The Federal Inland Revenue Service (FIRS) has issued a public notice on the due date for filing and payment. FIRS notice is further to section 77 of the Companies Income Tax Act (CITA) 2004 as amended and Section 18 of the Finance Act 2019. Filing of tax returns and tax payment are two different activities. A complete set of tax returns will contain evidence of any tax paid. For more details on companies income tax returns in Nigeria, click here. Taxpayers should note that;
- FIRS will approve taxpayers’ request to pay taxes in installments before the due date of filing. For ease of understanding, we will use an existing company, Taxpayer XYZ, with a financial year-end of December 2019. Taxpayer XYZ applied for payment in installment on 4 March 2020, that is, before 29 June 2020. However, the essence of payment in installment would be irrelevant where a company applies within 60 days to the filing deadline.
- Companies can pay taxes on or before the due date of filing in one single payment or installments. Using the example in (1) above, FIRS has approved Taxpayer XYZ’s request to pay the income tax liability of NGN200,000 in four equal installments. That is NGN50,000 per month for March, April, May, and June. The Company must, therefore, pay the fourth installment on or before the filing deadline of 30 June 2020.
- A medium-sized company will get a bonus of 2% (1% for a large company) of the amount payable if it pays all tax liability in 90 days before the filing deadline. Another taxpayer, EFGH Limited is a large company and has a tax liability of NGN1,000,000 which is due 30 June 2020. If EFGH Limited pays the full tax liability by 31 March 2020, then the company will receive a bonus of NGN10,000. The amount payable will be NGN990,000.
- Any tax due and unpaid by the due date of filing attract interest and penalties.