The purpose of tax filing is to determine the amount of tax liable to be paid by taxpayers or the refund a taxpayer may be entitled to.
What is Tax Filing?
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 tax filing?
The purpose of tax filing is to determine the amount of tax liable to be paid by taxpayers or the refund a taxpayer may be entitled to. The process usually involves completing and submitting the relevant 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 due date is important for several reasons:
1. Avoiding Penalties and Interest: Late filing incurs penalties and interest charges on the amount of tax owed. These penalties can accumulate over time, increasing the overall tax liability.
2. Legal Compliance: Filing tax return by the deadline is a legal requirement in most jurisdictions. Failure to file your taxes on time can result in penalties and legal consequences.
3. Claiming Refunds: Filing on time is crucial to tax refund. Delaying filing means a longer waiting time to access any refund owed.
4. Access to Benefits: Some government benefits, credits or financial assistance programs may require tax returns filed in a timely manner. Filing on time ensures that all eligible benefits are processed early for instance, 2% and 1% tax incentive for CIT.
5. Audit and Documentation: Timely filing reduces the likelihood of being selected for a tax audit. Having a documented record of tax returns can be valuable in various situations such as applying for loans, mortgage or visas.
Overall, filing tax returns on time ensures compliance with the law, helps avoid penalties, facilitates timely refunds and allows for effective financial planning.
What does filing on a due date entail?
Tax filing on the due date in Nigeria entails submitting tax returns and relevant documents to the Federal Inland Revenue Service (FIRS) or the relevant Tax Authority. The TaxPro MAX is exclusively used for filing and payment of taxes due to the FIRS.
Here is what the process generally involves:
COMPANY INCOME TAX (CIT)
1. Go to https://taxpromax.firs.gov.ng on your browser
2. After getting login details in your registered email: Click login Insert email address and password (Can subsequently change password by Click forget password)
3. Click login
4. From the dashboard click on "Taxes Due".
5. The Company Income Tax (CIT) form will be generated and displayed to process and to complete all the schedules available.
6. After completing all the CIT Schedules;
7. The Summary of the Schedule filled will be in the CIT Return Form
8. Beneath the generated CIT form, click on "Declaration" to declare that the information is correct and in accordance to the relevant Tax Act.
9. Click on "Submit"
10. On the CIT Payment page, go through the Description items and their corresponding Amounts for payment to click on "Proceed to Payment"
11. The system will give a payment summary page to select amongst the three (3) payment gateways available (REMITA, E-Tranzact and InterSwitch) for taxpayer to Click on to automatically generate a Payment Reference number (PRN).
· Two payment options will be available, i.e. 'Pay online' or 'Print pay at Bank'
· You can pay the amount online or at any FIRS designated Bank and click submit.
· Confirm payment and print payment acknowledgment slip.
VALUE ADDED TAX (VAT)
1. Go to https://taxpromax.firs.gov.ng on your browser
2. Click on the "Login" button in Blue
3. Insert email address and password
4. Click login
5. It will take you to TaxPro MAX home page
6. From the dashboard click on "Taxes Due"
7. Select the Tax type.
8. Under the Action column, click on "Process" to commence filing of taxpayer VAT returns.
9. Four (4) Schedules are Available for VAT filing;
10. The Sales Schedule, Purchases, Sales Adjustment and VAT returns Form.
11. The 'Sales Schedule' has a sample template which contains Vatable, Exempted and Zero-rated Sales, that is expected to be downloaded and uploaded.
12. If no Sales for the month Click on 'Sales Schedule' and Proceed
13. The 'Purchases' is Automatically populated when a taxpayer has an Input to claim; (this is only available when a taxpayer populate his Sales Schedule indicating by indicating a buyer with appropriate TIN)
14. The 'Sales Adjustment' allows for the provision returning inward sales for subsequent monthly VAT adjustment.
15. Click the VAT return Form; Choose the currency type NGN under Returning Currency
16. On VAT return Form; Total Sales, Zero-rate and VAT Exempt will be populated/generated automatically if any.
17. System will automatically do the computation of other necessary lines. Note: Columns without highlights can take inputs (if necessary)
18. After the VAT assessment form has been completed, beneath the generated form, click on the small box under Declaration to declare that the information is correct and in accordance to the relevant Tax Law/Act
19. A pop-up will be displayed asking for a confirmation of Amount to be paid as seen below;
20. If amount to be paid is accurate, click on "Ok", if not, do not submit
21. When you click on "Ok", click on "Submit"
22. On the VAT Payment page, go through the Description items and their corresponding Amounts for payment to click on "Proceed to Payment"
23. The system will give a payment summary page to select amongst the three (3) payment gateways available (REMITA, E-Tranzact and InterSwitch) for taxpayer to Click on to automatically generate a Payment Reference number (PRN).
· Two payment options will be available, i.e. 'Pay online' or 'Print pay at Bank'
· You can pay the amount online or at any FIRS designated Bank and click submit.
· Confirm payment and print payment acknowledgment slip.
It is essential to consult the official guidelines and requirements provided by the FIRS or seek professional assistance to ensure compliance with extant tax laws and meet the specific requirements for tax filing.
What are the penalties for not filing on due date?
The Federal Inland Revenue Service is empowered by section 2 and schedule 1 of the Federal Inland Revenue Service Act, 2007 to administer on the following taxes:
- Value Added Tax Act, 2007
- Company Income Tax (Amended) Act, 2007
- Personal Income Tax (Amended) Act, 2011
- Capital Gains Tax Act Cap. C1 LFN, 2004
- Petroleum Profits Tax (Amended) Act, 2007
- Stamp Duty Act Cap. S8 LFN, 2004
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- Taxes and Levies (Approved List for Collection) Act Cap T2 LFN, 2004
1. Penalties for default on VAT - Failure to file attracts a fine of N50,000 in the first month of failure occurred and N25,000 for each subsequent month the default continues (Finance Act, 2020).
2. Penalty for default on Company Income Tax - N25,000 penalty in the first month of failure to file and N5,000 for each subsequent month default continues (section 13 of CITA).
3. Penalty for default on Personal Income Tax - 10% per annum of the tax payable shall be added thereto (section 76 of PITA).
However, for effective implementation, Personal Income Tax, the Act (PITA) in sections 81 and 69-75 respectively provided a medium to which this can be done. The medium are as follows:
Pay As You Earn (PAYE) - Any employer who contravenes the provisions of this section shall be liable on conviction to a penalty of N500,000 in the case of body corporate and N50,000 in the case of an individual.
Withholding Tax (WHT) - 10% of the tax not deducted of remitted plus interest at the prevailing monetary policy rate of the Central Bank of Nigeria (section 74(1) of PITA).
Filing Due dates for the months of August to December 2023 provided below:
TAX TYPES
MONTHPAYE (PAY AS YOU EARN)VAT (VALUE ADDED TAX) & WHT (WITHOLDING TAX) CIT (COMPANIES INCOME TAX); TET (TETIARY EDUCATION TAX); NITDL (NATIONAL INFORMATION TECHNOLOGY DEVELOPMENT LEVY) AND CGT (CAPITAL GAINS TAX)
AUGUST 10TH 21ST31ST
SEPTEMBER 10TH21ST30TH
OCTOBER 10TH21ST31ST
NOVEMBER 10TH21ST30TH
DECEMBER 10TH21ST31ST
