The Federal Inland Revenue Service (FIRS) has issued a Public Notice appointing MTN, Airtel, and all money deposit banks as collection agents of VAT (value added tax). FIRS’ appointment is in line with Section 14(3) of the VAT Act 2004 as amended. These companies will withhold VAT on all taxable supplies from customers. The amount collected will be remitted as withholding VAT, in the currency of the transaction, to FIRS. Finance Act 2023 specifies the filing deadline for withholding VAT as the 14th day of the month after the month of the sales rather than the general due date of the 21st day.
Where the agent withholds the output VAT, a supplier may deduct the input tax paid from the output tax collected. Where a supplier is not able to recover the whole input tax paid from the output tax, FIRS will refund the balance to the supplier. The supplier can use the refund to offset future VAT payments or request a cash payout. FIRS has created adequate methods to ensure fast payment of refunds for input VA
An input tax claim will follow the rule for allowable deductions t offset output VAT. Non-compliance will attract fine. Effective date for the public notice is 1 January 2023. Taxpayers, tax practitioners, and other stakeholders should take note of the guidelines for the new collection agents for Nigerian VAT. To download the public notice on companies that can withhold VAT due to FIRS, click here.
Updated 23 March 2024