INTRODUCTION
A tax return is a document submitted by a taxpayer to the revenue authority. The contents of a typical tax return include the taxpayer’s name, taxpayer identification number, month or year of assessment, income/profit, tax payable (if any), and declaration section.
There are two instances where a taxable person will file tax returns in Nigeria. The first is every month while the second is at the end of the fiscal and/or financial year. Fiscal year runs from 1st January to 31st December. This article looks at the filing of annual tax returns in Nigeria. The following are the types of annual tax returns;
ANNUAL TAX RETURNS
1. Annual Employer Tax returns (Form H1)
Form H1 returns show the annual salary and income tax paid for all employees in a fiscal year. A business must file a Form H1 return with the relevant tax authority of the employee by 31 January of the following year. More details on Form H1 annual tax return is available here.
2. Personal Income Tax (PIT) returns
Self-employed persons, artisans, entrepreneurs, and individuals other than employees will file a self-assessment return with the relevant tax authority by 31 March of the following year. Note that a PIT return is different from a payroll tax return.
3. Companies Income Tax (CIT) returns
Every company is liable to companies income tax in Nigeria where the profits accrue in, or derived from, or brought into, or received in Nigeria. The due date is six (6) months after the end of the financial year end of the business. For new companies, the deadline for filing CIT returns is the earlier date of eighteen (18) months after incorporation or 6 months after the financial year end of the company. CIT return is due to the Federal Inland Revenue Service (FIRS).
4. Hydrocarbon Tax (HT) returns
In addition to CIT, companies in the upstream petroleum sector are charged with hydrocarbon taxes on crude oil, field condensates, and liquid natural gas obtained from associated gas and produced in the upstream field. Operations in the deep offshore and natural gas are not subject to HT. Companies subject to HT will file the HT returns with the CIT returns.
Other annual tax returns that are submitted to the Federal Inland Revenue Service alongside the income tax returns of companies are as follows.
5. Tertiary Education Tax (TET) returns
Resident companies in the country will file TET returns. Non-resident companies are exempt from submitting TET returns. More details on TET returns in Nigeria is available in this article.
6. National Agency for Science and Engineering Infrastructure (NASENI) Levy returns
Companies operating in specific sectors, and with at least a turnover of ₦100,000,000 (One hundred million naira) will file NASENI returns. The sectors are banking, mobile telecommunications, information and communication technology, aviation, maritime, and oil and gas.
7. National Information Technology Development Levy (NITDL) returns
NITDL applies to specific entities with an annual revenue of ₦100,000,000 (One hundred million naira) and above. The entities include telecommunications companies, cyber companies, internet service providers, pension managers, insurance companies, and financial institutions.
8. Nigeria Police Trust Fund (NPTF) Levy returns
Companies operating in Nigeria will file NPTF levy returns every year.
ANNUAL TAX-RELATED RETURNS
A. Transfer pricing (TP) returns
Entities that belong to a Nigerian or international group of companies or have a connection with another company within or outside Nigeria will file a TP return.
B. CountrybyCountry reporting (CbCR) notification
Although CbCR is not a tax return, it falls under a submission to FIRS before the end of the financial year. A constituent entity (CE) of a multinational enterprise group resident for tax purposes in Nigeria will let FIRS know whether it is the Ultimate Parent Entity (UPE) or the Surrogate Parent Entity (SPE). If otherwise, the CE will notify the Service of the name and tax residency of the reporting entity.
C. CountrybyCountry reporting (CbCR)
CbCR is different from CbCR notification. CbCR is required where a Nigerian company or tax resident in Nigeria and belongs to a multinational enterprise (MNE) group with a gross revenue of at least ₦160,000,000,000 (One hundred and sixty billion naira) in the accounting year immediately before the assessment year. The UPE or entity nominated by the MNE Group can also file CbCR in Nigeria. CbCR is due twelve (12) months after the last day of the accounting year of the MNE group.
CONCLUSION
Annual tax returns in Nigeria have the prescribed rate, mode of payment, format for filing, deadline and penalty. The tax returns are due to the relevant State Internal Revenue Service or FIRS. A good understanding of the different tax returns will help a business plan tax affair properly.