Tax & Business Matters - Nigeria

The FIRS has introduced new changes to TaxPro Max VAT filing procedure

The Federal Inland Revenue Service (FIRS) has announced new updates to the Value Added Tax (VAT) filing procedures on the TaxPro Max system. The aim is to increase the efficiency of the input VAT claim, sales adjustment entries and output VAT filing procedures. The changes take effect from the April 2023 filing period.

The FIRS is seeking to seamlessly match Output VAT collection to the Input VAT claimed by businesses and promote transparency in VAT compliance. To educate the public on the process and the increased data requirements to file a complete VAT return, the FIRS released illustrative videos on YouTube, documented guides and also held a sensitisation event on 18 April 2023 targeted at various stakeholders.

The FIRS mentioned that the changes are in their pilot phase but there is absolute commitment from management towards full implementation and adoption by taxpayers.

In our Tax Alert, we have highlighted the changes introduced under the new filing system, and analysed relevant legal and practical considerations.

Please read our Tax Alert below:

Download PwC Tax Alert - FIRS introduces new changes on the VAT module on TaxPro Max

PwC helps secure TAT ruling for deduction of product losses and taxpayer's right to claim capital allowance below the maximum threshold

Ardova Plc in the normal course of its business as a petroleum marketing and distribution company incurs product losses and shrinkages. The company expenses the losses in its financial statements and takes a tax deduction in its tax returns. The company filed its 2014 and 2015 financial year tax returns reflecting the above deductions. Thereafter, it filed amended tax returns adjusting the capital allowances claimed to be lower than the maximum threshold of 2/3rd as prescribed in the 2nd Schedule of the Companies Income Tax Act (CITA).

The FIRS conducted a tax audit and disallowed part of the shrinkages and product losses on the ground that it exceeded the acceptable industry benchmark. It also disallowed the adjustments made to the capital allowance brought forward based on the revised capital allowance claims. The dispute was escalated to the Tax Appeal Tribunal (TAT) for determination.

The Tribunal held that where an expense has passed the WREN (Wholly, Reasonable, Exclusive and Necessary) test under CITA, then it is deductible and CITA does not subject such expense to any industry average or benchmark. Also, CITA does not give FIRS the discretion to allow only a quantum of the said expense.

Also, the Tribunal agreed that claiming capital allowances below the threshold of 2/3rd of assessable profit does not offend the CITA, because CITA does not prescribe a minimum threshold of claim for capital allowances. However, the TAT ruled that an amended return can only be filed in the case of a mistake or error in the computation that has resulted in the payment of excess tax for the same year.

Please see our Tax Alert and the TAT judgment, below:

Download PwC Tax Alert - TAT ruling on deductibility of petroleum product losses and claim capital allowances below the maximum threshold

Download ARDOVA PLC v FIRS - CTC OF TAT JUDGMENT

PwC Tax Academy - "Managing employee tax and statutory compliance obligations: Dealing with practical challenges”

PwC's Tax Academy will be hosting a session titled "Managing employee tax and statutory compliance obligations: Dealing with practical challenges” on Tuesday, 18 April 2023.

Tax compliance is important for businesses to run smoothly, protect their reputation and avoid legal issues. This may even be more critical when it relates to employee/payroll-related taxes and contributions. With laws and regulations constantly evolving, it can be challenging to keep up with the latest requirements.

In this session, we will discuss the developments in the employee taxes space. We will also discuss the compliance requirements, risk areas, practical issues and how to navigate them.