Federal Inland Revenue Service (FIRS) will commence the review of taxpayers’ compliance with value added tax (VAT) and withholding tax (WHT) across the nation. The monitoring exercise on all taxable persons begins on Monday, October 23, 2023. Taxable persons include Non-Governmental Organisations (NGOs), Ministries, Departments, and Agencies (MDAs) of government.
FIRS officers will visit assigned taxable persons to check compliance with VAT and WHT laws. Where FIRS has audited the taxpayer’s record up to the 2018 accounting year, the review will cover the 2019 to 2022 accounting years. Otherwise, the scope of the review will include the previous year(s) that FIRS has not yet audited.
Every taxable person or tax collection representative who has deducted either VAT or WHT on behalf of FIRS must remit all deductions immediately to the FIRS within two (2) weeks of this public notice. FIRS will issue a letter to the target businesses on the personnel for the monitoring exercise, the years covered, and the documentation needed.
It is a common practice for FIRS to review the VAT and WHT compliance of taxpayers in Nigeria. The monitoring exercise differs from a tax audit or investigation. After the fieldwork, defaulting persons will bear additional costs and fines, while the Revenue Authority will be able to recover unpaid tax revenue for the Federation Account.
Coping with operational tasks, client service delivery, and resolving tax issues may be cumbersome for a business. Pre and post monitoring exercise activities require time and expertise. A good tax documentation and compliance procedure will help a taxable person to prepare for the diverse forms of inspection from the Tax Authority, State or Federal. New and existing companies can seek tax guidance, when necessary, on a transaction or business model.
To download FIRS public notice on nationwide VAT and WHT monitoring exercise, click here.