There is a new way to claim input value added tax (VAT) on the TaxPro Max. The Federal Inland Revenue Service (FIRS) has released a guide for taxpayers should file their VAT returns for April 2023 in May 2023. Every field deactivated earlier on will be enabled, while the automatic credit for purchases will be disabled. A taxpayer who wants to claim input VAT must attach the following documents:
- Purchase schedule to claim input VAT for purchases
- WVAT schedule to claim input VAT for withholding VAT (WVAT)
- Purchase imports schedule to claim input VAT for imports
Furthermore, all claims must follow the guidelines below;
Steps
First Step: Month 1 is for transactions from the 1st to the 30th of June
Second Step: The due date to file returns for transactions of June is 1st to 21st July at midnight
Third Step: The succeeding month after filing VAT returns, that is, from 1st to 21st August, an input VAT claim yet to be confirmed on TaxPro Max can be traced manually with the details submitted by the taxpayer.
Fourth Step: Every supplier that is traced must settle the unpaid sum. The amount will be added as a liability, with penalty and interest, in the supplier’s records. Later, the Federal IRS can carry out an audit on the supplier.
However, any input VAT claimed by a purchaser and whose supplier is untraceable will be added as amounts due from the purchaser, except if the taxpayer helps FIRS find the supplier within 30 days. Where FIRS cannot trace the supplier, the Revenue Authority can charge the taxpayer for false claims.
Fifth Step: FIRS will close all unverified claims in the next month after an unsuccessful manual tracing of the suppliers, that is, September 1st to 30th and;
i. Raise liability for the identifiable supplier and collect a payment,
ii. Issue liability for the purchaser and collect payment as well as start prosecution for wrong claims,
iii. Where FIRS does not receive payments within the stipulated time, the tax authority will use enforcement measures on the suppliers
BRC Comments
A taxable person can use input VAT to reduce the output VAT. Another way of defining the connection is the higher the VAT paid on purchases, the lower the tax payable. The process has an impact on the tax revenue of the government. It is, therefore, not surprising that FIRS wants to check the actual VAT paid on purchases with amount to recover in a month.
The rule takes effect on 1 June 2023. A copy of the public notice is available here.
