What is the tax return?
Tax filing is the act of submitting your tax returns to the appropriate tax authority. It involves providing all necessary financial information, such as income, deductions, credits, and expenses, in a prescribed format as required by the tax laws of any country.
What is the purpose of the tax return?
The purpose of the tax return is to determine the amount of tax that taxpayers must pay or the refund to which a taxpayer may be entitled. The process typically involves completing and submitting the appropriate tax forms or using electronic filing methods provided by the tax authority.
Why is it important to file tax returns on time?
Filing tax returns on or before the due date is important for several reasons: 1. Avoiding Penalties and Interest: Filing late incurs penalties and interest charges on the amount of tax due. These fines can add up over time, increasing overall tax liability.2. Legal Compliance: Filing your tax return before the due date is a legal requirement in most jurisdictions. Failing to file your taxes on time can result in penalties and legal consequences.3. Claiming Refunds: Timely filing is crucial for a tax refund. Delaying filing means a longer wait time to access any refund due.4. Access to Benefits: Some government benefits, credits or financial assistance programs may require timely filing of tax returns. On-time filing ensures all eligible benefits are processed early, eg 2% tax incentive and 1% for CIT.5. Audit and Documentation: Timely submission reduces the likelihood of being selected for a tax audit. Having a documented record of tax returns can be valuable in a variety of situations, such as applying for loans, mortgages, or visas.
In general, filing tax returns on time ensures compliance with the law, helps avoid penalties, facilitates timely refunds, and enables effective financial planning.
What does presenting on a due date entail?
Tax return due date in Nigeria involves the submission of tax returns and relevant documents to the Federal Internal Revenue Service (FIRS) or the corresponding Tax Authority. TaxPro MAX is used exclusively for filing and paying taxes owed to FIRS. Here’s what the process usually entails:
BUSINESS INCOME TAX (IRC)
1. Go to https://taxpromax.firs.gov.ng in your browser2. After getting the login details in your registered email: Click Login Insert email address and password (You can change the password later by clicking Forget Password)3. Click login4. From the dashboard, click on “Taxes Due”.5. The Corporate Income Tax (IRC) form will be generated and displayed to process and complete all available schedules.6. After completing all CIT Schedules; 7. The completed Schedule Summary will be on the CIT8 Declaration Form. Under the generated CIT form, click on “Declaration” to declare that the information is correct and in accordance with the relevant Tax Law.9. Click “Submit”10. On the CIT Payment page, go to the Description items and their corresponding Amounts for payment to click “Proceed to Payment”11. The system will provide a payment summary page to select from the three (3) available payment gateways (REMITA, E-Tranzact and InterSwitch) for the taxpayer to click to automatically generate a payment reference number (PRN). • Two available payment options will be displayed ie ‘Pay Online’ or ‘Print Bank Payment’ • You can pay the amount online or at any FIRS designated bank and click submit. • Confirm the payment and print the payment receipt.
VALUE ADDED TAX (VAT)
1. Go to https://taxpromax.firs.gov.ng in your browser2. Click the “Login” button on Blue3. Insert email address and password4. Click sign in5. It will take you to the TaxPro MAX6 home page. From the dashboard, click on “Taxes Due”7. Select the type of tax.8. In the Action column, click “Process” to start filing the taxpayer’s VAT returns.9. There are four (4) Annexes available for the presentation of VAT;10. Sales and Purchase Calendar Form, Sales Adjustment and VAT Declarations.11. The ‘Sales Schedule’ has a sample template containing taxable, exempt and zero rate sales, which is expected to be downloaded and uploaded.12. If there are no sales in the month, click ‘Sales Schedule’ and continue13. ‘Purchases’ are automatically completed when a taxpayer has an Entry to claim; (this is only available when a taxpayer fills out their Sales Schedule indicating a buyer with the appropriate TIN)14. The ‘Sales Adjustment’ allows the provision of return of internal sales for the subsequent monthly adjustment of VAT.15. Click on the VAT Return Form; Choose the NGN currency type under Return Currency16. In the VAT return form; Total sales, zero rate and VAT exemption will be automatically filled/generated, if applicable.17. The system will automatically calculate the other necessary lines. Note: Columns without highlights can take entries (if necessary)18. Once the VAT assessment form has been completed, under the generated form, click on the small box under Declaration to declare that the information is correct and in accordance with the relevant Tax Act/Law19. A pop-up window will appear requesting a confirmation of the Amount to be paid as seen below;20. If the amount to be paid is correct, click “OK”, if not, do not send21. When you click “OK”, click “Submit”22. On the VAT Payment page, go to the Description elements and their corresponding Amounts to pay to click on “Proceed to payment”23. The system will provide a payment summary page to select from the three (3) available payment gateways (REMITA, E-Tranzact and InterSwitch) for the taxpayer to click to automatically generate a payment reference number (PRN). • Two available payment options will be displayed ie ‘Pay Online’ or ‘Print Bank Payment’• You can pay the amount online or at any FIRS designated bank and click submit.• Confirm the payment and print the payment receipt. It is essential to consult the official guidelines and requirements provided by FIRS or seek professional assistance to ensure compliance with applicable tax laws and meet specific tax reporting requirements. What are the penalties for not filing the return on the due date?
The Federal Internal Revenue Service is empowered by section 2 and schedule 1 of the Federal Internal Revenue Service Law of 2007 to administer the following taxes:– Value Added Tax Law, 2007– Income Tax Law of Companies (Amended), 2007– Personal Income Tax (Amended) Law, 2011– Capital Gains Tax Law Cap. C1 LFN, 2004– Oil Income Tax Law (Amended), 2007– Stamp Tax Law Cap. S8 LFN, 2004– Taxes and Levies Law (Approved Collection List) Cap T2 LFN, 2004
1. Penalties for non-compliance with VAT: Failure to file carries a fine of N50,000 in the first month of non-compliance and N25,000 for each subsequent month that non-compliance continues (Finance Act, 2020).2. Penalty for non-compliance with company income tax: N25,000 fine for the first month of non-compliance and N5,000 for each subsequent month that the non-compliance continues (CITA section 13).3. Penalty for late payment of Personal Income Tax – 10% annual tax rate will be added (article 76 of the PITA).
However, for its effective application, the Personal Income Tax Law (PITA) in its articles 81 and 69-75, respectively, provided a means for this to be done. The means are as follows:
Pay As You Earn (PAYE): Any employer who breaches the provisions of this section shall be subject to a fine of N500,000 in the case of a body corporate and N50,000 in the case of a natural person. Withholding Tax (WHT ) – 10% of the tax not deducted from the remittance plus interest at the prevailing Central Bank of Nigeria policy rate (section 74(1) of the PITA).
The submission due dates for the months of August through December 2023 are provided below:
TYPES OF TAXES
MONTHPAYE (PAY AS YOU EARN) VAT (VALUE ADDED TAXES) AND WHT (WITHOLDING TAXES) CIT (BUSINESS INCOME TAXES); TET (TECIARY EDUCATION TAX); NITDL (NATIONAL INFORMATION TECHNOLOGY DEVELOPMENT RATE) AND CGT (CAPITAL GAINS TAX) 10 21 31 AUGUST 10 21 30 SEPTEMBER 10 21 31 OCTOBER 10 21 30 NOVEMBER 10 21 31 DECEMBER
Watch: Tax 101 in 1 Minute: A Quick Guide to Filing Returns: https://www.youtube.com/watch?v=5ZOqydb5fCg• Oluwaseyi Ogungbesan, Communications Staff for the Federal Internal Revenue Service, writes from Abuja.
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