically present in Nigeria at the time of supply, or if the goods are imported into,
assembled in, or installed in Nigeria.
49 A service is deemed to be supplied in Nigeria where: the service is provided to and consumed by a person in Nigeria, regardless of
whether the service is rendered within or outside Nigeria or whether or not the legal or contractual obligation to render such service rests
on a person within or outside Nigeria; or where the service is connected with existing immovable property located in Nigeria.
KPMG
5.5
Withholding Tax (WHT)
The Nigerian income tax laws provide that where any payment on which WHT
should be deducted is due from one person to another, the person making the
payment should deduct tax at the applicable rate and remit same to the RTA not
later than 30 days (21 days in CITA) from the date of deduction or the time the duty
to deduct arose. The above provision is contained in sections 69 to 74 of the PITA
(as amended), sections 78 to 82 of the CITA (as amended), section 56 of the PPT
Act and section 40 of the FIRSEA.
The activities and services on which WHT is deductible and the current applicable
rates are as follows:
Payment
Rent
Dividend, Interest
Royalty, Commission
Professional, Management, Technical and
Consultancy Fees
Director's Fees
Construction
Contract of Supplies and Other Contracts
Rate (%)
Corporate
Individual/
Partnership
10
10
10
10
10
5
10
LO
5
10
2.550
5
5
5
WHT deducted at source from NRCs in respect of interest, rent, dividend, royalty
and fees received by NRCS with SEP in Nigeria for services51 rendered to persons
in Nigeria, is the final tax liability due on the incomes. It is an offence not to deduct
WHT, or not to remit the tax deducted. Failure to deduct and/ or remit WHT attracts
a penalty of 10% of the amount in default plus interest at the prevailing MPR.
WHT payments must be made in the currency of the transaction (i.e. currency of
payment). WHT deducted from Naira payments to limited liability companies are
to be remitted to the FIRS by bank draft payable to "FGN-FIRS-WHT Account" or
via the FIRS's online payment platforms while WHT on foreign currency payments
are to be remitted via wire transfer to the relevant domiciliary accounts of banks
designated by the FIRS for this purpose. WHT deducted from payments to
individuals/partnerships are remitted to the SIRS of the State/territory where the
individual/partnership is tax-resident.
50 This rate was reduced from 5% to 2.5% in 2015 by the CIT (Rates etc., of Tax Deducted at Source (WHT)) Amendment Regulations, 2015,
and was reversed to 5% effective 9 November 2016 by the Honourable Minister of Finance. However, by virtue of amendment by Finance
Act, 2019, the prevailing WHT rate is now a maximum of 2.5%.
51These include technical, management, consultancy, or professional services.
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